Superstars and their money How ABBA and the entertainers beat the Australian taxman: It would have cost Rod Stewart $1.2 million to enter the UK, so he didn’t…Alice Cooper spends big on recording sessions…and ABBA’s companies own all their money. By Jules Zenetli

What three-letter word ending in “X” is taboo in the world of show business? If you answered “tax” you’d be right.

The stars don’t mind talking about sex - their own or other people’s. They’ll voice opinions on anything from politics to pot. But ask them how much money they actually earn and how much tax they pay and they clam up.

“Too many people misunderstand the figures,” say Björn Ulvaeus of ABBA. “What we earn is a matter between us and the tax man.”

Through their network of companies registered in Sweden, ABBA pay between 56 percent and 85 percent tax on their huge earnings. They would have been lucky to net $300,000 from their recent Australian tour - about the same amount the Australian tax man took from the $1.5 million plus gross receipts.

Alice Cooper thinks nothing of spending hundreds of thousands of dollars on a recording session. “If I don’t spend it, I pay it in taxes anyway,” he says. His recent Australian tour cost $400,000 to stage. He gets a six-figure contract for a week’s work, with free stage hands and accommodation thrown in. But taxes account for 60 cents in every dollar of what’s left after all expenses have been paid.

Tom Jones has chosen to live in America because, he claimed, he was paying 98 cents-in-the-dollar tax in Britain. Certainly, the British tax system is infamous on world standards, though Australia also has a bad rating on the tax scale. (Sam’s comment: 98 is what it’s printed in the actual article. I assume it’s a mistake and probably should have been 68 cents-in the-dollar instead?)

Rod Stewart and his beautiful blonde companion, Britt Ekland, have also been driven out of Britain because of tax problems. Stewart set up a base in Dublin to promote his record album, Atlantic Crossing.

On a flight from Nice to Dublin their plane was diverted to London’s Heathrow airport. Stewart refused to enter customs because this would have involved an official re-entry into Britain and the tax man was waiting with a bill for $1,250,000. Rod and Britt chose to fly back to the Continent and embark on a direct flight to Ireland 

Soon after, he sold his million-dollar, 32-room Georgian mansion at Windsor and set up home in a Beverly Hills mansion next door to Barbra Streisand. “I don’t mind paying my fair share of taxes, but in England now it’s become daylight robbery,” he stormed.

On his Australian tour, Rod Stewart’s promoters grossed $240,000 from a single concert at Sydney Showground. Stewart’s fee was not disclosed, but local taxes would have taken about 42½ percent of the net, and the US Department of Internal Revenue another 20 percent when he got home.

Stewart arranged to have a $93,000 Lamborghini, bought in Brisbane, delivered to his home in California. Without duty or sales tax, it cost him $55,000. But he would still have had to pay duty in the U.S. Rod Stewart was philosophical. “It’s one way to get a few bucks out,” he said.

A few years ago entertainers regarded Australia as easy pickings financially, but they are finding these days that the tax and treasury officials have become much more sophisticated and much harder to dodge.

For a start, tour promoters cannot even sign up a visiting celebrity until the Reserve Bank has vetted the contract. If the Bank doesn’t approve the contractual arrangements, none of the proceeds of the tour can be exported out of the country.

The Reserve Bank has also drawn up a list of what it regards as tax haven countries. If one of these havens is involved in the dispersal of profits, the Reserve Bank insists that the Taxation Department also vets the contract.

But where there is a tax agreement between Australia and the other countries involved, the tax man is content to tax at normal rates (about 42½ percent for companies and up to 60 percent for personal income).

Naturally, most visiting entertainers have formed themselves into companies to avoid paying the higher rate of tax. Many employ top-flight chartered accountants to help them devise ways of avoiding paying excessive tax, and to advise them on investing the net proceeds from a tour.

One firm of Sydney accountants, which specialises in handling financial arrangements for “second line” stage and TV personalities, most of whom perform on the lucrative club circuit, told us: “Most of these people are hopeless about money. They have big overdrafts and mortgage repayments, just like you and I.

Many of them regard a six-week tour of Australia as a working holiday. As long as they cover their expenses they are content. They live it up, of course. They want the best accommodation, first class air travel, top-class restaurants, some huge liquor bills, and all the other extras associated with the lifestyle of a celebrity.”

Of course there are still ways to beat the tax man. Roy Dotrice, for instance, took a tax-free holiday from Britain. He told the authorities he would be out of the country for a full year and accordingly would not be incurring any British taxes.

He spent quite a bit of that year performing his one-man show in Australia - and merely paid at the Australian rate of tax.

There are other methods of tax avoidance, usually involving a tax haven country. One rather complicated device involves a UK artist selling his services for a year to a company in, say, the Bahamas. The Bahamian company then sells a contract for the artist to a London company which in turn sells it to an Australian company.

