Paul Hogan and Departure Prohibition Orders
Newspaper and other reports are describing the Australian Tax Office’s action in issuing a Departure Prohibition Order against Paul Hogan, an order preventing him leaving Australia, as draconian, heavy handed, and even that it makes Australia a police state.
It seems I am the voice of reason in all of this, having been quoted in Saturday’s Australian Financial Review saying that it was perfectly OK to use these orders when there was a flight risk and that the orders weren’t draconian.
For example David Rydon, one of Paul Hogan’s lawyers, says that the Tax Office is holding Hogan to ransom with its order preventing him leaving Australia until his tax claim is settled and that he ‘could be detained for up to four years in Australia.’ Rydon goes on to claim that ‘news of the order could harm foreign investment’. (‘Hogan’s fate hangs in the balance’ The Sunday Canberra Times August 29 p 7).
The ATO very rarely uses Departure Prohibition Orders. In the last 5 years there have been 14 issued, mainly in relation to Project Wickenby, the multi-agency investigation into tax evasion and other criminal matters.
It is the role of the ATO to protect the revenue. DPOs do that by preventing those owing money to the community removing themselves (and often removing their assets too) from our jurisdiction.
The relevant law says that the Commissioner must believe on reasonable grounds that it is desirable to issue an order for the purpose of ensuring that the debtor does not depart Australia without:
- · wholly discharging the tax liability, or
- · making arrangements satisfactory to the Commissioner for the tax liability to be discharged.
The Australian claims the amount of income undeclared is $37 million and that the tax not paid plus interest and penalties possibly totals $150 million. One of his advisers has denied the figure but said it is substantial. I suspect the tax, interest and penalties assessed and in dispute will be less than $150 million but still very very large.
While Hogan is currently under investigation as part of Operation Wickenby he has not been charged with any offence.
The DPO could be revoked if Hogan paid his tax debt or made satisfactory arrangements with the ATO for the debt to be discharged. The solution lies with him. Alternatively Hogan could apply to a Court for an order to revoke the DPO, presumably arguing that the Commissioner did not have reasonable grounds for issuing it.
That may be a high risk strategy for a debtor since it may put into the public arena the reasons the Commissioner had for issuing the DPO. This might lessen public support for the debtor.
As to the DPO harming foreign investment, the idea is laughable. It appears to be nothing more than part of the spin emanating from the Hogan camp in the battle for the hearts and minds of the Australian community.
What we have here is another instance of a very rich person thinking we owe him and that the tax laws that apply to us all are draconian when and if they catch them. This is the nature of our society.
The main tax burden is borne by ordinary workers. We can’t manipulate our wage income, and we don’t have the money to pay advisors to structure our affairs to avoid or evade tax. This drive of the rich and big business (40 percent of whom pay not income tax) to cut their tax is inherent to capitalism.
Readers might also like to read an earlier article prompted by a court decision to release many documents relating to Hogan’s tax affairs called Hogan’s tax crock and the more general issue of the transfer of our tax wealth to big business and the rich called Fund the ATO to attack big business.