In Britain, the Church of Scientology is supposed to pay tax on the millions of pounds it brings in each year. Now, the organisation has been accused of claiming its entire UK operation is part of its Australian outfit.
Here, Scientology is recognised as a religion and does not pay tax. It's alleged the church is using this, combined with some lax laws covering incorporated associations, to avoid paying its dues in the old Dart.
Ten years ago authorities in Britain told the Church of Scientology it would have to pay tax, that it was not a charity. To avoid paying tax in the UK it's alleged they made the entire Church of Scientology in Britain a member of a tiny little association incorporated here in South Australia.
From its non-existent offices in Adelaide the tiny incorporated association boasts as its members, not people, but Churches of Scientology from the United Kingdom, Denmark, Belgium, France, Holland, Germany and Sweden. They have a member in South Africa too.
Today Tonight discovered a global multinational corporation boasting more members in Canada, including Montreal, Ottawa, Toronto and British Columbia.
They operate under a company called the Church of Scientology Religious Education College Incorporated, or COSRECI.
The British wing, like all branches of Scientology, sells its books, tapes, DVD's and courses for profit and employs a small army of so-called volunteers, who work up to 80, even 100 hours every week.
Ian Howarth, the founder of Britain's Cult Information Service, has helped many people trapped inside Scientology to escape.
"Well in my experience people don't actually join Scientology, it's usually a case of being recruited. They'll often go along and do some kind of a personality test and then low and behold they find there is something wrong with them and guess who's going to solve that problem, Scientology,” Howarth said.
"It's the one group in Britain that's been denied full charitable status so it doesn't have the recognition that the average religious group has, and yet it still allegedly isn't paying taxes... this is outrageous," Howarth added.
"The British citizen should not be paying Scientology's bills, if you will, Scientology should be paying taxes."Britain is in the throws of a terrible depression - that's about to get worse. With over 2.5 million people out of work the new government has savagely cut spending and is contemplating a rise in VAT, their Goods and Services Tax. That is the only tax Scientology is exempt from paying in the UK.
"Well its interesting that it's come up at this time isn't it when Britain is suffering,” Howarth said. "We're in the middle of a major recession people are struggling to make ends meet and yet, allegedly, Scientology has not been paying taxes for many years."
"You know, when I talk to families that are suffering, they're paying. Sometimes they pay financially, they certainly are paying emotionally and I think it's about time that Scientology paid," Howarth said.
Adelaide is 16,259 kilometres from London. Still, the capital of South Australia does have a distinctively British feel, furnished with plenty of reminders of the old country.
It might also be fate that in Scientology's universe of planetary confederates and intergalactic warlords, they chose Adelaide, the city of Churches.
The Independent Senator Nick Xenophon is one of South Australia's favourite sons. He championed the former members of Scientology who spoke out about the abuse inflicted on them. This latest intrigue surprised even him.
"Given what now has been revealed, you need to ask some very serious questions about how this group operates internationally in terms of the flow of money, where the money goes and how it's treated in terms of its tax free status," Senator Xenophon said. "It's a case of follow the money and also show me the money."
"I'd like to think the corporate regulators in the UK will be scratching their heads over this one."
"To say that the Church of Scientology in the UK is a South Australian charity seems pretty bizarre when you look at the evidence."
But that is precisely what Scientology does say. The group has not filed any financial records in South Australia but they've provided un-audited accounts to Companies House in Britain in which they themselves claim: "The Church is a South Australian charity, and is established in England for charitable purposes only. The trustees consider that corporation tax should not therefore be applicable."
"When you look at the fact that the three directors are based in the UK, that returns haven't been filed for the South Australian entity in over 30 years you've got to ask what on earth is going on," Xenophon said.
We do know that Scientology in Britain takes its orders from the group's leader in America, David Miscavige. If they take their orders from the United States, how can Scientology in Britain be run by a South Australian charity?
