News to pick up tab for PBL tax bill
THE Tax Office has secured a victory against James Packer's former company Publishing and Broadcasting Ltd, which later became Consolidated Media Holdings.
6 Dec 2012 SYDNEY MORNING HERALD - LUCY BATTERSBY
THE Tax Office has secured a victory against James Packer's former company Publishing and Broadcasting Ltd, which later became Consolidated Media Holdings.This will mean its new owner, News Limited, will pick up the tab on a $400 million capital gain.The tax bill is not expected to be material to News, which was aware of the court case when it bought ConsMedia last month for $1.94 billion."We were aware of the issue during due diligence," a News spokesman said. "The amount concerned is not material and News will pay what we owe."The tax assessment is expected to be about $4.2 million plus more than $1 million in interest.The High Court found on Wednesday morning the Commissioner of Taxation correctly assessed a $1 billion transaction done in 2002 as a capital gain.The tax dispute dates back to when Crown Limited, which was owned by PBL, bought back 840 million of its own shares from PBL.The Tax Office assessed the deal and found PBL made a capital gain when it sold the shares to Crown. PBL disputed this, but lost its first court case. In March this year, the full Federal Court held that the buyback was a dividend, allowing ConsMedia to use a rebate and franking credits to slash its tax bill by $4.2 million.The Tax Office took the case to the High Court, which ruled the transaction was a capital gain.