Murdoch and News Corp Receive $882m Australian Tax Rebate
Contributed by Digital Media Circle
21 February, 2014
As the debate about how much tax is paid by large investing institutions and global corporations rages on, news has emerged this week that in 2013, News Corporation received an $882m tax rebate from the Australian government. Such a figure was the largest ever paid by the Australian Tax Office and could have lasting ramifications for the Australian economy.
Figure Grows Due To Added Interest
The news emerged when News Corp published their accounts for 2013, and the outcome of the claim has been linked to a claim that was made by News Corp last year relating to $2bn of historic losses on currency transactions by its Australian subsidiary companies. Original estimates first believed that the deal would be worth $600m to News Corp, but the final figure grew to $882 after added interest.
A Multi-Billion Dollar Deficit Blowout
In December, Australian treasurer Joe Hockey announced a multi-billion dollar deficit blowout, and it is now believed that such a decision was made with the News Corp rebate in mind. Originally, the Australian Tax Office stated its intent to challenge the claim, but such a move as overruled by the Court of Appeal.
One of the Largest Payouts Ever By the Australian Tax Office
Such a payout was one of the largest ever faced by the Australian Tax Office, but the decision was made at a very volatile time, with New Corp then fighting against the then Labor government in Australia.
On the 6th February, News Corp released its half yearly accounts that showed it had received $882m from a foreign tax authority including the original tax and interest. In a statement, News Corp stated that The Company previously filed refund claims for certain losses in a foreign jurisdiction that had been subject to litigation. In the first quarter of fiscal 2014, the foreign tax authority determined that it would not appeal a favorable court ruling received by the company in July 2013 and therefore, a portion of the uncertain matter was resolved.
Australia Revises Its Debt Forecasts As A Result
Alongside this, in December, the Australian treasury was forced to include the sum paid to News Corp in its December budget update. In line with this, the Australian government revised its growth forecasts, for 2014. Off the back of this announcement, the treasury increased its debt forecast to $47bn- a $17bn increase on earlier forecasts.
The AFR concluded that the payment to News Corp was the largest factor in the deterioration of the budget between August and December 2013 and such a payment could have large ramifications for Australia in 2014.
While announcing the decision and the reasons behind it, Hockey warned the Australian public that they would have to expect spending cuts because the deficit was not sustainable.
Markets have not reacted favourably to the announcement, with many wary of potential cuts; especially because Australian unemployment levels have been creeping ever higher since October.
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