The Guardian March 21, 2001


Tax rorts: Legal millionaires cry poor

by Peter Mac

The poor but humane barrister, dedicated like Rumpole to the cause of 
defending ordinary folk against injustice and the vagaries of the legal 
system, seem to be pretty thin on the ground in Australia, and particularly 
in NSW. In the last few weeks there have been increasing reports of many 
barristers who have used their positions to evade tax and to receive 
enormous financial benefit from their privileged positions. Some 125 NSW 
barristers now owe the Taxation Office an average of $100,000. For this 
segment of unpaid taxes alone, the total taxation bill of $50 million must, 
as usual, be made good by the long-suffering honest taxpayer.

A number of barristers have actually benefited from having gone bankrupt.

In NSW, which does not currently have the legal provisions of other States 
to deal with non-tax paying barristers, 25 such legal practitioners are 
former bankrupts, and at least one third of them have been bankrupted more 
than once.

One such lawyer, who admits to earning some $600,000 per annum, went 
bankrupt in 1992, thus preventing the Tax Office from recouping any of the 
$450,000 he then owed in back taxes.

He reportedly has not paid any tax since the mid-1990s, and went bankrupt 
again in 1999, having transferred most of his assets to his wife's name 
while racking up a further tax debt of some $1.5 million.

One Queens Counsel, who might be accused of having benefited from an 
"insider trading" scam, has evaded location by the Australian Securities 
and Investments Commission and at one stage launched legal proceedings 
against the Commission itself, which he accused of wanting to damage him 
personally "so as to advance ASIC's position publicly."

At least four Sydney Barristers have been publicly identified as having 
amassed massive tax debts, which they show no willingness to discharge.

So will the professional body for these lawyers strike these practitioners 
off?

No, the NSW Bar Association thinks the situation does not call for such 
extreme measures.

Will they change their rules to prevent such anti-social behaviour from 
taking place?

No, despite cruel remarks from the Tax Office, the current rules are quite 
adequate, thank you very much.

You might think that the Association would have taken at least some 
disciplinary action against these four legal eagles. But no! Investigations 
are proceeding into their cases but so far the Association has taken no 
action against them.

This is not to say that no barrister is ever disciplined by the 
Association.

One of the few barrister to have been finally struck off in NSW claimed as 
defence that he suffered from "a mental block" against paying taxation, 
which he had "tried but failed to overcome"!

However, the Association's investigations take so long that they allow the 
individual in question plenty of time to continue to practice as usual, 
while allowing maximum time to organising a defence against disciplinary 
action or prosecution.

One investigation is still taking place five years after the lawyer 
concerned was fined $60,000 for non-payment of taxes and six years after 
first being bankrupted by the Taxation Office.

Questioned on the length of time for the investigations to be finalised, 
the President of the Bar Association snapped that "You can't assume that 
these things happen in two seconds. You just don't understand the way we 
work."

The Deputy Chief Tax Counsel, Mr Michael Bersten, later commented acidly 
that: "When you've been made bankrupt you can't be a public servant, you 
can't be an MP, you can't practice as an accountant, but you can still 
practice as a barrister."

But to really understand the situation some people suggest that the whole 
focus needs to be extended to include not just the legal high-fliers, but 
also those who hire their services.

After all, many of the barristers in question work hand in glove with the 
most obscenely wealthy corporations and individuals in Australia and some 
of the wealthiest in the world, and look what an example they receive from 
these clients.

One of Kerry Packer's companies, for example, made some $500 million a few 
years ago and despite being pursued through the courts by the Taxation 
Office managed to pay not a cent in tax.

As justification, Packer commented that "Anyone who pays tax when he 
doesn't have to is just stupid". Perhaps the non-tax paying barristers have 
simply concluded that if it's good enough for the organ grinders it's good 
enough for the monkeys.

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