James Hardie Limited (JHX) and the Australian Taxation Office ("ATO") have settled the company's tax dispute from 2002 and 2004. James Hardie agreeing to pay $153 million in back taxes.

James Hardie has previously disclosed that the ATO was auditing the company's Australian income tax returns for the 2002, 2004, 2005 and 2006.

The settlement concluded all ATO audit activities up to and including the year ended 31 March 2006.

However, James Hardie noted that the settlement didn't include the amended assessment in respect of RCI Pty Ltd for the 1999 financial year.

James Hardie's appeal to contest the ATO's position on this matter is expected to be heard in the Federal Court of Australia in September 2009.

At 30 September 2008, the company had provided A$153 million for uncertain tax positions, at an exchange rate of $1.00/US$0.8013 (US$122.6 million).

Subsequent to 30 September 2008, the company purchased $153 million at an exchange rate of $1.00/US$0.6645 (US$101.7 million), as a result of which a foreign exchange gain of US$20.9 million would be realised upon payment of the settlement amount to the ATO.

At market close, shares in James Hardie had fallen 43c to $3.75.