Malcolm Turnbull has declared that all income from his investments in managed funds registered in the Cayman Islands – which is described as a tax haven – is taxed in full in Australia.
Turnbull’s statement on his financial affairs followed Labor senator Sam Dastyari raising in the Senate Turnbull’s investments in several funds domiciled in the Cayman Islands. Later, the opposition pressed the issue in Question Time.
All these Turnbull investments were legal and disclosed on the register of interests, Dastyari said. “But is any of it appropriate?”
“There is one reason I know why people invest in the Cayman Islands and that is so they do not have to play by the same rules as the rest of us,” he said.
“How is it appropriate, how is it acceptable, that the prime minister of this country has investments sitting in the Cayman Islands?”
Dastyari said there was an impressive, five-storey homestead in the Cayman Islands called Ugland House, where nearly 19,000 corporations claimed to be headquartered.
“In describing this house, President Obama said: ‘Either this is the largest building in the world, or the largest tax scam in the world’.”
Dastyari said that Ugland House “is one of the most pre-eminent addresses in the world for tax minimisation. You have to ask, who invests in the companies that claim to be headquartered in this house? … Among them is our prime minister.”
In January, Turnbull had altered his Register of Members’ Interests to include investments in Zebedee Growth Fund, which was incorporated in Ugland House, Dastyari said. The fund required any outside investor to come up with at least US$250,000.
“And this is not even the only investment the prime minister has in the Cayman Islands. There is the Bowery Opportunity Fund, with a minimum investment of US$1 million. We also know of the 3G Natural Resources Offshore Fund.”
In a statement, Turnbull said that when he became a minister all his investments were approved under the ministerial code of conduct by the secretary of the prime minister’s department.
“In order to avoid conflicts of interest almost all of my financial investments are in overseas managed funds, which means that I have no say in what companies they invest in.
"Thousands of managed funds with investors outside of the USA are registered in the Cayman Islands, with the result that the income of the fund is taxed in the hands of the investors in their own home jurisdictions. So all of my income from my investments including funds registered in the Cayman Islands is taxed in Australia.”
In Question Time, Shadow Treasurer Chris Bowen said the Commissioner of Taxation Chris Jordan had described the Cayman Islands as a tax haven.
Manager of Opposition Business Tony Burke asked whether Turnbull could confirm that “the income that those investments is higher because they are located in the Cayman Islands”.
Turnbull accused Burke of a remarkable “inability to understand the way in which thousands of managed funds with international investors – by which I mean investors outside of the United States – use the Cayman Islands”.
Turnbull said if Labor members looked at their superannuation funds “they may find that many of them are invested in international managed funds which are domiciled in the Cayman Islands”.
“The consequence of that investment is to ensure that all of the tax is paid in Australia. It actually increases the tax that is paid in Australia,” Turnbull said.
“The fact is that all of my and my wife’s income from managed funds is taxed in Australia, and all of that income is taxed here in full.”
The Australian Financial Review reported in September that “an inspection of the new prime minister’s register of member’s interests shows a diverse portfolio conservatively worth about A$200 million, spread across investment classes Australia and the world over”.