Australian PM Defends Ministers In Tax Scam Affair

by Mary Swire, Tax-News.com, Hong Kong

27 August 2001

The Queensland division of the Liberal Party has been embroiled in a tax cheat scam by claiming rebates for GST (Goods and Services Tax) payments which had never actually taken place. Evidently the Liberals claimed GST credits worth A$800 for a party fundraising event at the seat of Groom by the Federal Electorate Council (FEC).

The confusion is as follows: the Groom branch did not charge GST on the tickets for the fundraising dinner as it is not a registered GST company with an Australian Business Number. However, the Liberal State headquarters is registered for GST. The Groom FEC sent a caterer's bill of $9,090.55 with a cheque for the amount minus the GST charge of $826.41. Party headquarters then reimbursed the caterer with the total $9090.55 and claimed back the $826.41 GST from the Tax Office. But as the GST had not been levied in the first place, the claim is considered fraudulent.

Liberal officials say they were 'horrified' at the mistake and Small Business Minister Ian MacFarlane - who holds the seat of Groom - and Treasurer Peter Costello were brought in to play down the oversight.

Mr McFarlane told reporters that the Australian Taxation Office had undertaken a 'comprehensive review of the Queensland division of the Liberal Party which resolved all outstanding matters.' He added: 'Everyday someone gets accused by the Labour Party of something and this is their standard form - just about every week they ask for a minister to resign. I mean this is politics. I've done nothing wrong.'

In response to Labour Party boss Kim Beazley's calls for the resignations of Costello and MacFarlane amid accusations that they had prior knowledge of the scam and misled Parliament, Prime Minister John Howard has publicly declared his full confidence in the politicians and says there is no evidence to suggest fraud has taken place within the party organisation.

Mr Howard stated: 'With any new system there can always be some misunderstandings; I've never pretended otherwise ... I don't pretend to know every book entry in every branch of the Liberal Party in every part of Australia any more than Mr Beazley does the Labour Party branches.'

But Kim Beazley was having none of it as he said: 'This is the Liberal Party into scamming arrangements in relation to the GST ... that are now the subject of heavy action by the taxation office when they are dealing with other small businesses around this country.'

'This is fraud,' added Shadow Treasurer Simon Crean, 'and we've got the Minister for Small Businesses knowing about it and covering it up; it was done under the nose of the Treasurer who knew about it in February and did nothing either. Both ministers should be sacked.'

Recommended