The massive payout to News Corp. -- one of the largest ever made by the Australian Taxation Office (ATO) -- related to complex shuffling of assets through local and overseas businesses in 1989 that netted the company a 2 billion Australian dollars tax deduction, according to The Australian Financial Review.
According to the AFR, the payout was a significant element of the 17 billion Australian dollars spending blowout unveiled by the new government in December.
The business daily said the ATO decided against such a move, as Murdoch's Australian newspapers waged a concerted campaign against the then-Labor government, openly urging voters to remove them from office with a series of scathing headlines.
Then-prime minister Kevin Rudd claimed Murdoch was agitating against Labor in exchange for concessions from the conservatives, who went on to win power in September 2013, the AFR said.
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Prime Minister Tony Abbott refused to comment on the allegations Monday, saying the payout "is something which is news to me and I'll have to take that one on notice".
"Careful consideration is given to a range of factors, including the costs to all parties of proceeding and the importance of the particular case to clarifying the law for the benefit of the wider community," an ATO spokesman told AFP.
Other major spending included an 8.8 billion Australian dollars cash injection to the central bank and 1.2 billion Australian dollars for a government's military-led crackdown on people-smugglers.