Wendell, a chartered accountant employed in industry, prepares tax returns from his home for clients during the busy tax return period. He has prepared a joint return of income tax for Mr. and Mrs. brown for the past five years. The Browns are being divorced. Wendell has been asked by the couple to prepare their separate returns during the divorce and to continue as tax advisor for each party after the divorce. Discuss the issues and advise Wendell. Q3. Case Study In order to avoid paying US withholding tax on the copyright royalties from his first film, the Australian film actor Paul Hogan (known as crocodile Dundee after his first movie) was advised by Hollywood tax advisors to place the royalties in Dutch Bank in Curacao. The scheme was known celebrity circles as a "Dutch Sandwich". Much of the money was then moved to Hong Kong, where it was held in various currencies by a chain of Hong Kong trusts. About 1990 using the services of his Australian tax advisor and a Swiss firm of tax haven specialists, various companies were set up in the Channel Islands and other tax havens. Mr. Hogan and his family were able to access the cash from ATMs using cards issued by banks in the tax havens. In February 2004 one of the offshore managers was intercepted while visiting clients in Melbourne and the contents of his laptop were copied by the Australian Crime Commission (a specially established and funded body to find tax evaders) Mr. Hogan's agent speaking on his behalf said "any failure to pay tax was a result of ignorance rather than dishonesty. The investigation was most likely examining the role of Mr. Hogan's tax advisers and not the star himself and that the advisers might not have understood Australia's complex tax laws". Withholding tax on income earned by a taxpayer who works in another country is the same in the USA as in Australia, the UK or Jamaica and other West Indian Islands. In other words, withholding tax must be paid in the country where the income arises. a) Do you agree with Mr. Hogan's agent's quote above? Give reasons for your answer? b) Discuss whether this can be considered aggressive tax planning and comment on the Dutch sandwich scheme. (c) Discuss the ethical concerns with this tax strategy