Jump to content

Murdoch's US empire siphons $4.5b from Australia

Featured Replies

Posted

Rupert Murdoch's US empire siphons $4.5b from Australian business virtually tax-free

http://www.smh.com.au/business/rupert-murdochs-us-empire-siphons-45b-from-australian-business-virtually-taxfree-20150406-1meu0l.html

1428293457338.jpg

According to an UNSW academic, Rupert Murdoch's Australian companies have paid income tax equivalent to only 10 per cent of their operating profits. Photo: Lucas Jackson

http://www.smh.com.au/business/rupert-murdochs-us-empire-siphons-45b-from-australian-business-virtually-taxfree-20150406-1meu0l.html

rupert Murdoch's media empire in the US has siphoned off $4.5 billion of cash and shares from his Australian media businesses in the past two years, virtually tax free.

According to calculations by University of NSW accounting academic, Jeffrey Knapp, over the past 10 years, Mr Murdoch's companies here have paid income tax equivalent to a rate of 4.8 per cent on $6.8 billion in operating cash flows, or just 10 per cent of operating profits.

News Corp Australia chief executive Julian Clarke is scheduled to appear before the Senate Inquiry into Corporate Tax Avoidance this week along with executives from Google, Apple, Glencore, Rio Tinto, BHP and Fortescue.

The inquiry has been called to address rising community concerns that multinational companies are not paying their fair share of tax in Australia.

Two pages of detailed questions were put to News about its accounting practices. The response from a spokesperson for the company was: "Our financial reports comply with Australian Accounting Standards and the Corporations Act 2001, have received an unqualified audit opinion and are filed with the regulator, ASIC.

Beyond this we have nothing further to add."

Normally a company will return cash to its offshore parent by way of dividends from shares or interest from loans. These however attract withholding tax. News has justified its practice of "repatriating" cash - $1.3 billion only last year - by making a "return of capital" to its New York parent.

In order for this capital to be returned, it had to be created in the first place. This was done via a transaction in late 2004 whereby News interposed a $2 company at the top of its web of Australian companies. This company, News Australia Holdings, then issued 77 billion shares to News Corporation in New York, the seat of Murdoch's global media empire.

Those shares were issued to acquire the shares of the previous Australian holding company.

In other words, Company A (News Australia Holdings) acquired Company B (the previous holding company) by issuing 77 billion shares to News Corporation.

News Corp owned the shares in Company B. They created the new holding company, Company A. It issued 77 billion shares to News Corp and then News Corp transferred the shares it held in Company B to Company A.

As part of the accounting for this transaction, there is a $7 billion increase in intangibles and consequently in the share capital in News Australia Holdings as well.

Although the intangibles were reversed the next year, the inflated share capital remained the same and News has used this share capital to return billions in cash years later.

The result of this "magic pudding", said Mr Knapp, is that "share capital ballooned by $7 billion for a temporary adjustment to intangible assets that has the character of internally generated goodwill".

"As a result of doing nothing more than putting a new $2 company at the top of the Australian group they later returned that capital in cash and shares with little tax consequence."

http://www.smh.com.au/business/rupert-murdochs-us-empire-siphons-45b-from-australian-business-virtually-taxfree-20150406-1meu0l.html

 

Archived

This topic is now archived and is closed to further replies.

Featured Content

  • REPORT: Port Adelaide

    Of course, it’s not the backline, you might argue and you would probably be right. It’s the boot studder (do they still have them?), the midfield, the recruiting staff, the forward line, the kicking coach, the Board, the interchange bench, the supporters, the folk at Casey, the head coach and the club psychologist  It’s all of them and all of us for having expectations that were sufficiently high to have believed three weeks ago that a restoration of the Melbourne team to a position where we might still be in contention for a finals berth when the time for the midseason bye arrived. Now let’s look at what happened over the period of time since Melbourne overwhelmed the Sydney Swans at the MCG in late May when it kicked 8.2 to 5.3 in the final quarter (and that was after scoring 3.8 to two straight goals in the second term). 

    • 2 replies
  • CASEY: Essendon

    Casey’s unbeaten run was extended for at least another fortnight after the Demons overran a persistent Essendon line up by 29 points at ETU Stadium in Port Melbourne last night. After conceding the first goal of the evening, Casey went on a scoring spree from about ten minutes in, with five unanswered majors with its fleet of midsized runners headed by the much improved Paddy Cross who kicked two in quick succession and livewire Ricky Mentha who also kicked an early goal. Leading the charge was recruit of the year, Riley Bonner while Bailey Laurie continued his impressive vein of form. With Tom Campbell missing from the lineup, Will Verrall stepped up to the plate demonstrating his improvement under the veteran ruckman’s tutelage. The Demons were looking comfortable for much of the second quarter and held a 25-point lead until the Bombers struck back with two goals in the shadows of half time. On the other side of the main break their revival continued with first three goals of the half. Harry Sharp, who had been quiet scrambled in the Demons’ first score of the third term to bring the margin back to a single point at the 17 minute mark and the game became an arm-wrestle for the remainder of the quarter and into the final moments of the last.

    • 0 replies
  • PREGAME: Gold Coast

    The Demons have the Bye next week but then are on the road once again when they come up against the Gold Coast Suns on the Gold Coast in what could be a last ditch effort to salvage their season. Who comes in and who comes out?

      • Haha
      • Like
    • 80 replies
  • PODCAST: Port Adelaide

    The Demonland Podcast will air LIVE on Monday, 16th June @ 8:00pm. Join Binman, George & I as we dissect the Dees disappointing loss to the Power.
    Your questions and comments are a huge part of our podcast so please post anything you want to ask or say below and we'll give you a shout out on the show.
    Listen LIVE: https://demonland.com/

      • Thanks
    • 31 replies
  • POSTGAME: Port Adelaide

    The Demons simply did not take their opportunities when they presented themselves and ultimately when down by 25 points effectively ending their finals chances. Goal kicking practice during the Bye?

      • Thanks
      • Like
    • 252 replies
  • VOTES: Port Adelaide

    Max Gawn has an insurmountable lead in the Demonland Player of the Year ahead of Jake Bowey, Christian Petracca, Clayton Oliver and Kozzy Pickett. Your votes please; 6, 5, 4, 3, 2 & 1.

      • Like
    • 31 replies