Regulators probe pharmacy rewards scheme
Tax investigation into business to business programme
The Australian Taxation Office (ATO) has launched an investigation into Sigma Pharmaceuticals’ Sigma Rewards scheme.
Pharmacists collected more than 1.3 billion points under the B2B loyalty scheme in fiscal 2008-09, which they exchanged for overseas holidays and electronic goods. Accountants warned that the ATO treated goods and services provided under the scheme as assessable income.
According to The Australian Financial Review, accountants have advised pharmaceutical clients to avoid rewards schemes due to tax liability issues.
The newspaper reported that a routine ATO audit of a pharmacy that subscribes to the scheme led the tax office to understand the value of goods exchanged through the program.
More than 1,500 pharmacists have joined the scheme operated by drug manufacturer and distributor Sigma.
News of the investigation follows the resignation this month of long-serving Sigma CEO Elmo de Alwis, and sustained criticism over the company’s recently announced A$390m annual loss.
The loss was due largely to a non-cash goodwill impairment of $424.23m, comprising $375.1m on Sigma’s Arrow generics business and $49.1m on its Herron brand.