The Altium Limited (ASX: ALU) share price was out of form and started the week with a disappointing decline.
The electronic design software companyâs shares ended the day 3% lower at $36.30.
This compares to a 0.2% decline by the ASX 200 index.
Why did the Altium share price tumble?
Investors were selling down the Altium share price on Monday following the release of the companyâs update on its dealings with the Australian Tax Office (ATO).
According to the release, the company has received a formal communication from the ATO in relation to an alleged tax liability.
The release notes that the ATO intends to proceed with issuing amended assessments for the 2016 to 2018 tax years of approximately $80 million. This excludes any penalties and interest, but does not include deductions of global operating costs.
In addition, the ATO has indicated that it will also commence a roll over audit of the subsequent 2019 to 2021 tax years.
Altiumâs response
Altium revealed that it disagrees with the ATO on the matter. It believes that the the tax officeâs position is based on a misperception of the substance that underpinned Altiumâs relocation to China in 2011 and subsequent relocation of its core business assets in 2015 to the United States.
Furthermore, the company regards the amended assessments as âillogical.â This is because it implies an Australian corporate tax rate of approximately 65% of profit before tax.
Altium advised that it continues to engage external legal advisers in relation to this matter and will request an independent internal review of the decision by the ATO. It also plans to vigorously defend its position and, if necessary, contest the matter through litigation proceedings.
The post Why did the Altium share price sink into the red today? appeared first on The Motley Fool Australia.
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More reading
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Altium. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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