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Hellfire Club
19 November, 2009  
The Archers

Ins and outs of Stephen Archer’s lifestyle … The income … The spending … There was always a Merc in the garage and excellent wine on the table … All helped along with a special tax rate of eight percent

imageAfter a long-winded series of tortures the Bureau de Spank has finally come to grips with the idea that former Sydney-Perth red wine and cheese barrister Stephen Archer (pic) is guilty of professional misconduct.

See reasons

The hearing into penalty is on today (Thursday) November 19.

Between 1991 and 2002 Archer was made bankrupt three times with the sole or principal creditor on each occasion being the Australian Taxation Office.

In February 2001, The Sydney Morning Herald identified six barristers in NSW, including Archer, who had failed to pay proper amounts of income tax.

In September 2001 Archer asked the bar council to cancel his ticket, which it did in October that year.

The complaint that was the subject of the proceedings before the Administrative Decisions Tribunal was made by the bar council on August 29, 2002.

The council resolved on July 31, 2003 that the current proceedings be instituted.

And here we are six years later.

Not that Archer was too helpful.

In a letter to the bar on November 19, 2002, he said:

“I acknowledge that in the years 1988 to 2001, I did not pay all the income tax I was liable to pay. I paid substantial income tax but I have no intention of disclosing to the bar council what tax I paid and what I did not pay.”

On July 5, 2003 he sent this missive to the chief barman:

“How is this complaint to be proved, that is, by admissible evidence? Only the ATO and I know the true facts of my taxation affairs. The ATO is unable to provide you with information. You may be assured that I will do nothing to help you prove any of the allegations made in the draft report.”

Still, what has emerged about the rumpled geezer’s money management is instructive.

In the three statements of affairs relating to his bankruptcies Archer admitted that he failed to pay $2,772,884 to the ATO over the period covered in his statements.

imageThe bar’s counsel, Christine Adamson (pic), submitted that this understated his true position and that between 1988 and 2002 he should have paid more than $3 million to the ATO.

In one piece of correspondence the Insolvency Trustee Service said that it understood Archer had paid no tax on income earned in 1993, 1994 and 1995.

According to calculations made by Denis Robertson, a chartered accountant engaged by the bar ‘n’ grill, Archer’s gross income between 1988 and 2002 was nearly $8.9 million.

After deduction of practice expenses of $3.5 million, his net income for the period was $5.4 million.

Archer’s total taxable income for those 14-years was $5.4 million.

The ratio of the total amount actually received by the ATO from Archer during this time ($428,406), to his taxable income was no more than eight percent.

Here’s the picture of Archer’s fluctuating gross income during the relevant years (figures are rounded).

Period leading up to his first bankruptcy
1989: $1.7 million
1990: $0.8 million
1991: $0.6 million

Period leading up to his second bankruptcy
1995: $0.6 million
1996: $0.1 million
1997: $0.2 million

Period leading up to his third bankruptcy
2000: $0.5 million
2001: $0.5 million
2002: $0.1 million

(In the last of these years he was only in practice for three months.)

With a total taxable income of $5.4 for the relevant period the tax he was assessed came to $2.5 million.

The total of Archer’s “after tax cash” was $2.9 million.

As a rough guide the yearly average of his after tax cash over the 15 years was $191,922.

This was the amount available each year for him to spend if he had paid all his assessable tax.

The evidence as to Archer’s expenditure was “far from complete”. He said this was because he paid most of his bills in cash.

The big amount he received in 1989 ($1.7 million) included $1.3 million as a retainer from Perth wide-boy Laurie Connell.

In a sense this was his undoing because it enabled him to live it up for two years. By the time he had to pay his tax bill his income had fallen quite substantially.

The ADT also pointed to the deed executed under the Family Law Act whereby he made “permanent provision” for his wife (to whom he is still married) and two daughters.

This included an indexed $5,500 a month for maintenance, lump sums, phone charges, school fees and holidays, plus a motor car replaceable every five years “of a standard not less than that of a Mercedes Benz 280 SE sedan”.

From tax years 1998 to 2001 he paid his wife a total of $828,635, or an average annual amount of $207,140.

In his second bankruptcy he listed Mrs Archer as an unsecured creditor for $94,300.

One of the complaints of the bar council was that Archer never sought to vary the terms of the Family Law agreement, even when he was having trouble paying his tax.

Denis Robertson also identified significant amounts withdrawn each year from Archer’s account at the St George Bank.

The total of unallocated withdrawals between 1998 and 2001 was $475,334. There was also $457,220 of “cash withdrawals” for the same period.

There was also a total expenditure of $52,522 on wine during those four tax years, or an average of $13,631 a year.

One of Archer’s explanations for all this trouble was that between 1974 and 1980 he was a partner in Simons & Baffsky where he conducted litigation against the ATO on behalf of clients who were involved in Curran tax loss schemes.

He was involved in a Curran scheme himself.

In some of the litigation against the Deputy Commissioner he was successful.

As a result of these successes he believed that ATO officers “appeared to harden” their attitude towards him.

Poor Stephen Archer. He made a lot of money, but never enough to pay all his tax.