Tax-dodging Australian celebrities, actors and sports stars will soon be forced to hand over more of their hard-earned cash as part of the federal government’s aptly titled “Fame Tax” crackdown.
From 1 July 2019 the loophole that allows top earners to dodge income tax by funneling their money through a business, trust or company will be closed.
How does it work?
Let’s say Chris is an actor who earns $100 million a year and has just licensed his brand to a supplements company.
That puts him in Australia’s top tax bracket. But Chris doesn't want to pay up to $48 million in tax. (Who would?!)
So, instead of getting his salary paid into his personal bank account, Chris licenses his name and image to a business. That business then contracts the use of the image on his behalf and pays him a salary.
Companies pay 30% tax, but only on profits. So if Chris claims his expenses as a business cost, the result could mean he pays very little or no tax.
BuzzFeed News understands the fame tax is an initiative of the Australian Tax Office as part of its bid to make all Australians pay their fair share of tax.
It currently believes that highly paid celebrities are taking advantage of lower tax rates, and wants all money they make included in their assessable income.
The government wouldn’t tell BuzzFeed News exactly how much money it expects to raise from the fame tax, just that it was an “unquantifiable amount”.
It also wouldn’t give any indication of the celebrities it has in its sights.