All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

News Corp’s Australian branch wins tax dispute with ATO


News Limited, the Australian branch of News Corp, has won a longstanding fight with the Australian Taxation Office (ATO) over more than A$2 billion ($2.06 billion) in deductions linked to currency exchange losses.

In its ruling yesterday, the Federal Court in Sydney said the ATO’s assessments with respect to tax deductions claimed by News Limited were excessive, and should be set aside.

The company claimed deductions of A$629.7 million in 2001 and A$1.42 billion in 2002.

News Limited said the deductions were linked to losses incurred as a result of devaluation of the Australian dollar when it made repayments to US subsidiary, News Publishers Investments Pty, following a global group restructuring which began in 1989.

Although no cash or bank deposits were exchanged, the court said the taxpayer incurred a loss from an exchange of liabilities due to exchange rate fluctuations, and this was sufficient to justify the deduction claims.

“The determinative matter is the breadth of the definition of ‘currency exchange loss’ in section 82V(1). All that it requires is a loss attributable to a fluctuation in a rate. It does not require an exchange of anything,” the ruling said.

The losses were shared among 18 News Corp companies, though the court has left it to the ATO to re-determine News Corp’s liability, since it is still unclear when the currency conversions took place and this could affect the final calculations of the correct amount owed.

The ATO now has the option to take the case to the Federal Court of Appeal or accept the judgment.

Full analysis of the case is now available.

More from across our site

Japan reports a windfall from all types of taxes after the government revised its stimulus package. This could lead to greater corporate tax incentives for businesses.
Sources at Netflix, the European Commission and elsewhere consider the impact of incoming legislation to regulate tax advice in the EU – if it ever comes to pass.
This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree