For centuries the tax cheats of the world had a willing accomplice in the Swiss banking system. The secrecy surrounding those numbered bank accounts was legendary. Gradually, pressure is forcing more disclosures and the tax man is closing in relentlessly.
The tax avoidance industry is fighting back and we are now seeing the emergence of the" Freeport " industry in various cities of the world. This is based on what used to be called " Bond stores ". The Bond store was a tax free area where goods could be stored until their final destination was decided - at which time any tax or excise was then payable.
What was held within a Bond store was deemed " goods in transit " and in some cases in the days of sail it was simply waiting trans-shipment until the arrival of a ship which would convey it to another part of the world. It was also handy to hold goods in bond until cheques cleared or a buyer could be found. There was no time limit on how long contents could remain in that " in transit " stage.
Tax dodging has taken a new form. Freeports are now used to store art, antiquities, rare wine or items that may increase in value. They resemble a fortress in their mode of construction because they need to offer an incredible standard of fire protection and burglary security. Rates charged range from about a $ 1000 per annum for the storage of a medium sized painting, to somewhere between $ 5,000 - $ 12,000 for the space of a small room. Some Freeports mirror the facilities of banks, with storage boxes to hold cash or gold bars.
One of the benefits of Freeports is that the wealthy of the world may quietly trade their treasures amongst themselves. In many cases, this simply involves the item being transferred from the holding area of one owner - to the holding area of the buyer. That is reminiscent of the days of the Gold Standard, in which countries settled their trade debts by transferring gold bars within a central gold storage area.
The other change from the past is the location of Freeports. Traditionally, they were sited in sea ports to handle the merchandise carried by ships, but today are more likely to be in close proximity to a major airport. The trend started with Geneva, Singapore and Luxembourg, but it is rapidly growing and taking trade away from remote tax havens like the Cayman islands - and becoming an adjunct to the big cities of the world.
Once again the tax avoidance industry and the tax man face each other across the Chess board as they make move - and counter move. As one door closes - another door opens. Inevitably, all this is reliant on the legislation in place to confer legality - and that will become the real battleground !
Saturday, 30 November 2013
Friday, 29 November 2013
Suppression orders !
This week a man charged with murdering his fiancee by throwing her to her death from a high rise balcony was found guilty by a judge. What was unusual about this case was that the accused elected to be tried before a judge rather than face the verdict of a jury.
It is the custom of our law system to suppress any record of previous criminal activity from being presented to the court hearing the evidence relating to the crime for which the accused is charged. The trial procedure requires those involved to only consider the facts relating to the charge laid and in most cases the accused presents his or her version of the events - and this requires those sitting in judgement to make a decision as to whether they accept or reject that version.
It seems ironic that such a judgement is kept entirely devoid of the character history of the accused when they assess the conflict between what the accused claims to be the facts, and the evidence that the prosecution puts forward.
Now that a verdict has been delivered, the media is free to publish what was suppressed at the trial, and we learn that this convicted person once bit the ear of an arresting police officer, has engaged in selling cocaine and was previously convicted of brutally attacking a man held defenceless by others. He led a lavish lifestyle and this was not supported by any form of fiscal record.
This case was a decision between two issues. The prosecution claimed that in a fit or rage the accused carried the victim to the rail and threw her to her death. He claimed she climbed over the rail, slipped and fell to her death by accident. There was evidence of violent arguments between the pair and that he had a " controlling personality " . His fiancee was in the process of leaving the relationship and returning to Canada.
The issue of suppressing earlier criminal history is certainly argumentative. In this case the accused probably made a mistake to elect to be tried before a judge rather than rely on the decision of a jury. It stands to reason that judges usually are interested in other cases going through the courts and may well have been aware of this mans previous history. A jury would most certainly have that screened from their knowledge when making a decision on which version of events to believe. Discord from even one juror would have led to acquittal.
Suppression order falls into disrepute when a high profile case leads to acquittal - and then the media is filled with a lurid past history that was hidden from the jury. That jury has been tasked with deciding the truth or otherwise of the accused - without being given the tools we usually use to decide on a persons character.
It seems that suppression is a price the prosecution pays when the law implements that " Innocent until proven guilty " requirement !
