Former ATO auditor Chris Seage writes:

Sunday’s revelations in The Sunday Telegraph into the spat between Australia’s most benevolent
GP, Dr James
Wright and the Uncle Scrooge in Australian government, the Australian Taxation
Office, need urgent political intervention.
This debacle is not only
bad news for elderly Australians who were the beneficiaries of Dr Wright’s
low-cost or no-cost
charity known
as the Medi-Aid
Centre Foundation,
but also to the Howard government which may have to step into the financial
breach left by the ATO’s decision to cut Medi-Aid’s
charitable status.

This unfortunate story
broke around the same time as news of the $523,000 tax refund to former HIH
director and corporate criminal Ray Williams,
which was calculated in part due to donations Williams made to charitable

decides on which organisations are charitable institutions and
administers them in accordance with tax ruling TR 2005/21. If you can make much sense out of all that
you are doing better than me.

The tax office action of revoking the tax-exempt status of
Medi-Aid relates to its commercial activities: that the monies derived
by them were allegedly not applied for approved purposes. Dr Wright
responds by saying returns from commercial ventures are poured back
into the charity to subsidise non-commercial investments and what he
calls “do-gooder” projects.

However under paragraph 153 of the ruling it states:
“A charitable institution can have purposes which, when viewed in isolation
would be non-charitable, but which are only for the sake of, or in aid of, or in
furtherance of, its charitable purposes. Such purposes are wholly incidental or
ancillary to fulfilling or furthering its charitable purpose, and so are, in
reality, only aspects of the charitable purpose”.
Clearly this means that
commercial activities undertaken by Dr Wright to further his charity or
“do-gooder” projects are allowable.

It seems to me that some young ambitious tax office clerk sitting at
his or her desk has suddenly found a loophole in Dr Wright’s charity
and knocked it on the head because he hasn’t met some obscure clause in
the plethora of divisions, sub-sections and parts of the acts that
govern charitable institutions. Don’t forget this is the same mob that
gave Liberal Party donor and alleged tax avoider Robert Gerard a $75m
discount on his assessment without penalties and prosecution, and that
won’t report to Parliament on their secret settlements with Corporate

But is it the Howard
government’s intention that the acts be interpreted this way? Suddenly knocking back a charity that has
been operating well for over thirty years is a tough call even in light of some
recent dodgy investments. Someone in the
Howard government has got to take hold of this and sort it out. If, in the end, the government now has to
provide funding for the very activities Dr Wright’s charity was financing, what
has been achieved? Common sense must
prevail. I’m not expecting Treasurer
Peter Costello to smirk his way into this.
But what about Minister for Revenue and
Assistant Treasurer Peter Dutton, who has parliamentary responsibility
for administrative matters relating to the Australian Taxation Office. Here’s your big chance, Mr

Peter Fray

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Peter Fray
Editor-in-chief of Crikey