Star Entertainment settles long-running ATO tax dispute over junket payments

Star Entertainment Group has resolved long-running disputes with the Commissioner of Taxation over the goods and services tax (GST) and withholding tax treatment of past payments made to junket operators, the Australian operator said in a Tuesday morning ASX filing.

The Commissioner has refunded AU$33 million (US$22.77 million) of the AU$88 million (US$60.72 million) Star had previously paid toward the disputed amount. As a result, the company will record a charge of AU$55 million (US$37.95 million) for the year ended June 30, 2026.

The tax dispute covered payments made to junket operators between October 2013 and August 2017 with respect to GST treatment of rebates, and between July 2014 and June 2020 with respect to the method used to calculate withholding tax.

The Australian Taxation Office (ATO) had alleged that Star underpaid GST on rebates and commissions paid to junket operators, a claim totaling AU$158 million (US$109.02 million). The ATO also pursued a separate claim of AU$8.4 million (US$5.80 million) related to withholding tax on junket rebate payments.

Star, which ended its dealings with junket operators in October 2020, disputed the ATO’s interpretation of the tax law and filed proceedings in the Federal Court in 2023. The two parties subsequently took part in mediation during the course of those proceedings.

The settlement adds to a series of steps Star has taken to move past the compliance issues that have affected the company in recent years, as it works to regain suitability to operate its casinos in New South Wales and Queensland following last year’s acquisition of a controlling stake by Bally’s Corp. and Investment Holdings Pty Ltd.

Star recently chose not to seek a determination of its license status in connection with the change of control, and it has submitted a plan to the NSW Independent Casino Commission (NICC) outlining its pathway toward regaining suitability.