It is the custom of our law system to suppress any record of previous criminal activity from being presented to the court hearing the evidence relating to the crime for which the accused is charged. The trial procedure requires those involved to only consider the facts relating to the charge laid and in most cases the accused presents his or her version of the events - and this requires those sitting in judgement to make a decision as to whether they accept or reject that version.
It seems ironic that such a judgement is kept entirely devoid of the character history of the accused when they assess the conflict between what the accused claims to be the facts, and the evidence that the prosecution puts forward.
Now that a verdict has been delivered, the media is free to publish what was suppressed at the trial, and we learn that this convicted person once bit the ear of an arresting police officer, has engaged in selling cocaine and was previously convicted of brutally attacking a man held defenceless by others. He led a lavish lifestyle and this was not supported by any form of fiscal record.
This case was a decision between two issues. The prosecution claimed that in a fit or rage the accused carried the victim to the rail and threw her to her death. He claimed she climbed over the rail, slipped and fell to her death by accident. There was evidence of violent arguments between the pair and that he had a " controlling personality " . His fiancee was in the process of leaving the relationship and returning to Canada.
The issue of suppressing earlier criminal history is certainly argumentative. In this case the accused probably made a mistake to elect to be tried before a judge rather than rely on the decision of a jury. It stands to reason that judges usually are interested in other cases going through the courts and may well have been aware of this mans previous history. A jury would most certainly have that screened from their knowledge when making a decision on which version of events to believe. Discord from even one juror would have led to acquittal.
Suppression order falls into disrepute when a high profile case leads to acquittal - and then the media is filled with a lurid past history that was hidden from the jury. That jury has been tasked with deciding the truth or otherwise of the accused - without being given the tools we usually use to decide on a persons character.
It seems that suppression is a price the prosecution pays when the law implements that " Innocent until proven guilty " requirement !
Thursday, 28 November 2013
Opportunistic crime !
Crime is constantly evolving into innovative new methods of obtaining money. When women are the sole occupant of a car they are urged to drive with their doors locked and not leave their handbag on the passenger seat. Opportunistic criminals took to attacking cars stopped at traffic lights, opening the unlocked passenger side door - and simply helping themselves to that handbag - which usually contained the woman's purse.
At least the vast majority of crimes do not involve violence. The most common form of criminal activity is described in police statistics as " Break, enter and steal ". Forcing entry into an unoccupied family home usually gives access to a trove of easily portable items that can be sold for money. The danger comes if that house happens to contain a sleeping shift worker and the burglar is surprised - and a fight ensures.
What chills the blood of ordinary citizens is random street crime in which the thief is indifferent to the safety of the victim, and this week brought an example of this in Wollongong.
A 42 year old dog walker was exercising his string of pooches as he walked the cycling track in the northern suburb of Bulli one morning. It was a hot day and he decided to sit on a seat and admire the view of the sea while he and the dogs rested. Two young men aged in the 17 or 18 age group approached, and one of them asked him for a cigarette - which he obligingly offered.
The other - standing behind the seat - suddenly whipped a piece of cord around his throat and exerted pressure until he lost consciousness. While he lay inert on the ground, they ransacked his wallet and made off with his cash, leaving without bothering to check if he was alive - or dead !
Causing a person to lose consciousness by restricting the airway can easily tip the balance - and result in death. The outcome depends on the length of time involved, together with the general state of health of the victim - and sheer luck. This could very easily have evolved into a murder case.
The perpetrators were young men of what appeared to be a Pacific Islander appearance. The fact that the victim recovered and gave police a good description will no doubt result in scrutiny of the cctv network - and most likely an arrest, but the fact that an attack happened in broad daylight on a man innocently going about his business will cause disquiet in the community.
In particular, the fact that this happened in what most Wollongong people would regard as a " safe " suburb will cause many to curtail their normal activities. There are obviously many parts of the world that citizens would consider unsafe - but surely walking dogs beside the sea in a quiet residential neighbourhood would not be one of them.
It seems that today the " risk factor " does not exclude the better postcodes !