By a round-robin method, the artist is eventually paid the proceeds of the tour tax-free in the Bahamas, and is entitled to export the funds back to the UK. Getting the cash back to the home base is always the difficulty where tax avoidance schemes are involved.

Another popular “dodge” for visiting celebrities is to enter into a contract with an international advertising agency to do a TV commercial while in Australia. As the commercial may well be shown in several countries, the fee can be split up and paid in these countries.

In this way, an artist may be able to enjoy a virtually tax-free holiday in, say, Hong Kong at the end of a strenuous Australian tour.

According to our accountant friend, who was naturally keen that we did not name his clients, many visiting entertainers like to invest the net proceeds of an Australian tour in this country as a nest egg for a subsequent holiday trip or for their retirement. Often they leave the investment details to the accountant.

Some well-known entertainers are substantial shareholders in Australian corporations, own tracts of rural land, or enter into partnerships in hotels, home units and city properties.

Many of these investments have “evaporated” over the past two years with the decline in share prices and the crash in property values. But the artists keep coming back. They like Australian audiences. They like the free-and-easy lifestyle here. And the club circuit pays good money and offers low overheads and commissions.

While many celebrities, big or small, go to elaborate lengths to avoid paying tax, ABBA is one group that doesn’t bother. Instead of establishing domicile in a tax haven country like Switzerland, the channel islands or the Bahamas, they choose to live in Sweden one of the most heavily-taxed countries in the world.

Says Frida: “We’d rather be poorer and happy living in Sweden than richer and unhappy somewhere else.” That means paying taxes of up to 85 cents in every dollar earned!

In Sweden they like to joke that ABBA is the nation’s biggest provider of revenue outside of Volvo. An exaggeration, of course, but just one of ABBA’s five companies is reputed to have paid a staggering $5.6 million tax over the past two years.

Just before their Australian tour, ABBA played two concerts at London’s 6,000-seat Royal Albert Hall. Both shows were completely booked out and scalpers were asking and getting $150 a ticket. Yet ABBA lost $500,000 on the two shows. Stig Anderson, the group’s manager, said at the outset of the Australian tour he was hoping it might recompense the London losses. But he wasn’t optimistic.

“This is not a profit-making tour,” said Anderson. “We want to show our appreciation to the Australian public.”

With an entourage of 105 people, tonnes of sound and stage equipment to be transported from Europe, a six-figure advertising campaign and all the incidentals of an elaborate Australian tour. Anderson estimated total costs of about $500,000.

Of the $1.4 million box office, the Australian Performing Rights Association got a little less than 10 percent (but about a quarter of this would eventually be repaid to ABBA). Commissions to agents, entrepreneurs, publicists and accountant would have taken another 20 percent off the top. This would have left at best about $500,000 profits on the tour.

ABBA, or rather their corporation, would have had to pay the Australian Government about $200,000 of this. In Sweden they would be taxed at a rate of about 56 percent company tax on the same $500,000. But because of double tax agreements, the tax already paid in Australia would be discounted from the Swedish bill.

As well as the tour itself, ABBA negotiated a film deal and a seven-figure advertising deal. But again, all net proceeds were subject to Australian and/or Swedish taxes.

No one is more conscious of taxation and the problems it can bring than Benny Andersson. He learned the hard way, long before ABBA was thought of.

In 1964 he joined The Hep Stars as an organist and they quickly went to the top in Sweden. But they were inexperienced in business matters and no one bothered top lodge any tax returns. By 1967 The Hep Stars’ tax debt had swollen to well over $200,000.

When the group split in 1969, Benny called in an accountant to sort out the mess, and spent the next four years writing songs and using the proceeds to clear the debt.

“Stig Anderson taught me the importance of straight economic thinking and an ordered life,” he said recently. “It’s much easier to face up to the responsibilities that go with making money, pay the tax and enjoy what’s left over with a free conscience.”

For ABBA, of course, there is still plenty left. Their corporate business approach ensures control over everything they do. They write, publish and produce their own songs and records, and earnings are eventually channeled into Harlekin AB, which in turn pays the quartet’s salaries.

Official salaries quoted to the Swedish tax authorities in 1975 were – believe it or not! – Björn $76,000; Agnetha $61,000; Anni-Frid $52,000; Benny $77,000.

Photos: (1) ABBA: all their earnings are channeled through a network of companies, but they still pay up to 85 percent in tax. (2) Alice: His earnings attract tax at around 60 percent so he slumps for as much tax-deductible spending as possible. Hundreds of thousands of dollars will go on a recording session - “If I don’t spend it, I pay it in taxes anyway…” (3) Rod and Britt: A $93,000 Lamborghini was “one way to get a few bucks out” of Australia and pay less in tax. Transcribed for ABBA World

Pix/People (Australia) · 2 June 1977 (Pages 6 & 7)

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