BlueScope Steel faces being hit with a bill of up to $203 million from the Australian Tax Office amid a dispute over a deal struck in 2007.
The ATO has told the steel maker it intends to issue it with amended assessments for the 2007 and 2008 tax years in relation to a sale and leaseback of equipment deal which allowed BlueScope to raise $270 million.
The new assessments relate to the gain BlueScope made on the sale of the equipment and the ATO's denial of the deduction for lease rentals paid to the new owner of the equipment.
BlueScope said it intended to dispute the ATO's new assessments.
If the company is unsuccessful, it faces a maximum liability of about $140 million relating to the gain it made on the deal.
Its maximum liability for the deduction for lease rentals is expected to be between $51 million and $63 million.
"BlueScope considers that these assessments involve mutually exclusive outcomes and that the real amount of tax in dispute relates to the second assessment," the company said in a statement on Friday.
"BlueScope believes that its treatment of the transaction is correct and is supported by both the existing case law and the ATO's published ruling on sale and leaseback transactions."
BlueScope says it expects the resolution of the tax dispute will take some time.
It intends to apply to the ATO for part payment of the amended assessments pending determination of the dispute.
"Any amount paid will be fully refundable in the event that the matter is resolved in favour of BlueScope," it said.