At least the vast majority of crimes do not involve violence. The most common form of criminal activity is described in police statistics as " Break, enter and steal ". Forcing entry into an unoccupied family home usually gives access to a trove of easily portable items that can be sold for money. The danger comes if that house happens to contain a sleeping shift worker and the burglar is surprised - and a fight ensures.
What chills the blood of ordinary citizens is random street crime in which the thief is indifferent to the safety of the victim, and this week brought an example of this in Wollongong.
A 42 year old dog walker was exercising his string of pooches as he walked the cycling track in the northern suburb of Bulli one morning. It was a hot day and he decided to sit on a seat and admire the view of the sea while he and the dogs rested. Two young men aged in the 17 or 18 age group approached, and one of them asked him for a cigarette - which he obligingly offered.
The other - standing behind the seat - suddenly whipped a piece of cord around his throat and exerted pressure until he lost consciousness. While he lay inert on the ground, they ransacked his wallet and made off with his cash, leaving without bothering to check if he was alive - or dead !
Causing a person to lose consciousness by restricting the airway can easily tip the balance - and result in death. The outcome depends on the length of time involved, together with the general state of health of the victim - and sheer luck. This could very easily have evolved into a murder case.
The perpetrators were young men of what appeared to be a Pacific Islander appearance. The fact that the victim recovered and gave police a good description will no doubt result in scrutiny of the cctv network - and most likely an arrest, but the fact that an attack happened in broad daylight on a man innocently going about his business will cause disquiet in the community.
In particular, the fact that this happened in what most Wollongong people would regard as a " safe " suburb will cause many to curtail their normal activities. There are obviously many parts of the world that citizens would consider unsafe - but surely walking dogs beside the sea in a quiet residential neighbourhood would not be one of them.
It seems that today the " risk factor " does not exclude the better postcodes !
Wednesday, 27 November 2013
White Ribbon day.
All the politicians are wearing a " White Ribbon day " symbol on their lapels this week to bring support to the movement to stop violence against women. In particular, all the sporting codes have been at the forefront in promoting this anti violence message. They must despair at picking up the daily newspaper and finding a front page crime report about police charging a leading Rugby League player with an incident of domestic violence against his wife.
Over the past few days there probably have been the normal spate of disagreements between family members that have progressed from a shouting match - and in some cases - ended with some sort of physical action. They often involve the neighbours calling the police and in many instances the wife refuses to press charges against her husband. It goes down in the police log books as just another " domestic " !
From a media point of view it falls into that old adage of " Dog bites man " failing to merit interest as a news story - but " Man bites dog " making it onto the front page. When one of the participants in a domestic incident is a leading sporting figure - hold the press !
This weekends " domestic " involved a man who is a regular item in the news for his prowess on the Rugby pitch and his value as a member of one of the big sporting clubs. It seems that he got involved in an argument with his wife that resulted in a door getting kicked in, some furniture broken - and a possible " physical contact ". This man drove away from the scene, refused a police order to pull over and led police on a short chase. He was breath tested, and will face a DUI charge.
Rugby League will possibly impose some sort of penalty for " bringing the game into disrepute " and most certainly the drink driving incident will go to court. All this will be avidly covered by the media and quite likely the domestic violence aspect will be quietly dropped for lack of evidence and a refusal to testify.
There seems to be a degree of discord amongst psychologists on the harm done by reporting incidents of domestic violence. Some suggest that it's prevalence amongst our sporting heros brings justification in the minds of lesser mortals while others think that the " shame " factor deters some people from employing the same end to anger.
The main aim of events such as White Ribbon day is to try and achieve a degree of self control to stop arguments getting out of hand. It can be deemed a success if even a few learn to walk away when their temper reaches boiling point. At least one small step in the right direction !
Over the past few days there probably have been the normal spate of disagreements between family members that have progressed from a shouting match - and in some cases - ended with some sort of physical action. They often involve the neighbours calling the police and in many instances the wife refuses to press charges against her husband. It goes down in the police log books as just another " domestic " !
From a media point of view it falls into that old adage of " Dog bites man " failing to merit interest as a news story - but " Man bites dog " making it onto the front page. When one of the participants in a domestic incident is a leading sporting figure - hold the press !
