The Tax Office has hit the family of corrupt former Labor kingpin Eddie Obeid with a $9 million bill after it audited his tax affairs and family trusts spanning half a decade.
Documents filed by the Tax Commissioner in the Federal Court reveal that more than 30 members of the Obeid family, including family matriarch Judith, most of their children and dozens of grandchildren, have been drawn into a dispute over unpaid tax and penalties.
The Tax Office kicked off an audit of Mr Obeid and a complex web of family trusts and companies in February last year, according to the documents, covering the five years from July 2007 to June 2012.
It is targeting his family for a slice of a $30 million coal deal at the centre of a historic corruption inquiry, as well as a smaller deal involving a separate mining venture.
It was revealed last month that Mrs Obeid and most of the couple's sons and their wives, along with two of their four daughters, had simultaneously launched court challenges to decisions of the Tax Commissioner on May 30.
The new documents, filed in reply by the Tax Office, reveal it sent bills for unpaid tax and penalties totalling $8.6 million to 11 members of the family and a corporate trustee in August last year.
The individual bills range from about $55,000 to $1.57 million. The corporate trustee, Calvin Holdings, is challenging its bill on behalf of 24 grandchildren who are aged under 18.
Mrs Obeid and the wives of four of the couple's five sons – Damian, Paul, Gerard and Eddie junior – received the largest bills, totalling more than $1.5 million each in tax and penalties. The sons received smaller bills of about $55,000 each.
Daughters Rebecca Joumma and Gemma Vrana were hit with bills totalling $396,132 and $187,782 respectively.
The grandchildren, as beneficiaries of one of the Obeid family's trusts, were hit with a combined bill of $53,500 in tax and penalties.
But Mr Obeid snr and his entrepreneurial middle son Moses are not involved in the court dispute, which covers the 2010-11 and 2011-12 income years.
In a report released in July last year, the Independent Commission Against Corruption found that the two men had corruptly agreed with former Labor mining minister Ian Macdonald to create a coal tenement over the family's Bylong Valley farm.
The Obeids entered into a mining joint venture with private company Cascade Coal, which later agreed to pay the family $60 million to extract them from the venture.
The money started flowing into family coffers in late 2010 and to date $30 million has been paid.
At the conclusion of the inquiry, dubbed Operation Jasper, the ICAC referred information about the operation of the Obeid family trusts to the Tax Office ''for such action as it considers appropriate''.
At the heart of the dispute between the family and the Tax Commissioner is whether the $30 million was ordinary income – and taxed at the full tax rate – or was on capital account, which would entitle the family to a 50 per cent discount on their tax bill.
"This is a not uncommon question that arises when valuable properties are sold," a tax lawyer said.
"In many cases the answer is clear one way or another but there are cases where the application of the law is more complex. The ATO has been very focused on this question in recent years when conducting audits and looking at property sales."
The Obeids say in court documents that the money from the coal deals is not ''ordinary income''.
They also argue they are not liable to penalties for any shortfall on the amount of tax paid ''as there was no statement made to the [Tax Office] which was false or misleading in a material particular''.
