Crikey was certainly first yesterday with the tale of Rupert Murdoch’s Bermuda Stock Exchange tax lurk, but The AFR’s
Neil Chenoweth has painted the complete canvass in today’s paper with
an interesting feature about the Sun King’s aggressive structuring as
part of the move to Delaware.

Crikey talked about the Bermuda
story on ABC Radio Victoria last night and commented that it would be
interesting to see how the Murdoch press covered the story today. While
The AFR was all over it on page one, the Fairfax broadsheets decided to leave it alone, although they followed up their stablemate this morning online. TheAustralian and its media writer Jane Schulze deserve credit for giving the story a solid run, as you can see here.

According to the information memorandum on the US
move sent to News’s shareholders, the transfer of the Murdoch family’s
News shares from Australia to the US would attract $51 million in stamp
duty.

But the crikey.com.au website yesterday revealed the
prospectus for the listing of the family’s stake. The prospectus states
that one of the purposes of listing was that it “may have favourable
consequences for the company’s shareholders under Australian stamp duty
legislation”.

“Ordinarily, transfers of shares which are not
quoted on a stock exchange attract duty under Australian stamp duty
legislation at a rate of 0.6 per cent of the stamp duty consideration,”
it said.

Rupert has often pushed the envelope
when it comes to tax, and on this occasion he told his public
shareholders about a forthcoming stamp duty liability that he then took
extraordinary steps to avoid.

From Chenoweth’s piece today, it
appears that Rupert had a capital gains tax problem at three levels.
First, he would be caught if he sold any of his News Corp shares held
in Queensland Press because these were all acquired after 1985. He was
in trouble if he sold Queensland Press itself, but he was also up for
it if he sold Cruden Investments, because he had bought out the family
on the cheap after the debt crisis of 1991.

This is why News
Corp could only buy the ultimate holding company Kayarem. While
Chenoweth talked up the $1.2 billion CGT liability, we don’t really buy
this argument because Rupert didn’t actually sell any shares – this
was all about rolling them over. The move to America would never have
happened if it had triggered a $1.2 billion tax bill for the family.

Get Crikey for $1 a week.

Lockdowns are over and BBQs are back! At last, we get to talk to people in real life. But conversation topics outside COVID are so thin on the ground.

Join Crikey and we’ll give you something to talk about. Get your first 12 weeks for $12 to get stories, analysis and BBQ stoppers you won’t see anywhere else.

Peter Fray
Peter Fray
Editor-in-chief of Crikey
12 weeks for just $12.