Dick Smith donates $1m to the ATO after discovering he owed no tax due to his generous donations to charities

After discovering that he’d paid no tax, due to donating $5m to charity, Dick Smith insisted the ATO take a million dollar donation as his contribution to the country.

Dick Smith sees it as an iron-clad obligation of the wealthy to give back to the country that made them rich. And this includes paying tax. Picture: Nikki Short

It was, as tax Commissioner Chris Jordan said, among the more unusual requests to come across his desk “in my 10 years as commissioner”: an angry complaint from a wealthy Australian, incensed that he hadn’t paid enough tax.

In fact, he hadn’t paid any tax at all. Not a cent. The businessman was Dick Smith.

Smith and his wife Pip had been particularly generous last year and had donated more than $5m to various charities, such as the Salvos, Vinnies and Mission Australia. Smith sees it as an iron-clad obligation of the wealthy to give back to the country that made them rich.

And this includes paying tax. He’s proud of the fact that for 40-odd years he’s paid more than $1m a year in tax and is scathing of others who’ve hidden their wealth abroad, or hired expensive consultants to set up dubious structures to game the system.

Many self-made rich people believe they’ve got to where they are entirely through their own grit and wit. Very often, so do those who’ve inherited it. Smith reckons we all got a head start, just being born in Australia, and that the services, the infrastructure and the stability provided by our governments allows people like him to accumulate their ship loads.

And so he was miffed when his accountant told him his generous donations last year had reduced his tax bill to zero.

Dick Smith at home in Sydney on Friday. He has given $1m to the Tax Department after he wasn’t required to pay anything. Picture: Nikki Short

“I simply couldn’t believe that no tax would be payable at all, and I believe this is quite wrong,” he said.

Data from the Australian Taxation Office in 2020-21 showed that 66 very wealthy Australians, who had trousered more than $1bn ­between them the previous year, had paid zero tax – not even the Medicare levy.

Smith reckons these selfish squillionaires are bludging off the rest of us. He didn’t want to be one of those people, and so he wrote to the Tax Commissioner, offering to chip in $1m to the nation’s coffers.

At first, he was rebuffed. It seemed there was no mechanism for him to do so. But the tax office found a way past having to peer into the gob of this thoroughbred nag. Following a meeting, Deputy Commissioner Louise Clarke emailed him to say: “I confirm that you can make a conscience payment into consolidated revenue.”

The email gave him the ATO’s BSB and account number and Smith transferred $1m.

But it niggled away at him. He pointed out that he was number 49 on the AFR’s Philanthropy 50 list and there are others above him, far wealthier, who also are likely to have paid little or no tax.

He believes this is wrong and he found references in old newspapers of people sending in anonymous “conscience money” to the tax office and other government departments for money they felt they owed. This seems to have been particularly prevalent during World War II, when those funds went to pay for the war effort.

And so he wrote to Anthony Albanese, pointing out that many rich people had employed dodgy accounting methods to reduce their tax to zero, which was “outrageous”.

He told the Prime Minister that he and his wife had paid no tax. “We benefited from the tax that other people paid, through their contributions towards the extraordinary security that our federal police and defence services provide, Medicare, environmental conservation…Would you give me support in looking at the tax act to make changes so that wealthy people who benefit from Australian services pay their share?”

Albanese wrote back: “A wealthy individual who does not pay tax, and does not have a legitimate reason for doing so, is more likely to attract the ATO’s attention,” he said, and that the government had provided additional resources to the ATO to go after these blood suckers.

Smith didn’t think this was good enough.

“Pip and I believe it is really important for all wealthy Australians, who benefit from the fantastic services provided by our federal and state governments, to put in our fair share,” he said.

He is now campaigning on this issue to see if he can get at least one politician to support changes to tax legislation. “The fact that Pip and I are living on the wealth of this country – having the police, the hospitals, the roads, the airports, the defence forces – everything for free, is completely wrong,” he said.