Tax avoidance & evasion

The late Kerry Packer’s company, Consolidated Press Holdings, infamously paid just $6 million in tax on $600 million profits in 1992.

Australian Council of Trade Unions
Tax evasion, avoidance & tax breaks
Page 20

Tax avoidance and tax evasion

Tax avoidance (i.e. structuring your affairs in order to pay less tax) is legal. However, tax evasion (i.e. acting in an illegal manner in order to pay less tax) is a criminal offense.

Rich individuals and large trans-national companies such as Google and Apple pay very little tax - including here in Australia. Their favourite method of dodging the tax bill is by using tax havens. If you watch any of the videos on the right - it will quickly become obvious to you that billions of dollars are hidden away in these tax havens. While these havens continue to be used by the wealthly - you and I will continue to pay more than our fair share of tax.

 

The 1% Debit Tax will make it very difficult, if not impossible, for any person or corporation to dodge paying their fair share.

 

actuTo give you a quick indication of how much tax revenue is lost to the government from tax evasion, tax avoidance and tax breaks - below are a few quotes taken from the report published by the Australian Council of Trade Unions:

Wealthy people use various devices and tax breaks to reduce their marginal tax rate from 46.5% to 30%, 15% or even a negative tax. This costs $22 billion per year.

Many small businesses fail to declare income, fail to pass on GST collections, or claim false tax deductions. This costs the government more than $10 billion each year.

Most contractors fail to declare their income properly or at all, avoiding almost $20,000 in tax on average. This costs the government up to $17 billion per annum.

Wealthy people can avoid paying tax at their ordinary marginal tax rate, the same advantages are not available to low and middle income earners.

 

Fortescue Metals Group made $579 million profit in 2010. However, it was able to deduct $176 million against its $174 million prima facie tax bill, meaning that it paid no tax in 2010 and will receive a $2 million tax credit to use next year.

Australian Council of Trade Unions
Tax evasion, avoidance & tax breaks
Page 20