This weekends " domestic " involved a man who is a regular item in the news for his prowess on the Rugby pitch and his value as a member of one of the big sporting clubs. It seems that he got involved in an argument with his wife that resulted in a door getting kicked in, some furniture broken - and a possible " physical contact ". This man drove away from the scene, refused a police order to pull over and led police on a short chase. He was breath tested, and will face a DUI charge.
Rugby League will possibly impose some sort of penalty for " bringing the game into disrepute " and most certainly the drink driving incident will go to court. All this will be avidly covered by the media and quite likely the domestic violence aspect will be quietly dropped for lack of evidence and a refusal to testify.
There seems to be a degree of discord amongst psychologists on the harm done by reporting incidents of domestic violence. Some suggest that it's prevalence amongst our sporting heros brings justification in the minds of lesser mortals while others think that the " shame " factor deters some people from employing the same end to anger.
The main aim of events such as White Ribbon day is to try and achieve a degree of self control to stop arguments getting out of hand. It can be deemed a success if even a few learn to walk away when their temper reaches boiling point. At least one small step in the right direction !
Tuesday, 26 November 2013
Lowering the risk !
The traditional way of getting illegal drugs into Australia usually involves having them carefully hidden away in imported items. This ongoing battle of wits between the smugglers and customs has involved great ingenuity. The sheer volume of containers passing through import hubs puts the chances of success in the smuggler's favour but we also see regular busts and detection methods are constantly being improved.
Smart criminals took to diversifying the risk. Instead of putting all their eggs in one basket, they changed tactics and began sending very small quantities of drugs through the mail system. The sheer size of the mail flow made close inspection of each item impossible and inevitably much contraband reached it's destination successfully.
The mail branch of customs has also sharpened up it's detection methods. Drug sniffing dogs have made inroads into the flow, but the most effective weapon has been the computer. The ability of computers to keep track of the destinations of inward letters and small parcel deliveries highlights suspicious people who receive multiple deliveries from suspicious locations overseas. Once this pattern emerges, customs pounce !
Now the ever resourceful criminal elements behind the drug trade have devised a new strategy. The foot soldiers of the drug trade have been tasked with recruiting high school kids as the new breed of drug mules. They are offering bribes of between $ 300 and $ 500 for the use of their " clean " addresses. The drug cartels can use the computer tracking system to know precisely when a nominated package will arrive and they forewarn the kids to be at home to receive delivery. Usually, the parents know nothing of this underworld arrangement.
The clever strategy behind this method relies on a wide array of clean addresses that are not likely to draw suspicion because they are each used at spaced intervals. The fee paid to the " Mule " is minuscule in comparison to the profit made from the value of the drugs involved.
Some of the kids are naive and unaware that they are involved in the drug trade while others are getting their first taste of criminal activity - and are liking the easy profits it delivers. Few would fully understand the risks that are involved. Rival drug gangs wage vicious wars with competitors and these kids - and their families - risk being drawn into the fray.
This new menace delivers a warning to parents. If your child makes purchases on the Internet, be aware that the item purchased may contain hidden drugs and that these may be passed into the hands of a criminal in exchange for money. Innocent items such as a safety helmet can contain a stash weighing in at half a kilo - and on the drug market that can make the drug industry people a small fortune.
Smart criminals took to diversifying the risk. Instead of putting all their eggs in one basket, they changed tactics and began sending very small quantities of drugs through the mail system. The sheer size of the mail flow made close inspection of each item impossible and inevitably much contraband reached it's destination successfully.
The mail branch of customs has also sharpened up it's detection methods. Drug sniffing dogs have made inroads into the flow, but the most effective weapon has been the computer. The ability of computers to keep track of the destinations of inward letters and small parcel deliveries highlights suspicious people who receive multiple deliveries from suspicious locations overseas. Once this pattern emerges, customs pounce !
Now the ever resourceful criminal elements behind the drug trade have devised a new strategy. The foot soldiers of the drug trade have been tasked with recruiting high school kids as the new breed of drug mules. They are offering bribes of between $ 300 and $ 500 for the use of their " clean " addresses. The drug cartels can use the computer tracking system to know precisely when a nominated package will arrive and they forewarn the kids to be at home to receive delivery. Usually, the parents know nothing of this underworld arrangement.
