A $2 company has allowed Rupert Murdoch’s News Corporation to substantially avoid the taxman on nearly $7 billion, an academic report suggests.
Through a process that appears simple, News has paid about 10 per cent of operating profits in tax over the past 10 years, Fairfax has reported.
Accounting figures were analysed by University of New South Wales accounting academic, Jeffrey Knapp.
“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,” Mr Knapp told Fairfax.
Former treasurer Wayne Swan said on Twitter that the government is discussing raising the GST to cover corporate tax avoidance.
— Wayne Swan (@SwannyQLD) April 5, 2015
A Senate Inquiry on Corporate Tax Avoidance is looking at multinational corporations and the possibility of international collaboration to ensure they pay tax adequately.
News Corporation representatives are scheduled to appear before the inquiry along with representatives from other companies, like Rio Tinto, Apple and Google.
News said their financial reports “comply” with legislated requirements and are audited, Fairfax reported.
In late 2004 News Corp set up a $2 holding company which issued 77 billion shares to News’ American arm.
The holding company acquired shares in another News Corp company in the move.