The Australian Taxation Office has begun its court appeal against a decision to award News Corp
(ASX:NWS) over $500 million in tax benefits.
The Australian Financial Review reports the Tax Office told the Full Federal Court yesterday that News Corp's $1.5 billion capital loss claim in 2005 was a tax avoidance scheme.
The $500 million in tax benefits to News was generated in a complex asset shuffle, which involved a US subsidiary company buying back its shares at a reduced price in June of 2005, before selling the same shares at full price later that day.
The ATO has claimed that the share buyback that produced the tax loss made no sense.
While News has maintained that the decision to set up the scheme was not to obtain the tax loss but because it achieved the commercial purpose that the company was seeking.
News Corp posted a $4.1 billion loss in 2009.
