From the Brisbane Times:

“An $880 million payout to Rupert Murdoch’s News Corporation has reignited the debate over whether global companies pay their fair share of tax in Australia. News was paid the money after winning a long-running legal battle with the Tax Office relating to a 1989 restructure of the media empire involving billions of dollars and a company in the tax haven Bermuda. The ATO had refused to allow the deduction but News Corporation defeated the ATO in the Full Federal Court in July and the money began flowing to the company over the Christmas-New Year break.”

As with all tax avoidance, there are two ways of looking at this. First, one could dive into all the legal shenanigans, armed with the question “is this legal?” Which can be the route to madness. But this question, while important, is a distraction from the much bigger issue: what is the economic substance of what happened here?

First of all, this wipes out most of a $1.1 billion in budget savings announced by the Australian government recently. Second, Murdoch has been making large economic profits in Australia – then shifting those profits out of Australia, so they can’t be taxed there. And the same story quotes:

“Mark Zirnsak, who is the Australian representative of advocacy group Tax Justice Network and was a member of a panel set up by the previous government to review the low tax paid by some multinational companies, said the payout ”highlights the urgent need for reform of the global tax rules”.”

And what reforms might be useful?

Well there are many. But if you want to get serious about it, there is only really one proper answer: Unitary Taxation. Read the basics here, and the full report here.