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REVEALED: Australia's tax office hit suspected Bitcoin creator Craig Steven Wright's company with a massive penalty

Published by Business Insider on Wed, 09 Dec 2015

A failed company run by the Sydney IT executive who has suddenly come to prominence as a possible Bitcoin founder is at the centre of a heated dispute with the Australian Taxation Office involving millions in disputed tax credits and a $1.7 million penalty.Craig Steven Wrights company, Hotwire Pre-emptive Intelligence, is now in the hands of administrators McGrath Nicol who, in a recent update to creditors, revealed the ATO had issued the penalty against the tech company.Wrights home in Sydney was raided by federal authorities today, just hours after he was named by two major US tech titles as one of the potential masterminds behind Bitcoin. The cryptocurrencys creator has always been a mystery.At the centre of the dispute is Hotwires 2014 tax return and some $3.4 million claimed as GST tax credits. Hotwires tax return also gives rise to a $5.5 million income tax refund, but Business Insider understands this has not been released by the ATO.The companys tax return is now being handled by the arm of the ATO which specialises in high net worth individuals.The ATO has disputed the validity of the amounts claimed and has levied a penalty on Hotwire of $1,716,608.00 in respect of the lodgement, the McGrath Nicol administrators write. We understand that the Directors dispute the position adopted by the ATO.After Hotwire went into voluntary administration, its creditors agreed last year to strike a Deed of Company Agreement, a deal to stop the company going into liquidation. Some repayments to creditors have been made, although other expected payments throughout this year have failed to materialise, in part because the expected ATO refund hasnt shown up.There is a further Bitcoin-related twist, however: the failure of Hotwire was attributed in May 2014 partly to the disintegration of the Mt Gox Bitcoin exchange, which famously imploded in February of last year with the loss of more than $US450 million worth of Bitcoins.Hotwire hit problems in April of last year when it failed to receive another expected tax rebate worth millions of dollars, killing its cash flow. McGrath Nicol wrote to creditors in May 2014:The Directors have attributed the failure of the Company to: delays in receiving the $3.1 million GST refund for the September 2013 quarter; and Dr Wright, as the major shareholder no longer being able to provide financial accommodation to the Company due to the collapse of the Mount Gox Bitcoin registry where we understand Dr Wright had a significant exposure.In its update to creditors last month, McGrath Nicol wrote: We note that since the FY14 Tax Return was filed, it has been allocated to the Private Groups & High Wealth Individuals team within the ATO, which has made several detailed requests for additional information.Business Insider understands that with the $5.5 million refund not forthcoming to pay the creditors, the money is expected to come from another source, potentially Wright himself.Earlier today, Business Insider reported that Wrights current company, DeMorgan, claimed to have secured access to up to $54 million in taxpayer-funded rebates through R&D concessions.In early 2014 Wright spoke to Business Insider Australia about his plans to create a Bitcoin-based bank called Denariuz Bank, with the aim of building a customer base of a million people.Join the conversation about this storyNOW WATCH: This 3-minute animation will change your perception of time
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