Trade Queensland has been unable to explain why former Queensland premier Peter Beattie’s salary as the state’s Trade Commissioner to the Americas is tax exempt, while a tax consultant has told Crikey that the Queensland agency should be investigated.
As part of his three-year government appointment, Mr Beattie will be paid an annual tax-free salary of $171,091, plus a $35,585 living allowance.
Other perks that come with the LA-based position include a car, accommodation and credit card, with all expenses to be picked up by Queensland taxpayers.
Crikey first contacted Trade Queensland about the tax exemption on April 18. Several phone calls to the agency since then have failed to shed any light on the matter.
Trade Queensland director of trade services, David Hardy, said he did not know the provision that allowed Mr Beattie’s salary to be tax exempt.
“For all of our commissioners we go through a review with an external tax consulting firm…they do an individual assessment,” Mr Hardy said. “The information is still being sought in relation to Mr Beattie’s contract.”
The Australian Taxation Office would not comment on whether the wages, salary or other remuneration of Trade Commissioners and Special Representatives working for the Queensland Government are tax exempt in Australia.
“Under section 16 of the Income Tax Assessment Act the Tax Office is unable to discuss individual taxpayer matters with anyone other than the taxpayer or their adviser,” a spokesperson said.
Chris Seage, a former tax office audit manager, said that under the Australia-United States Tax Treaty, Australian government officials were exempt from paying tax in the US.
“Under Article 19 of the treaty an Australian government official such as Beattie working in the US will not be taxed there so as to avoid the situation of double taxation. Therefore those people will pay tax in Australia,” Mr Seage said.
“Beattie’s salary has all the hallmarks of an employee with the provision of accommodation, a corporate credit card, a car and he has one paymaster, that being the Queensland Government. Any suggestion that Beattie or the other trade commissioners are not being taxed should be immediately investigated by the Australian Taxation Office.”
Mr Seage also said Trade Queensland could be liable for millions of dollars in back tax and penalties for failing to tax the salary of Mr Beattie and the other Commissioners and Special Representatives it employs.
Trade Queensland has 13 trade offices in overseas countries including the United Kingdom, China, Japan and the United Arab Emirates. Mr Hardy was unable to say whether other Trade Queensland employees based overseas are on tax-free salary packages.
“Tax Chief Michael D’Ascenzo should act quickly to ensure the politically-charged nature of the investigation is conducted professionally,” Mr Seage said.
Crikey contacted the office of Queensland Premier Anna Bligh but did not receive a response by the time of deadline.
Mr Beattie started his new appointment on June 1.
Hi Chris,
I’m not sure if you are reading the same legislation that I am there is no quote of “approved project ” anywhere.
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1936240/s23ag.html
You will see that quite clearly it is tax exempt. Furthermore straight from the tax office website.
ATO ID 2001/28
Income Tax
Overseas income: Salary of Resident Employed on Project In a Foreign Country
Issue
Is salary earned by an Australian resident while employed on a project in a foreign country exempt from tax under section 23AG» of the Income Tax Assessment Act 1936 (ITAA. 1936)
Decision
Yes. Salary earned by an Australian resident while employed on a project in a foreign country continuously for not less than 91 days is exempt from tax under section «23AG» of the Income Tax Assessment Act 1936 .
So i think this satisifies why it is tax exempt in both Aust & US. So please make correction.
Trade Queensland – trading in what? With due respect (if any is owing) it looks like the boys spilled out of Parliament House in Brizvegas last September and headed for their Trade bunker – the Premier, an old D-G and his Chief of Staff. You can hear it now. “Wanna go to London”, says Rob now as Trade’s GM. “Nah, I’m heading south,” says Pete. “South Carolina that is – where the Statehouse Report gives me more coverage than the Akubra – I like it where it’s hot.” Rob does a Clouseau and spins the world globe. “We’ve got Loftus headed for the Middle East, Julie’s in Japan going like a German band so there’s only LA left”. “On the knocker”, says Pete. “I’ll commuter it to Century City, courtesy of those new OTC allowances we passed last year.” So I guess that’s how Pete ended up heading States-side. Lets hope Clarke Thompson at the SC Department of Commerce has got some chilled lemonade and southern comfort, cause only last July he bemoaned the relationship between Beattie and the southern state had been pretty one-sided. “We really have never reciprocated to Brisbane to the level that Peter Beattie has done here,” admitted Clarke. “If we can send a high-level delegation of leaders to him, he would eat it up and greatly appreciate it.” Hey Clarke, no need to whistle Dixie – Pete’s coming to you!!
http://www.statehousereport.com/columns/07.0729.better.htm
Under Section 23AG it must be an “approved project” and be approved by the Minister for Trade. If he has such approval why didn’t the various departments she approached for clarification, and indeed the ATO itself, tell the journalist that.
Richard,
Mr Beattie is not tax exempt in Australia as a result of 23AG. The provision clearly states that Australians are not eligible for tax exemption under 23AG if they are not taxed in the foreign country for a number of reasons, including a double tax agreement or the foreign country’s law.
Neither Trade Queensland nor the office of the Queensland Minister for Trade have been able or willing to provide a response to the question of why Mr Beattie’s income is tax exempt in Australia. Similarly, the Premier’s office has not responded. If some high-paid government officials overseas are not paying tax, the reasons for this should be transparent and on the public record.
Section 23AG which refers to exempting income when in service in a foreign company may operate to exempt Mr Beattie’s income from Aus tax in conjunction with the foreign tax treaty mentioned above which exempts him from US tax.
So this article may be defunct.