The Australian Crime Commission yesterday waved the white flag in its fight against Australian entertainment icon Paul Hogan and his manager and mate John Cornell by declaring it will discontinue its current criminal investigation of the pair under its Operation Wickenby investigation into international tax fraud.

The ACC has been described by Crikey commentator Greg Barnes as “the closest thing our nation has to a star chamber”. So, after five long years hunting Hogan down, pursuing him through the courts and abusing his civil liberties, they have come up with a donut — a big zero.

Hogan isn’t exactly in the clear yet with the other Wickenby authorities. He is still fighting the tax office over his tax bill I estimate to be around $95 million dollars. Hogan’s lawyers have publically confirmed my estimate as “within the ball park of what we are talking about”.

At the moment the ATO is considering detailed and lengthy objections to those assessments from Hogan’s lawyers Robinson Legal in Sydney. However, Andrew Robinson told Crikey this morning that he believes the ACC decision could have a flow-on effect to the civil matter of the tax bill with the tax office. This is because the ACC did not find any criminality or intentional disregard of the tax laws.

This is great news for Hogan who has declared he couldn’t pay a tenth of what the ATO are demanding. I calculated his tax bill this way:

  • $18.2 million in evaded tax
  • $13.5 million in penalties (75%)
  • $63.3 million in late payment penalty and general interest charge.

The 75% penalty levied on Hogan was based on the ATO’s claim he had “intentionally disregarded” the law. But after Robinson’s insight this morning, Hogan looks like he will face a drastically reduced tax bill because the penalties will be much less than anticipated and this will also affect the vast amounts of late payment penalty and general interest charge.

Another factor is that if the ATO can’t prove fraud or evasion then under tax law they can’t open up earlier assessments. If this happens it will wipe over 90% of what the ATO is demanding — the bill he currently faces goes back all the way to 1987 — but if fraud and evasion is not found the ATO can only go back four years. Instead of facing a $95 million bill he could now be asked to cough up as little as $5 million. Hoges must be laughing.

Robinson also believes the issues at the heart of the dispute will now be looked at more favorably by the ATO. He maintains that Hogan was acting on the best tax and legal advice available in Australia and around the world.

I’ve previously told Crikey readers that Hogan’s tax haven advice came from Graham Hill QC who went on to become a judge of the Federal Court. Hill (who is now deceased) was once described by former High Court Justice Michael McHugh as “probably the leading lawyer in Australia on taxation matters”. He was also a friend of the tax commissioner Michael D’Ascenzo.