Old and even deceased Prime Ministers still causing problems for Accountants

Are you serious? Yes, but you were probably born after these dates.

In 1979 John Howard when he was Federal Treasurer was reclaiming the tax mess made by the Chief Justice of the High Court, Sir Garfield Barwick. Barwick took a literal interpretation of the tax law and thus allowed all sorts of tax schemes to flourish.

One classic was to make 36 Tongans beneficiaries of a trust who then received distributions below the then tax-free thresh hold but not the money (note 1). Thus Howard introduced section 100A to counter this. However, subsection 13 in the definition of an agreement says “but does not include an agreement, arrangement or understanding entered into in the course of ordinary family or commercial dealing.”

The recent ATO practice note does not talk about what the ATO does not like that current trusts are doing but has a colour-coded risk analysis. If anyone needs to do a risk analysis, it is the public accountant advising their client on the operation of trusts. There is no risk to the revenue if the ATO stated what it did not like and acted accordingly.

Then we come to the late Bob Hawke. He wanted to introduce the Australia Card in 1985. They had not invented Facebook then. The descendants of our convict colony said no to this and then insisted that Bob not use the TFN as an alternative.

Bob, being a good politician and reader of the public mood, agreed. Thus the TFN took on the form of a secret number and everyone is still whiting out or deleting the TFN in case someone uses it to pay your tax. Tax Agents of course no longer need to use the TFN to access their clients’ information on  Online Services for Agents.

Public accountants must still take note of these long-gone PMs otherwise we could be held liable if we do not.

~ Peter Vickers, Chartered Accountant, Lindfield NSW



  1. Peter Clyne L.L.M., notorious tax dodger and bankrupt, “New Adventures in Tax Avoidance” 1980 p41