The Australian Tax Office faces a massive $452.45 million court challenge over the sale of Optus to Singtel

Sergio Dionisio / Getty Images

The Australian Taxation Office (ATO) is facing a court challenge over hundreds of millions of dollars in payments related to the multi-billion dollar sale of Optus to Singtel.

The $452.45 million claim, by UK telco Cable & Wireless, is one of the largest to be brought against the ATO, according to the Australian Financial Review.

The case goes back to 2001 when Cable & Wireless sold 82% of its holding in Optus for $6.2 billion as part of a share buyback offer. That valued Optus at $17 billion.

According to papers lodged in the Federal Court, Cable & Wireless says that of the $586.9 million deposited to pay tax, only $134.5 million was actually payable.

The ATO had ruled that about $3.9 billion of the amount paid to Cable & Wireless was a dividend and taxed at 15%.

However, Cable & Wireless argues that this was an error.

The matter goes before Justice Richard Edmonds in the NSW Federal Court next month.