The clever strategy behind this method relies on a wide array of clean addresses that are not likely to draw suspicion because they are each used at spaced intervals. The fee paid to the " Mule " is minuscule in comparison to the profit made from the value of the drugs involved.
Some of the kids are naive and unaware that they are involved in the drug trade while others are getting their first taste of criminal activity - and are liking the easy profits it delivers. Few would fully understand the risks that are involved. Rival drug gangs wage vicious wars with competitors and these kids - and their families - risk being drawn into the fray.
This new menace delivers a warning to parents. If your child makes purchases on the Internet, be aware that the item purchased may contain hidden drugs and that these may be passed into the hands of a criminal in exchange for money. Innocent items such as a safety helmet can contain a stash weighing in at half a kilo - and on the drug market that can make the drug industry people a small fortune.
Monday, 25 November 2013
Bracket creep !
We live in a world of wonderful inventions. In the last two centuries humans have replaced candles with electric light, been able to communicate by telephone and both the aeroplane and automobile have given them mobility. What a pity that nobody has been able to create a time machine so that we could go back to the past and correct some of the mistakes we have made !
One of the imposts that urgently needs review is stamp duty. When people try and obtain that most basic of needs - a roof over their heads - they find a rapacious treasury with it's hand out for a huge fee for just stamping approval on the record of sale. The average fee demanded on a Sydney property is now $ 25,000.
Way back in 1986 the stamp duty rate was increased from 2.5% to 4.5% on properties valued at over $ 300,000 and to 5.5% on those priced over a million dollars. At that time, the median house price in Sydney was $ 98,325 and the average yearly salary was $ 22,000. It was simply a tax grab aimed at the upper end of the market - but those stamp duty rates have not been adjusted for the bracket creep that has occurred in the housing market. Now a $ 500,000 home is just " average " !
Realists know that the government needs a money flow to pay it's bills, but imposing a crippling tax on those trying to get their first home seems to be putting the cart before the horse. The timing is lousy ! The first home buyer struggles to raise a deposit on an ever rising market and the early years of the average mortgage usually saps an onerous slice of their income stream.
Whoever dreamed up the idea of stamp duty simply applied it to the wrong end of the deal. It would be better placed at the other end of the housing market - when that first home eventually goes on the market for resale. By then the first home buyer has either cleared the mortgage or has significant equity - and the stamp duty impost is a lesser burden.
It is too late to make that adjustment now. Stamp duty has already been paid on the vast majority of housing stock and to make that change would be a case of doubling the tax on existing owners. The only possible relief would be to make a rate adjustment to take account of bracket creep, but that would deprive the government of a much needed money source - and would be anathema to treasury.
Unfortunately, this looks likely to be an ever widening problem. The housing market is giving no indication that pressure on prices will ease and the present very moderate rate of inflation will see that stamp duty climb higher as the years progress.
Those aspiring to buying their first home can only hope that some genius will succeed in inventing a time machine - and then perhaps a lot of wrongs could be righted !
One of the imposts that urgently needs review is stamp duty. When people try and obtain that most basic of needs - a roof over their heads - they find a rapacious treasury with it's hand out for a huge fee for just stamping approval on the record of sale. The average fee demanded on a Sydney property is now $ 25,000.
Way back in 1986 the stamp duty rate was increased from 2.5% to 4.5% on properties valued at over $ 300,000 and to 5.5% on those priced over a million dollars. At that time, the median house price in Sydney was $ 98,325 and the average yearly salary was $ 22,000. It was simply a tax grab aimed at the upper end of the market - but those stamp duty rates have not been adjusted for the bracket creep that has occurred in the housing market. Now a $ 500,000 home is just " average " !
Realists know that the government needs a money flow to pay it's bills, but imposing a crippling tax on those trying to get their first home seems to be putting the cart before the horse. The timing is lousy ! The first home buyer struggles to raise a deposit on an ever rising market and the early years of the average mortgage usually saps an onerous slice of their income stream.
