Media giant News Ltd has won a case against the Australian Taxation Office after the Federal Court found that the ATO's assessments had been excessive.
The decision, handed down this morning, means News can claim A$2 billion ($2.6 billion) in tax deductions from currency exchange losses.
The losses totalled A$629.6 million in 2001 and A$1.42b in 2002.
Justice Nye Perram ruled the Tax Office's decision, to object to News claiming the deductions, would be set aside. The ATO was also ordered to pay News's costs.
Thirty companies associated with News - part of Rupert Murdoch's News Corp - were involved in the litigation, including Mirror Newspapers, National Rugby League Investments, HarperCollins Publishers, The Herald and Weekly Times and Nationwide News.
The court heard the complex financing and restructuring history of News Corp's global operations in 1989 were sparked by negative media coverage of its financial position. There was another refinancing in 1991 when Rupert Murdoch said there was a "severe liquidity crisis" within the group.
The court found actual money doesn't need to change hands for a company to claim a deduction on a foreign exchange loss. A conversion between liabilities denominated in various currencies is enough.
- Sydney Morning Herald