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Crown bet that Victoria ‘wouldn’t notice’ its possible tax rort

Crown Resorts decided not to tell Victoria’s gambling regulator it may have been cheating on its taxes for six years because it did not think the watchdog would notice the underpayment.

Victoria’s royal commission into the casino giant also heard on Monday that the possible underpayment of up to $272 million in tax has only come to light now because details were sent to the inquiry by accident.

Xavier Walsh, CEO of Crown Melbourne, giving evidence to Victoria’s royal commission into the casino on Monday, July 5 2021.

Xavier Walsh, CEO of Crown Melbourne, giving evidence to Victoria’s royal commission into the casino on Monday, July 5 2021.

Crown Melbourne chief executive Xavier Walsh said he first became aware of the practice of classifying marketing giveaways – such as drinks and free car parking – as player “winnings” to reduce how much tax it paid Victoria from poker machine revenue in 2018, when he read a 2012 memo explaining the new policy.

The questionable deductions mean Crown may have underpaid between $8 million and $272 million to the Victorian government since 2012, depending on the calculation, the inquiry has heard.

Crown decided in 2012 that, given other changes at the casino’s tax rates around the time, the new deductions “will not be noticed” by the Victorian Commission for Gaming and Liquor Regulation (VCGLR), the memo said.

Commissioner Ray Finkelstein, QC, asked Mr Walsh why “this kind of deception didn’t worry you enough in 2018 to do anything about it?”

“And probably worse than that,” Commissioner Finkelstein said, “this kind of deception was known to many people in the organisation and it didn’t seem to trouble anybody – they were happy to go along with it.”

Mr Walsh said he took “too much comfort” in the fact that the VCGLR looked at the deductions in 2018 and “didn’t ask any further questions”.

It was a sign of Crown’s poor culture that it did not earlier raise the issue with the VCGLR itself, Mr Walsh said, but that had changed recently due to a significant turnover in management and board members following the Bergin inquiry in NSW.

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