"Never in my wildest dreams could I imagine that the Church of Scientology's European and UK operations are based on a suburban home in Adelaide," Xenophon said.
South Australian authorities confirmed the group is not a registered charity in Australia. Today Tonight even tracked down the owners of the house listed on the COSRECI Article of Incorporation as their address.
"Oh, we were surprised, I was surprised and had no idea of it until today," the owner said.
The owners are a family who run a market gardening business. They owned the property long before Scientology declared it as their address.
"My parents have owned it for a number of years and I'm unaware of that," the owner said. "My parents are Greek Orthodox and we have no idea it was used in this way."
"Here you have an organisation with hundreds of millions of dollars of revenue over the past few years from their European operations and they rely on their tax free status based on premises in suburban Adelaide," Senator Xenophon said. "You've got to ask whether this little suburban house is a powerhouse for the Church of Scientology or whether it’s really just a house of cards."
"We don't know what they're spending that money on, we hear about management fees being paid to the Church in America," said Senator Xenophon. "This organisation needs to be up front and say how much has been paid in so-called management fees, who it's been paid to, in which country its been to, what transfers have occurred from one country to another and that's what the authorities need to be looking at."
"The Church of Scientology has to come clean on their books, they have to open their books."
"I'll be meeting with the federal government later this week to brief them on this issue and to urge the government to give all cooperation, all support to the UK Government in their investigations."
Following our inquiries, the anti-avoidance group of Her Majesty's Revenue and Customs (HMRC) in Britain are investigating Scientology's tax arrangements to see if they are in breach of their laws. Likewise, the Australian Tax Office and the South Australian Government are looking into the church's corporate structure.
Today Tonight requested an interview with the Church of Scientology but was refused. They supplied us with a brief written response you can view below.
Story LinksSenator Nick Xenophon
Questions to Scientology (sent by email, Friday, June 18, 9:34am):I am writing to request an interview on camera with a spokesperson for you group, to answer the following questions:
- Can you please explain the nature and purpose of COSRECI (Church of Scientology Religious Education College Incorporated)?
- Why is this group registered in South Australia?
- Which domestic and foreign organisations are current members of COSRECI?
- How many staff does COSRECI employ?
- Who is the responsible office holder for COSRECI?
- What is the nature of the business of COSRECI?
- What is the status of COSRECI's tax obligations in Australia?
- How much tax has COSRECI paid in Australia over the past decade?
- Why has COSRECI not filed periodic financial accounts with South Australian regulators?
- Why does the Church of Scientology (United Kingdom) operate under COSRECI?
- What is COSRECI's tax obligations to the UK Government?
- How much tax has COSRECI paid to the UK Government over the past ten years?
Please respond by close of business today.
BryanResponse from Scientology (Received Monday, June 21, 5:02pm):Dear Bryan,With regard to your inquiry about Church of Scientology Religious Education College Inc., I saw your email to the UK Church. I have received the following response for your information
which I am forwarding to you: We don't discuss the details of our tax affairs with the media as you well know. We have lawyers and accountants who make sure that these things are properly taken care of in a correct and legal manner, and so it is with this incorporation.Religious Education College was established in the mid 1970s. It is an association incorporated in South Australia and has corporate members comprised of Scientology churches around the world. Its activities have been exclusively in England and to some degree India, and primarily consist of operating an Advanced Scientology organization that ministers to parishioners from around the United Kingdom and overseas. The nature of your questions regarding this incorporation seem to imply that you think there may be something untoward regarding it, however the opposite is true. South Australia was seen as a place that respected religious freedom.The object of the corporation is expressed in its Constitution which is available in the South Australia Companies House. As with any such incorporated association, it is governed by a board of trustees. It has a few hundred volunteers.Regards, Sei KatoChurch of Scientology | Public Affairs
t 02 9638 5200 I f 02 9680 0144 I e firstname.lastname@example.org
20 Dorahy Street, Dundas
NSW 2117 Australia
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