Rupert Murdoch's media empire in the USA has siphoned off $4.5 billion of cash and shares from his Australian media businesses in the past two years, virtually tax free. Over the past 10 years, Mr Murdoch's companies here have paid income tax equivalent to a rate of 4.8 per cent on $6.8 billion in operating cash flows, or just 10 per cent of operating profits. Normally a company will return cash to its offshore parent by way of dividends from shares or interest from loans. These however attract withholding tax. News has justified its practice of "repatriating" cash - $1.3 billion only last year - by making a "return of capital" to its New York parent.

"As a result of doing nothing more than putting a new $2 company at the top of the Australian group they later returned that capital in cash and shares with little tax consequence." Had these recent distributions been classed as dividends, News could have contributed a further $1 billion in tax to the Australian public purse. Dividends incur withholding tax at a rate of 30 per cent.