Gina Rinehart's threat that her children would be bankrupted by a massive tax bill if they wrested control of a trust holding their $5 billion inheritance has been undermined by a private ruling by the Australian Taxation Office.
The development came in the NSW Supreme Court yesterday, where Mrs Rinehart failed to have the battle sent to private mediation.
But the fight between the mining magnate and three of her four children took another twist, with Mrs Rinehart challenging them to claim their share of the family fortune, with her lawyers saying she would not stand in their way.
David Russell, for Mrs Rinehart, said the children preferred not to get their shares for tax reasons and were pursuing her out of "spite".
This is despite questions whether the children could equally split shares in the trust with Mrs Rinehart still controlling how money from the family's company Hancock Prospecting flows to the trust.
The court was given a copy of a binding ruling made by the ATO last month that said Mrs Rinehart's son John Hancock would not have to pay capital gains on the vesting of the $5 billion trust set up by their grandfather, Lang Hancock.
This was because no one child would have total control of all of the assets in the trust. Last September, Mrs Rinehart sparked the family feud when she pressured her children to sign a deed to give her more control over the family empire.
In a letter sent by Jay Newby, one of her most senior executives, she warned that the children had three days to sign up to the new arrangements or face "financial ruin".
Mrs Rinehart based her claims on advice from global accounting firm PricewaterhouseCoopers, but refused to hand it to her children claiming confidentiality.
In response, Mr Hancock and his sisters Bianca Rinehart and Hope Rinehart Welker took their mother to court to have her removed as trustee, alleging she engaged in "deceptive, manipulative and disgraceful conduct".Andrew Bell, for the three children, said yesterday Mrs Rinehart's actions as trustee since were "manifestly inappropriate".
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