Australia’s two big news publishers are embroiled in a bitter public battle over how much tax News Corporation pays following allegations that it was shifting profits overseas to avoid paying up to $1 billion in local taxes.

The stoush began on Monday when The Sydney Morning Herald and The Age ran a story by Michael West with the headline ‘Rupert Murdoch’s US empire siphons $4.5b from Australian business virtually tax-free’.

The article claimed News Corp had used devious, convoluted methods to shift money from the Australian arm of the business to the parent company in the US, and in the process avoided paying a hefty tax bill.

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Mr West’s allegations were so complicated that you would have to be an international tax expert to understand them. However the underlying message was clear: Rupert Murdoch was dodging billions of dollars of tax.

Fairfax says Murdoch’s empire is a tax dodger. Photo: Getty

Round Two

The next phase in the public battle came on Wednesday, when News Corp Australia chief executive Julian Clarke appeared before a senate committee on corporate tax avoidance (his seat still warm from the bums of Google, Apple and Microsoft representatives).

Before Mr Clarke had been asked a single question, he addressed the claims made by Fairfax, which he called an “outright attack” on News Corp.

“These comments are either ­intentionally misleading or they don’t have a clue what they’re talking about,” he said. “And in the case of the author I think it’s a bit of both. We are of course demanding a correction, and we will see if that is forthcoming.”

Later, Greens leader Senator Christine Milne questioned Mr Clarke as to why The Australian runs at a loss, implying that it purposefully operates at a loss to avoid tax.

Mr Clarke responded: “Senator, we’ve got a difference of opinion as to what we’re doing and why we’re doing it, and every time you tell me we’re trying to do this to run at tax losses, I’m going to tell you we’re not.”

Ms Milne memorably responded: “I accept that you’re doing it for idealogical purposes.” Clarke nodded.

When Mr Clarke was grilled in more detail about Fairfax’s claims, the complexity of News Corporation’s international corporate structure soon silenced the senators.

Round Three

The next phase in the battle came in an article in The Australian on Thursday, in which journalist Darren Davidson claimed Fairfax had “quietly” corrected Michael West’s story, taking out the following paragraph:

“Had these recent distributions been classed as dividends, News could have contributed a further $1 billion in tax to the Australian public purse. Dividends incur withholding tax at a rate of 30 per cent.”

Mr Davidson claimed the paragraph was factually incorrect because, in his words, “under the Australian-US tax agreement and applicable Aust­ralian tax law dividend ­payments do not attract a withholding tax of 30 per cent” – something News Corp Australia chief financial officer Susan Panuccio had told the senate committee on Wednesday.

Mr Davidson criticised Fairfax for failing to declare the correction, using couched terms to accuse Fairfax of misleading its audience: “Despite the correction, the Michael West story does not note the changes, opening up the SMH to accusations of further misleading readers.”

If the SMH and The Age had taken that paragraph out on Thursday morning, by Thursday afternoon they had certainly put it back in again.