In Multi-Million-Dollar Tax Tussle, Aussies Back The Artful Gambler
By Bernard LaganJuly 31, 2012
Does the Australian Tax Office have a case against gambler millionaire David Walsh? We’ll soon find out. In the meantime, Australians have come out in defence of the owner of MONA and the art museum he built for the public.
A menacing silver two-seater Mercedes is lodged in the disabled car space at Tasmania's Museum of Old and New Art — a sign that the founder is at work. "Yeah, David likes to give us grief," smiles an attendant at Tasmania's Museum of Old and New Art. Australia's biggest, most lavish and wildly provocative private museum is housed here, in sandstone galleries cascading along a cliff top overlooking the Derwent River.
Its over-arching themes of sex and death — Walsh counts the pursuit of the first and the avoidance of the second as the most fundamental of human endeavours — have pulled in over 600,000 visitors since it opened last year. MONA, as the museum is known, has benefited tourism ventures across the island state and has elevated the already tall, eccentric, candid and complex Walsh — on the cusp of his 51st birthday — to one of Hobart's most recognised figures.
He was once, he says, a shrinking nerd full of colliding emotions. His success and profile have changed how women relate to him; "Yeah, it's funny," he says. "Now nerdism is popular and chicks want to fuck me, but then they didn't."
It's not a public profile the father of two daughters particularly enjoys. He grew his grey hair down to his shoulders in an effort at disguise, but eventually it made him even harder to miss. A few weeks ago he reverted to a cruel short cut. This transformation occurred during Walsh's tussle with the Australian Taxation Office (ATO), which is seeking $37.7 million from him, plus interest — an amount that Walsh is fiercely contesting.
A standout maths student who withdrew from his science studies at university in Tasmania, Walsh became the founding member of a Hobart gambling ring. According to the ATO, that consortium has grown into a global gaming business, hitting a turnover of over $2.4 billion in 2006; and it has consistently exceeded volumes of $2 billion a year since then. The tax office claims that the gambling syndicate's 19 members — most of whom have since left Australia — use sophisticated computer programs and technology to reap enormous profits from gambling, mostly by punting on thoroughbred, harness and greyhound racing. According to recent reports, its systems use complex mathematical algorithms to place a wave of betting just before a race starts.
Perversely, the tax office's pursuit of Walsh has unleashed a series of high defenders of the gambler and collector. They are people not normally given to shielding tax avoiders, and include former Greens leader, Bob Brown, and Tasmania's premier, Lara Giddings. The concern is that the future of the museum — which Walsh describes as his life's work — might be affected by the tax office's actions. MONA has so far cost him more than $55 million to build and fit out, and it houses collections worth at least $100 million.
A Facebook campaign set up by his defenders has drawn support from more than 4,500 people, many of whom have used the forum to lambast the tax office. One supporter, David Moore, directs attention to the 170 jobs that have been created at MONA and the spin-offs it has created for Tasmanian tourism.
"When MONA goes belly-up they'll [the ATO] get nothing at all, forever, from that and many other businesses being supported by it," Moore writes.
Another follower, Neill Rose writes: "The ATO is going after the wrong people all the time. Give David Walsh a break. He has put all his own funds behind it. I find this action by the ATO bloody un-Australian!"
And from Andy Mullins: "Keep punting, DW. I have no need for your taxes, just your art."
In an interview with The Global Mail, Walsh said that he is about to go into a dispute-resolution process with the ATO, a move he believes will end the tussle.
Walsh interprets the outpouring of support for himself and MONA, prompted by the tax case, as a sign that the public, particularly Tasmanians, value his efforts to establish the museum. "What I see is ownership, you know, of MONA," Walsh says. "And I absolutely love it, but I certainly didn't predict it."
After all, Walsh, a committed atheist prone to subversive ideas, didn't particularly set out to please people by opening his museum. Rather he sought a form of engagement with the museum's visitors who would, he hoped, see the art and be provoked into self-analysis.
"I can tell you that I do think MONA is life-affirming. I think that, hopefully, we have given people the mechanism to stop them lying to themselves. However, you do build community support and there is a leaning toward the positive," he says of the public's interpretation of his project and his motives. "A lot of people are taking that attitude [about MONA] that is, 'Well at least somebody is doing something'.
"It's like me walking into a Catholic Church, suspending my disbeliefs, giving it a go and finding it beautiful. They walk into my museum and they give it a go and sometimes they find it profound."
