1% News: Twiggy could dodge tax for 5 more years

Friday, May 4, 2012
Andrew 'Twiggy' Forrest.

Twiggy could dodge tax for five more years

Billionaire Australian mining tycoon Andrew Forrest boasted on May 3 that he may pay nothing in tax for the first five years of the federal Labor government’s new Mining Resources Rent Tax (MRRT), which comes into effect in July.

Forrest said his company Fortescue Metals would “pay between zero and $50 million of MRRT some time in the next five years” because the company will qualify for big tax exemptions.

The Canberra Times said Fortescue Metals’ pre-tax profits are expected to “exceed $20 billion in the next five years”.

In April, Mining.com put Forrest’s fortune at $5.8 billion. The Australian Financial Review said in June last year that “Forrest has never signed a corporate income tax cheque for any of the listed companies he has run in the past 16 years”.

Clive Palmer: 'I run a small family company'

Queensland mining billionaire Clive Palmer announced this week that he will build an “unsinkable” Titanic II — a replica of the doomed 1912 cruise liner. He also revealed plans to build a new commercial fleet to import nickel into Australia and pledged to run for the Liberal National Party against ALP Treasurer Wayne Swan in the next federal election.

Palmer assured the Herald Sun he would not need to give up his business interests to serve as an MP, saying his was just “a small family company”. Business Review Weekly puts Palmer’s wealth at $5.05 billion.

Liberal leader Tony Abbott said he preferred a more “grassroots candidate” than Palmer. But Liberal legal affairs minister George Brandis told Sky News: “I'm very glad that Mr Palmer is on my side … The more Mr Palmer participates in the political system and brings his peerless business experience to it, the better.”

Billionaires end football war with secret deal

A six-month war between billionaire mining mogul Nathan Tinkler — owner of the Newcastle Jets football team — and Football Federation Australia (FFA) chief and fellow billionaire Frank Lowy ended on May 1. Details of the agreement remain secret.

Tinkler announced in early April that he would break his contract, pull his money out of the Newcastle Jets and hand back the club's licence to the FFA.

About 1000 Newcastle Jets supporters rallied on April 20 to save their club. Public anger at Tinkler’s broken promise likely influenced his May 1 about-face, in which he said he had recommitted to the club.

The Sydney Morning Herald said, “sources have told us that the flaying he's copped in recent weeks has … stunned Tinkler”.

From GLW issue 921


Learn something about tax

Forrest isn't dodging tax. You don't pay tax until you earn a profit. Mining companies always make losses when they start up as their expenses are huge and they have no revenue. Once they start producing the minerals do they earn revenue and become profitable.

Do you believe unemployed people are dodging tax by not earning money?

Poor Twiggy

Sure, for the past 16 years Twiggy Forrest hasn't paid tax because he has made losses ... strange that he became a billionaire over the same period.

Twiggy is not a billionaire

Owning shares in a company is not the same as having cash. If he sold the shares for cash then he may become a billionaire. Any capital gain would be taxed (offset by any previous losses carried over). He would also be taxed on any income from investments. There is nothing strange about investing in a private company and the value of your shares changing (for better or worse). Also, as other posters have indicated if a company has not made profit then it is normal for that company not to be taxed.

While many of us may find capitalism unethical, I fail to see anything unethical in Twiggy's behaviour within the context of a mixed economy like Australia's, especially as he and his wife have pledged to donate half their wealth to worthy causes within their lifetimes.

Whats the issue then !

Forrest borrowed a vast amount of money. With it he has created thousands of jobs resulting in billions of dolars in tax revenue and royalty payments plus he has created thousands of real jobs for indigenous people. Would you prefer he didnt do that ? Would it be better if he sat on his bum like the rest of us and we didnt get all those jobs and all that government revenue. His own fortune is a house of cards. If demand for iron ore drops, the share price will drop and his wealth will disappear like it did in the GFC. What do you people want. The man does great things for Australia and you criticise him for it.