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Published On: Wed, Sep 4th, 2019

Clive Palmer and the ATO: One Justice for High-Net-Worth Individuals, Another for the Rest

  • Clive Palmer’s PwC accountant says the mining magnate’s affairs were monitored by a dedicated team within the Australian Taxation Office that deals with high-net-worth individuals.
  • To minimise tax, the billionaire forgave $100m in loans from Queensland Nickel to his other companies.
  • The forgiven loans Queensland Nickel paid to Mineralogy and other Palmer entities meant the company had a cash shortfall when nickel prices plummeted, causing it to go into administration.
  • This case raises questions about ASIC’s and the ATO’s attitudes towards the ultra-rich – special tax laws and tax units allow billionaires like Palmer, whose wealth is estimated at $4b, to avoid paying taxes in Australia almost altogether.

The Queensland Nickel liquidation trial is the gift that keeps on giving. 

photo/ Jwmcdonald81

Just this week, Palmer’s tax adviser of 12 years, Mr. Graham Sorensen, told the court about Queensland Nickel’s deliberately complex company structure; the refinery was controlled by two joint venture companies, QNI Resources and QNI Metals, to avoid paying taxes. Apparently, tax rules, especially 245-90 notices, allow companies that are commonly controlled, such as those of Mr Palmer, to not have a tax impairment when debts were forgiven. This means debts between companies with the same owner or controller could be forgiven and not needed for tax purposes.

“QNI never filed any tax returns between 2010 and 2015 because it didn’t derive any assessable income”, said Sorensen.

This was a purely artificial structure; Mr Sorensen said QNI was the only company that operated the Yabulu refinery, but still, all profits from the refinery were split between QNI Resources and QNI Metals. Mr Sorensen eventually had to concede that the tax structure mostly (if not only) benefitted Mr Palmer, the ultimate owner of the assets, after being pressed by the special liquidators.
“It was a tax advantage, not just to Mr Palmer, but to QNI Resources and QNI Metals,” he said.

The PwC associate of 28 years said it was “Mr Palmer’s prerogative to do what he wanted with the money” and that forgiving the loans, rather than paying the money to himself as dividends, was the best way to legally avoid income tax liabilities.

How can an aspiring-politician, who recently ran on the nationalist ticket of Making Australia Great, both claim he was acting for Australians and employ a team of specialists to avoid paying his due taxes to the State? Palmer has always claimed he opposed Chinese companies in Australia to keep jobs and money inside, but it seems that even him, an Australian employer, evaded taxation.

This isn’t the first time Palmer bends the ATO’s rules in his favour, either; In February 2019, 7News revealed that Palmer was registered in the tax-free haven of the Cayman Islands. His private plane and his company Mineralogy are listed in the Cayman Islands “where there is no income tax or tax on corporate profits”. “For months Mr Palmer has been running political ads and sending Australians millions of text messages, painting himself as a patriot who puts Australia first,” Mark Riley wrote at the time in the West Australian.

To return to the QNI trial, many are confused that the liquidation trial is still ongoing, as liquidators reached a $100m settlement with Palmer in August. However, the agreement that was reached only involves the Special Purpose Liquidators. The General Purpose Liquidators are still pursuing up to $100m in debts from the financial collapse of QNI and are also still pursuing claims Palmer traded while insolvent for 3 months in 2015.

ASIC watches these proceedings closely; a separate investigation into Clive Palmer and Clive Mensink’s actions as directors in the refinery is still in progress. ASIC should file criminal charges separately, some say, as QNI, which was the biggest private-sector employer in North Queensland, was grossly mismanaged. 

Recent evidence from the trial might show that Palmer even made a string of “uncommercial transactions” by using worthless coal assets in the Galilee Basin (such as Waratah Coal and China First) as security for QNI, thus racking in $235m ahead of workers and creditors in share purchase and security. 

Queensland Nickel went into liquidation in January 2016, costing about 800 employees their jobs and leaving more than $200m in debts. The trial has only started in August 2019, with Palmer almost immediately reaching a settlement with the special purpose liquidators. Palmer has been trying to delay proceedings as much as he could since 2016, and is still pursuing this strategy – some expert testimony for his defense would be delayed until October.

Townsville residents are pushing for a full investigation of Palmer’s role in the nickel refinery’s collapse, at a time when nickel prices have skyrocketed. Ex-employees call service providers to boycott Palmer’s next ventures, like a proposed coal mine in the Galilee Basin, unless he makes full reparations of over $200m to them and to the State of Queensland. As the court seems to be the only way to force Palmer to settle, many now wait for ASIC to bring this case to a close.

Author Bio:
James North is a young entrepreneur, who has accomplished a great feat in the world of marketing and advertising. He is the husband of a accomplish writer, and the father of two young adults. He has been contributing to digital platform for quite some time now. He loves to share his innovative ideas and thoughts so that readers could be benefited. He loves playing cricket at his leisure time.
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