If Walsh set out to subvert ideas of what an art museum should be, then he has succeeded. Some of the more than 1,560 antiquities and 650 modernist and contemporary works — which range from those by young, edgy British artist Chris Ofili (first brought to prominence by the London adman and collector Charles Saatchi), to a bloated red Porsche car and Egyptian mummies — send parents (they are warned) and children scattering. The former mayor of New York, Rudy Giuliani, was so affronted by Ofili's Holy Virgin Mary that he threatened to cut off funds to the Brooklyn Museum of Art when it showed the work in 1999. He famously said of it: "There is nothing in the First Amendment that supports horrible and disgusting projects." It now hangs in MONA, and, to fill you in, it depicts a black Madonna with a clump of elephant dung at her breast and magazine cut-outs of genitalia in the background.
But the work that causes the biggest stink is more a contraption. Belgian artist Wim Delvoye's Cloaca Professional consists of a series of suspended glass receptacles interconnected with pipes and tubing, which is a working replica of the human digestive system. Around 2pm each day it produces a bucket of poo — an event so popular, that it usually plays to a packed house, standing room only.
While these are the headline acts of MONA, Walsh has thought long and deeply about art, and has shelled out millions for more conventional Australian works. In 2006 he revealed himself and his intentions for MONA when he stepped out of the shadows of the art world to snap up John Brack's The Bar for $3.1 million. In this, Walsh pipped the National Gallery of Victoria, which had intended to hang the work beside Brack's companion piece, Collins St, 5 pm.
He reserves his fiercest admiration for the work of the late Sir Sidney Nolan, and has made space at MONA for the artist's Herculean work, Snake, which is 44 metres long and made up of 1,620 panels in the shape of a Rainbow Serpent — a motif deeply ingrained in Aboriginal mythology. Until Walsh found the space to display it, Nolan's work had languished in government storage for over 40 years.
It is Nolan's indefatigability that entrances Walsh. "I believe that [our experience of] art is a totally arbitrary engagement. But for me Nolan is the greatest Australian artist, the most interesting Australian artist, the most relentless Australian artist and the most honourable because he was prepared to cut himself open and bleed for his art," he says.
The introspective and iconoclastic characteristics of Nolan might also be said to beat in Walsh's heart. Walsh is not an acquirer of art out to impress others and nor did he build MONA as some kind of hill-top totem to his achievements.
"I am not sure all of my behavior is rational," he says. "I think most of the things we do, we ascribe meaning to them only after we've done them and they are generally successful. I kind of got lucky. I built something that a few people think is pretty fine. I think if I did it a million times, it wouldn't have turned out that well a million times. It may only come out that well once."
He continues: "Most of the time people try to make it sound as if this [an undertaking such as MONA] is what I have always wanted to do; this is my idea, it's my plan and it's come to fruition. Well, I just don't feel like that. I did something, then I did something else and it turned into something else … and it ended up where I am now. The level of certainty was quite low."
Emboldened by the museum's success, Walsh does now have bigger dreams for MONA. But first he must deal with the tax office, and he hopes a resolution will emerge from the forthcoming mediation.
The tax office has not been forthcoming about its dispute with Walsh, but Chris Seage, a former tax office audit manager and now tax consultant, has told the ABC that he understands the ATO did, originally, give Walsh a private ruling that his income from gambling was not assessable for tax. However, according to Seage, if the ATO subsequently decides it did not know all about the nature of Walsh's gambling operation, its original ruling may no longer be valid.
The tax office's position on gambling or betting wins has been well known since 1991 when it issued a draft ruling on the tax treatment of winnings. The ruling said that the proceeds of gambling and betting would not be taxed unless they had been generated by a gambling or betting business.
The ATO's case against Walsh, therefore, revolves around whether or not the gambling operation in which he is involved is effectively a business. According to Tax Office court documents filed in the case, Walsh's syndicate employs about 300 people in Hobart and Sydney. It places bets globally, including on races in England, Japan and the United States.
Walsh's view is that the ATO has changed its position in relation to gambling activities.
In the light of its earlier advice — that gambling winnings are not taxable — he maintains that the tax office has since reversed its opinion and is retrospectively trying to wring more money from him than it is entitled to.
"The problem is that they're being retrospective and that's highly unsound," he says.
He adds: "Obviously I would say this, but I believe we have a strong case. I think we will get an outcome through mediation. I think we are going to find a solution."