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.