Tax Dodgers

Reporter: Andrew Bourke

This is the alleged mastermind of Australia's largest money laundering scheme. An offence normally associated with organised crime. But this operation which involved hiding $13 million on $100 million worth of profits was used by the rich and famous.

The scheme, allegedly devised by accountant and lawyer Robert Agius, involved Australian customers transferring money to accounts in Vanuatu and New Zealand, claiming them as a business expense. The money would them be returned to Australia, less commission for Agius, paid in the form of a loan and that repayment was then treated as a tax deduction. Agius has allegedly received $1.4 million in commissions since 2000 for tax evasion.

The average Australian earns over $55,000 a year, the tax on that is more than $12,000. The wealthy who employ accountants and lawyers to drive down their tax, either legally or illegally, can pay as low as 5%. So someone earning $300,000 a year paying 5% will only pay a few thousand dollars more than the average worker. If it doesnt seem fair....it isn't.

They do it because they can, moving their money through schemes that are cunning but as you'll see in some cases - criminal. These are the famous people caught out - trying to dodge tax, whether they did it themselves or copped bad advice. From motorcycle champion Valentino Rossi, to our own Crocodile Dundee to the notorious OJ Simpson. Actor Wesley Snipes, tennis star Steffi Graf, homemaker queen Martha Stewart, tax evasion is big business for celebrities and their advisors. "Anyone who pays anymore tax than they have to is an idiot" once said the late Kerry Packer. "I think alot of people believe the Packer argument that you're a madman if you don't reduce your tax." Financial Advisor Peter Switzer has been following the fortunes of those who have crossed the line between legal and illegal on their tax returns. "These people are so busy doing what they're doing either in their business activity or in their acting or singing and then the advisor comes along and realises they're time poor and comes up with creative ideas that can substantially reduce their tax. The question is, is it legal?"

There are tax minimisation schemes that are legal and can be very effective. Investing in areas such as almond and macadamia farms, aloe vera and tea tree plantations. The logic being that some of these crops can take up to seven years to grow, therefore there's no income providing the investor with a healthy return. But get good advice and invest in an area where there's future demand or your tax minimisation scheme could cost you more in the long run. And for those doing the wrong thing closer to home, Operation Wickenby is getting results. Former rock musician Glen Wheatley who's made his name, and his millions, managing stars John Farnham and Delta Goodrem thought he could play the taxman and swindle him out of over than $300,000 using an elaborate scheme.

"He's been accused of hiding money that should've been taxed in a Swiss regime. He was sentenced to jail and the court must've believed Mr Wheatley knew what he was doing and as a consequence he's in jail" says Peter Switzer. While Glen Wheatley sentenced to a maximum of 2.5 years has been in jail since July, but is to be released to home detention within weeks - albeit wearing an electronic ankle tag. And the net is closing around other celebrities trying to hide their money in offshore tax havens.

Paul Hogan tried to slash his tax bill. The comedian turned multi millionaire had his cash spread through 23 companies, and if you believe reports, the figure is around $40 million. The lesson, be careful who you listen to for tax advice. "He was recommended this was a good way of reducing his tax, it was put together by a fancy-pants accountant, he's gone along for the ride and found out the ATO didn't approve and as a consequence he's in trouble" says Peter Switzer. And be careful, the taxman is prone to changing his mind as TV host Lisa Wilkinson and her husband former Wallaby Peter Fitzsimons found out.

"In that case an advisor put together a scheme related to retirement villages, its been going on since the 90's and they're in a large group of other people who were also encouraged to take this kind of scheme on but what happen is the tax office can turn a blind eye to this scheme or give private ruling and when more and more people go into it, they can turn around and say we don't approve of it" adds Peter Switzer. And here are some tax tips, that are legal and can save you a fortune:

  • § Find an accountant who will look at your personal circumstances and decide what expenses you're incurring.
  • § Find out all your deductions; alot of things you do may be business related, such as working holidays. These should be investigated as you may be able to claim percentages of them.
  • § Check the ATO website; the tax office website will look at various occupations and what you can legitimately claim for those expenses.
  • § Research independent websites: Independent websites offer tax tips and you'll be surprised at the sort of expenses you should be saving on that you're not.