Obeids' trust is the best ad for tax reform
How nice to see that public-spirited Obeid family campaigning so hard to end the rort that is the family trust system. Well done, Eddie, Moses and the rest of them.
Of course, the Obeids might not quite see it that way, but the creeping exposure of their use of trusts to disguise, channel, fiddle and generally muck around with the spirit of the Tax Act, revealing the power of the rich and well-accounted to avoid paying their fair share, is the best advertisement yet for radical reform of the putrid trust system.
Moses' ability to be officially broke while living the millionaire life, courtesy of the family trust structure, thus avoiding a $16 million debt to the City of Sydney, and this week's ICAC evidence outlining trust "loans" to avoid income tax are why the Obeids are the new pin-up boys of tax avoidance.
Whether that avoidance strays into the realm of illegal evasion is something for the Australian Tax Office to investigate. One can only hope there's an ATO officer keeping notes at the ICAC hearing.
But, giving the Obeids the benefit of the doubt, as one must on legal matters, they nonetheless have supplied the nation with more than enough evidence to suggest that the use of family trusts is a joke at the expense of the less fortunate.
That's if the nation is awake or, more importantly, if the political class had any will to pursue the wealth and privilege of some of their own members and many of their backers, let alone the richest and therefore most powerful Australians.
And it's not as if there is anything particularly new in the Obeids slipping the odd camel through a trust loop-hole. Kerry Packer was famous for it, throwing in the odd Caribbean tax haven for good measure.
The closest the public ever came to discovering some of the legal fiddling in the Packer empire was when his daughter's claimed love of privacy over her trust structure was the reason given for James Packer needing to pull out of a dud US casino deal.
The untrusting souls on the other side of that $US1.75 billion disaster reckoned Gretel's desire to keep the labyrinthine family finances secret was just a ruse to protect James from his failed American expansion.
But I would again give her the benefit of the doubt: I can well understand that the Packer clan wouldn't want people to know what's been avoided, particularly now that James is playing the philanthropist role, wanting to "give" Sydney another casino.
Far more mundane is the routine use of trust structures to minimise tax by the merely well-off, as opposed to the mega-wealthy. In the multi-millionaire and billionaire class, it's taken for granted. For the comfortable, there's the line to cross between the extra accounting fees and the benefit.
A little while ago I had a chance social encounter with an accountant. As people will talk ailments with doctors, crime with police and scandal with journalists, chat fell to occupations and structures. The accountant was a little perplexed that I operate as a sole trader with no company structure, let alone a family trust.
He suggested I really should consider setting up a trust as I could save several thousand dollars a year in tax, after the initial set-up costs. He said I'd have no trouble meeting the three ATO legitimacy tests – the third of which was that the trust wasn't being set up to avoid tax.
Michael Pascoe is a BusinessDay contributing editor – who doesn't have a family trust.