Court backs CBH
The CBH board is expected to announce early in 2011 that its preferred structure moving forward will be a non-distributing co-operative.
This follows last Friday’s decision by the full court of the Federal Court to dismiss a taxation department appeal against CBH keeping its tax exempt status for the storage and handling side of its business.
CBH chairman Neil Wandel said the final model hinged in part on the result of the tax case.
The tax man now has 28 days to seek special leave to apply to appeal to the High Court. He has also been ordered to pay CBH’s appeal costs.
But if the decision sticks, it should see CBH finally announce its preferred model for restructure.
In September this year, chairman and chief executive Andy Crane took three structure models to growers — a non-distributing co-operative, a dual co-operative and a distributing co-operative.
At the time, Dr Crane was quick to point out to growers that a range of options including corporatisation had been canvassed in arriving at this short list.
Of the three that made the final cut, it now seems improbable that the board will opt for the distributing co-operative model because the price for this is that CBH would have to give up the sacred tax exempt cow it has spent more than two years trying to rear.
Mr Wandel said CBH had fought hard to win the tax reprieve back because the exemption, worth millions of dollars annually, was money that had been used to reinvest in the storage and handling network.
That leaves a dual co-operative model, but one of the sticking points with this model is its structure would require a new ruling from the tax office and there would be no guarantees.
And depending on how it was structured, some onlookers believe separating the entities would be a step backwards, negating the promised benefits of the merger of the Grain Pool and CBH.
It is therefore most likely the board will give the nod to retaining a non-distributing co-operative, also described by CBH management as an “enhanced” version of the current model, albeit with promised bells and whistles to recognise patronage.
Mr Wandel said the board was still working towards presenting a preferred model to growers in early 2011 before going to members for a formal vote on the future structure in the second half of 2011.
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