Whoever dreamed up the idea of stamp duty simply applied it to the wrong end of the deal. It would be better placed at the other end of the housing market - when that first home eventually goes on the market for resale. By then the first home buyer has either cleared the mortgage or has significant equity - and the stamp duty impost is a lesser burden.
It is too late to make that adjustment now. Stamp duty has already been paid on the vast majority of housing stock and to make that change would be a case of doubling the tax on existing owners. The only possible relief would be to make a rate adjustment to take account of bracket creep, but that would deprive the government of a much needed money source - and would be anathema to treasury.
Unfortunately, this looks likely to be an ever widening problem. The housing market is giving no indication that pressure on prices will ease and the present very moderate rate of inflation will see that stamp duty climb higher as the years progress.
Those aspiring to buying their first home can only hope that some genius will succeed in inventing a time machine - and then perhaps a lot of wrongs could be righted !
Sunday, 24 November 2013
Busting the " Bikie " mob !
Sometimes the solution to seemingly intractable problems can be found by looking back into the past. In the dizzy days of the 1920's the most celebrated gangster in the United States was Al Capone. This swaggering bandit chief was constantly on the front pages of the nation's newspapers and his crime empire had tentacles into diverse avenues of American society.
What finally brought him down and landed him in prison - was tax evasion !
Bikie crime in Australia is big business. It is estimated that it has an annual turnover of more than ten billion dollars spread across legal and illegal activities. Drugs make a big contribution, but the bikie gangs have learned to diversify and they are now into tattoo parlours and car rebirthing rackets operating on the fringe of society.
The tax office is now going after these untaxed profits and as any honest business person will testify - fighting the tax office is usually a losing situation. " Hot " money presents huge problems and trying to move it through the labyrinth of tax laws is like walking through a mine field. At any stage the law is entitled to demand proof that this money was legally acquired - and then " proceeds of crime " legislation comes into play.
That is the situation that the 1200 members of the Rebels Motorcycle club are about to face. It seems that 117 of them have never filed a tax return, and that can result in some very uncomfortable questions to be answered. Cars - bikes - property - all manner of assets leave a money trail and it is up to the owner to provide proof that they were legally obtained.
Until now, the cops have been trying to bust the bikie gangs in the act of committing crimes. Now the impetus has changed to the tax department going after the profits and making them pay their tax liabilities.
This reversal has changed the line of attack. The bikie gangs have been very good at running their illegal activities out of sight but their lifestyle from the rewards is very public.
Accountants with calculators may be more dangerous than uniformed law enforcement officers with guns when it comes to gaining convictions in court. That was something that Al Capone found to his horror - and resulted in him spending the rest of his life behind bars.
The bikie culture has every reason - to be very afraid !
What finally brought him down and landed him in prison - was tax evasion !
Bikie crime in Australia is big business. It is estimated that it has an annual turnover of more than ten billion dollars spread across legal and illegal activities. Drugs make a big contribution, but the bikie gangs have learned to diversify and they are now into tattoo parlours and car rebirthing rackets operating on the fringe of society.
The tax office is now going after these untaxed profits and as any honest business person will testify - fighting the tax office is usually a losing situation. " Hot " money presents huge problems and trying to move it through the labyrinth of tax laws is like walking through a mine field. At any stage the law is entitled to demand proof that this money was legally acquired - and then " proceeds of crime " legislation comes into play.
That is the situation that the 1200 members of the Rebels Motorcycle club are about to face. It seems that 117 of them have never filed a tax return, and that can result in some very uncomfortable questions to be answered. Cars - bikes - property - all manner of assets leave a money trail and it is up to the owner to provide proof that they were legally obtained.
Until now, the cops have been trying to bust the bikie gangs in the act of committing crimes. Now the impetus has changed to the tax department going after the profits and making them pay their tax liabilities.
This reversal has changed the line of attack. The bikie gangs have been very good at running their illegal activities out of sight but their lifestyle from the rewards is very public.
Accountants with calculators may be more dangerous than uniformed law enforcement officers with guns when it comes to gaining convictions in court. That was something that Al Capone found to his horror - and resulted in him spending the rest of his life behind bars.
The bikie culture has every reason - to be very afraid !
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