A strange tax story

The Herald Sun is reporting a “pollies are tax-cheats” story.

Under the alleged scam some MPs who travel interstate are charging Parliament for expensive fully flexible airfares with a return date less than five days later.

It is alleged the MPs are then extending their stay without telling Parliament, to avoid FBT reporting rules.

Under federal tax law, anyone who stays away more than five nights on business is obliged to keep a travel diary and submit it to their employer if their employer paid for their airfare.

My first question would have been:

Why are state MPs travelling interstate at all?

I can think of no reason why state MPs should be travelling interstate on (government/parliamentary) business. But, okay. Moving along.

What I can’t work out is whether this “rort” has any actual taxation consequences. In Australia FBT is paid by employers and not employees – so the Victorian Parliament would be up for any FBT. But different levels of government don’t tax each other (one of the reasons the ACT is broke – they can’t charge the federal government a payroll tax). So the question is whether the Victorian Parliament has to actually pay the FBT or just keeps track of the notional liability. Conversely I suppose given the fiction that MPs are self-employed, they may have to pay the FBT. I’m sure our resident tax law experts might be able to clear that up in the thread.

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10 Responses to A strange tax story

  1. Disillusioned

    Under federal tax law, anyone who stays away more than five nights on business is obliged to keep a travel diary and submit it to their employer if their employer paid for their airfare.

    Why. What business is it of the federal government unless it involves federal public servants?

  2. fhb

    What really gets me is the fact that given the full knowledge of Williamson/Wilson/Thompson/Jackson slush funds there seems to be no mention of the tax office investigating that undeclared income. We are talking about significant sums which I’m sure that if any normal PAYE taxpayer were to hide, the ATO would come after them with all their resources.

  3. sabrina

    Name them. I can not have respect for politicians.

  4. Dr. Sir Fred Lenin

    What a pity the Canberra Town Council cannot charge us this tax .it stops them from buyingmore “BLOONS” .like that stupid thing they had recently.

  5. Des Deskperson

    One issue here, surely, is that whatever tax rorts the Victorian MPs are up to, they are using the flexible fare system to do it and charging the taxpayer.

    A QANTAS flexible fare one way Melbourne to Syndey is $200, non-flexible is around $140, and that ‘s economy. Polies presumably fly business where the cost difference would likely be greater. It used to be much higher!

    As for State politicians travelling interstate at all, well, the ACT Government, with no foreign policy or border interests or responsibilities at all – it’s landlocked – regularly sends its politicians all over the world.

  6. Des Deskperson

    And speaking of taxpayer-funded travel, Victoria still has an Agent-General in London. The current incumbent is one Geoffrey Conaghan. His predecessor was Sally Capp, described by Wikipedia as a former director of Collingwood Football Club, ‘being the first woman to serve on the board of that club’.

    I believe that most other States have overseas appointees with similar, err, responsibilities

  7. Tim Neilson

    You’re right, Sinc, States don’t pay FBT. But perhaps there’s some Grants Commission issue where they’re supposed to keep track of it? In which case they’d be more or less ripping off the nation’s taxpayers anyway.
    And Des’s point above about the extra cost of flexible fares means that, whatever the rort is, it ought to stop.

  8. boy on a bike

    COAG meetings? Can’t think of many other reasons.

  9. David

    But they are “pollies”. They have to travel. It is in the genes. :-)

    Before retirement I travelled extensively and paid my own Business Class fares. I used to see a lot of travelling pollies and it annoyed the crap out of me that the pricks were sitting up the front without asking if I, a taxpayer, had approved of their seating option.

  10. JohnA

    boy on a bike #1413715, posted on August 12, 2014 at 9:47 am

    COAG meetings? Can’t think of many other reasons.

    Yes, but there is plenty in that.

    We have so much faux-centralism in the form of co-operative legislation, that they are kept very busy seeing how the other States/Territories are doing things, and making suyre that they stay in line.

    And which government is going to send a team that can do the job in five days if they can take ten? /sarc

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