News Corp’s $417m tax bill confounds critics

NEWS Corp’s Australian operations paid corporate ta​x totalling $417.3 million over a five-year ­period.

News Corp executive chairman Rupert Murdoch, whose newspapers reach more than 13 million Australians a month.

NEWS Corp’s Australian operations paid corporate ta​x totalling $417.3 million over a five-year ­period, with the media group also paying an additional $900m in Australian goods and services, fringe benefits and payroll taxes over the same period.

The tax affairs of News Corp Australia were laid bare for the first time in a submission to the Senate’s economics committee, which launched an inquiry into corporate tax avoidance.

The inquiry was called after the tax affairs of Australia’s biggest companies, including the banks, were examined by United Voice and the Tax Justice Network in a report on the tax practices of the 200 largest stocks listed on the Australian stockmarket.

A copy of the submission obtained by The Australian demonstrates the company is incurring and paying substantial tax on its operations in Australia, confounding reports published by Fairfax Media, which claimed last year that News Corp Australia had engaged in corporate tax avoidance.

A story published in The ­Australian Financial Review ­alleged the Federal Court and the independent Australian Taxation Office plotted to give News Corp Australia a handout so big it blew a hole in the $400 billion federal budget.

The figures show News Corp Australia received a $623.8m reimbursement in 2014 for tax already paid by the company in respect of the 2001 to 2009 years. Removing the one-off benefit, the company paid $417.3m in income and withholding tax in the 2010 to 2014 financial period.

Before the benefit, News Corp paid an $85.1m tax expense for the 2014 financial year after an ­accounting profit before tax of $355.9m. The effective tax rate News Corp Australia incurred in 2014 was 26.4 per cent, higher than the Australian corporate ­average of 23 per cent.

News Corp Australia’s accounts for the five years are marked by significant writedowns of intangible assets, which caused the annual tax expense to fluctuate significantly. Tax rates in the company’s profitmaking years are as high as 39.3 per cent in 2010.

The amount awarded by the independent Australian Taxation Office was only received after the matter had been considered by the Federal Court, which found in favour of News following a long-running case.

In an accompanying letter to the submission, News Corp Australia chief executive Julian Clarke writes: “It is important to us that our businesses are fully compliant with all applicable Australian income taxation laws, and we firmly believe that we are.”

Over the past five financial years, News Corp Australia’s statutory accounting profit before tax was $815.9m. The tax statements show that excluding the one-off benefit, over the same period an Australian income tax of $292.5m​ and interest withholding tax of $124.8m, totalling $417.3m, was paid.

While the group’s ultimate parent, News Corp, is a global company based in the US, News Corp Australia operates its local businesses through entities incorporated in Australia. The tax statements include income tax paid by subsidiaries of News Corp operating in Australia, including the local arm of book publisher HarperCollins.

Because the focus of the ­inquiry is on taxes paid by companies that generate revenue in Australia, the submission does not cover taxes paid by the parent company and its non-Australian subsidiaries in Britain and other markets.

Since the then News Limited was founded 92 years ago by ­Rupert Murdoch’s father, Sir Keith Murdoch, the company has become the largest private sector employer of journalists in Australia, employing close to 9000 ­people.

As well as investing billions of dollars in journalism, Mr Murdoch’s companies have created additional value through the launch of new businesses including pay-TV operator Foxtel, sports program provider Fox Sports Australia, and REA Group, the operator of the nation’s most popular property listings website.

The company’s newspapers reach more than 13 million Australians a month through mastheads that include The Australian, The Daily Telegraph, Herald Sun and The Courier-Mail and regional brands such as Geelong Advertiser, Gold Coast Bulletin and The Cairns Post.

Each week, the combined footprint of these media companies provides 15 million Australians with news and information ­services.