It is unclear whether there is any possibility that Rupert Murdoch, 84, would relinquish the Fox CEO position to James anytime soon. Credit:Reuters At the end of 2011, 13 companies were "higher risk". By 2012, that dropped to six, and by 2013 to three. The three included Google, which then, thanks to being co-operative and open with the ATO about its use of its Singapore marketing hub – where it sends over $2 billion in revenue – managed to move off the highest risk rating. But News stayed there. Why? It didn't want to play ball with Tax Commissioner Chris Jordan. That is, until now. The fact that News Corp is the subject of the ATO's highest level of scrutiny is partly due to its history. It's been in long-running legal battles with the ATO.

And traditionally, it has mainly won because its tax minimisation strategies – while morally questionable – are legal under global tax laws. Even the courts have said so. As my Fairfax colleague Neil Chenoweth previously reported, in 2013 the Federal Court of Appeal had ruled against the Tax Office, which had argued News Corp was not eligible to claim a $2 billion deduction from a series of paper shuffles between subsidiaries. The ATO decided not to appeal, as advice from its senior counsel was that it wouldn't succeed in a High Court challenge. The result? An $882 million cost to the federal budget. But News Corp's accounts revealed that the tax refund was larger than initially reported, coming in at $923 million. Former News Corp Australia chief executive Kim Williams has defended the media empire's treatment of its tax obligations. He said the ATO had historically rated the company as higher risk and said it was "forever being tough against" News.

"We were always having tax audits being run. It was non-stop," Mr Williams said. "It's always been a company that the ATO has had a kind of visceral dislike for. I think a lot ATO's views on that are very misplaced and I think News has always behaved perfectly properly in its taxation management. "I would think that News has nothing to fear." The News Corp case was just the tip of the iceberg, according to the ATO, which has previously admitted other cases in dispute are worth much more than $882 million. Which begs the question, just how many cases is the ATO settling because it thinks it cannot win? And does its risk ratings, then, even matter?

Settlements are common. The ATO's 2013-14 annual report said it settled 34 cases with large businesses during that year worth more than $1 billion. This is because total claims the ATO had made against companies had amounted to $2.7 billion, but in the end it settled on just over half that, at $1.5 billion. We don't know the reasons but the Greens, in their tax policy, have suggested a public list of settlements that states the reasons the ATO settled. Furthermore, Australia's anti-avoidance laws, while being strong by international standards, still have loopholes that allow companies to argue their case – and win – in court. Treasurer Joe Hockey on Monday announced that the government will beef up Australia's anti-avoidance laws to ensure the Tax Office has the powers to tax "contrived arrangements". Its penalties for diverted profits will go further than the British Google tax.

The Tax Commissioner will have the power to recover unpaid taxes and issue a fine of an additional 100 per cent of unpaid taxes plus interest. That means that now News, and the other company under scrutiny – Hockey says there are 30 that will come under these laws – may be caught up. It could also mean that company risk ratings change. Mr Jordan has said the Q1 taxpayer [News Corp's] "attitude may be changing and there have been approaches to us recently to work with us to get out of that Q1". To determine the ratings, the ATO uses what's known as a "risk differentiation framework". There are four categories (or in Tax Office-speak, four quadrants) that describe a person or company's riskiness: higher-risk (Q1), key taxpayers (Q2), medium-risk (Q3) and lower-risk taxpayers (Q4).