Rio Tinto in billion dollar tax dispute settlement; important "drop in the ocean" as federal government confronts trillion dollar debt

Mining giant Rio Tinto has settled a long running dispute with the Taxation Office for a cool billion dollars - one of the biggest payouts in Australian corporate history.

The settlement will be sending a chill wind through multinational boardrooms with the ATO on the warpath to recover debts from elaborate tax minimisation schemes that use dodgy offshore havens.

And it's a critical windfall as the new federal government grapples with paying down a trillion dollar debt.

Here's my analysis on the ABC's AM program.