It centred on the amount of tax due in Australia from the sale of BHP Billiton’s Australian commodities to its Singapore marketing business between 2003 and 2018.
The agreement completely resolved the dispute “with no admittance of tax avoidance by BHP”, according to a statement from the group.
BHP agreed to pay approximately A$529m (£299m) – A$328m of which it has already paid – in additional taxes for the income relating to the period in question.
“The A$529m payable under the settlement is in addition to the more than A$75bn in Australian taxes and royalties that has already been paid by BHP over that same period,” said Peter Beaven, BHP chief financial officer.
He added that it provided clarity for BHP and for the ATO on how the sale of Australian commodities will be taxed and paid in the future, a point to which the ATO also agreed.
Jeremy Hirschhorn, ATO deputy commissioner, described the amount as “over and above the tax returns originally filed”.
He added the agreement meant that BHP would now be “within the ATO’s ‘green zone’ for marketing hubs”, making all their future profits from the sale of Australian owned commodities taxable in Australia.
“This is a landmark and precedential development in the execution of our marketing hubs strategy, and sends a strong signal to other industry participants.
“Given the importance of mining and natural resources to the Australian economy, it is critical that exporters of Australian commodities, whether iron ore, coal, gas or other commodities, pay the correct tax in Australia on their profits,” said Hirschhorn.