There is much discussion in the financial pages of the fact that Rupert Murdoch's News Corporation has recovered about $882 million in tax in Australia from a government decidedly reluctant to pay it.
The repayment relates to a deal done as long ago as 1989 in which the then group was restructured via tax haven companies and no cash actually changed hands at all. I think four things follow.
First let's stop pretending that tax havens do not undermine the right of democratic states to tax appropriately.
Second let's stop pretending the role of the tax proffession in such matters is benign.
Third, let's recognise that these processes are meant to make the rich richer at cost to the rest of society.
Last, let's recognise that a general anti-avoidance principe may have considerable benefit in preventing such abuses and in that case make sure we have one in the UK to replace the inadequate General Anti-Abuse Rule we now have.
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Interesting. Australia has had a general anti avoidance rule (as opposed to the uk anti abuse rule) for many years. Your article seems to suggest that this has failed to counter the restructuring you describe which suggests either the rule is flawed (which I would be surprised at as it’s very wide) or the transaction is not as described. Alternatively perhaps this all happened before the gaar was in force?
Any more details on this at all?
Did it apply in 1989?
I am not sure
If it did then it clearly needs to be reviewed
It was introduced in 1981. If the ATO invokes it, the burden of proof is on the taxpayer to show that the transactions were carried out for reasons other than avoidance.
I understand that Australia is changing the definition of “tax benefit” to catch more situations, but I’m not familiar with the details.
What seems to be missing from this article is any claim or evidence that the rebate was caused by aggressive tax planning rather than in the course of business. The claim was verified by the Australian court and their tax office declined to fight further because they might lose.
The article seems to assume that the tax rebate should be blocked because :-
1) News Corp is owned by Rupert Murdoch and he is a horrible right winger.
2) News Corp and Murdoch are very rich and so should be stopped from getting richer.
If you are going to demand the far reaching powers of a GAAP then you will have to make a better case than the money could be better spent elsewhere and you don’t like the recipient!
This comment has posted further to point 5 of the comments policy to which attention is drawn.
I can’t find many details of the tranactions, but in one or two articles there is a suggestion that the $2bn of losses in Australia were matched by $2bn of gains elsewhere.
I assume that the gains must have been taxed at a low rate or not at all, or this would be a non-story, but the absence of any detail is a bit frustrating. If the losses do relate to non-taxable gains then we at least have an illustration of how the existence of independent states allows for tax arbitrage, and we quite possibly have an example of full-blown avoidance – although as Australia’s GAAR is reckoned to be a reasonably strong one (it catches situations that in the UK are considered entirely legitimate, such as Penny & Hooper) I would tend to assume not. But it all depends on the facts.