News to pay $4.2m PBL tax bill
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The Australian Taxation Office has won a long-running court battle against James Packer's former media company Publishing and Broadcasting Limited (PBL) over a $1 billion share buy back scheme.
The High Court ruled on Wednesday that PBL, which later became Consolidated Media Holdings, made a capital gain in 2002 when it sold 840 million shares it held in Crown back to the casino operator for $1 billion.
However, the tax bill, which is expected to be $4.2 million with interest of $1.1 million, will now be paid by ConsMedia's new owner, Rupert Murdoch's News Limited.
A News Limited spokesman said the company was aware of the issue when it bought ConsMedia for $1.94 billion in October.
"We were aware of the issue during due diligence," he said.
"The amount concerned is not material and News will pay what we owe."
The commissioner of taxation originally assessed that PBL had made a capital gain when it sold its shares in Crown.
After PBL unsuccessfully appealed to the tax office to reverse its decision, the media company took the matter to the Federal Court in 2011.
Federal Court Justice Arthur Emmett ruled in the taxation department's favour, but PBL then took the matter to the full bench of the Federal Court and won.
The full bench of the Federal Court ruled in March 2012 that the buyback scheme was a dividend, which allowed PBL to use a rebate and franking credits to cut its tax bill by $4.2 million.
The High Court has overturned that decision and said the commissioner was correct in assessing the deal as a capital gain.