The Story of the late Dr Peter Clyne

Dear guys,

A different case study……………..



The Story of the late Dr Peter Clyne

Dr Peter Clyne will be remembered as the man who took on the ATO (Australian Tax Office) for years and eventually lost, lost his life in fact. He was a tax lawyer and financial consultant who was respected by his peers as well as the many people he helped over the years.

He was Australia's first tax rebel. He was well known for the games he would play with the bureaucrats in the ATO. What Peter Clyne did was set up his affairs in such a way that the tax department couldn't tax his income. He would always brag that all his assets were in a safety deposit box in Liechtenstein (Hmmmm?). The only problem was that he used to brag - he would announce this to the newspapers, radio and would advertise in an overt way that he could help you do the same. He would hold seminars and sell books and tapes about how you could do this sort of thing too (Hmmmm?, again). This infuriated the ATO to such an extent that they "declared war" on Clyne and tried to prove that the sole motivation for arranging his affairs in this way was to evade tax, not to avoid or minimise it, which was of course true. You see the ATO has a funny way of looking at things. If you set up your affairs for commercial or personal reasons and the by-product is a lower tax bill - this is ok. But if your sole intention is to reduce tax and there are no other obvious reasons for setting up your affairs in this way the ATO can determine that this is tax evasion or avoidance scheme and impose tax anyway. Again, Clyne announced that he was in fact evading tax and he announced this to the world - A Big Mistake. Clyne become public enemy number one - he had to be stopped!

Peter Clyne was no shrinking violet, he would travel the world living the high life with girlfriends half his age, travelling first class and earning a fortune from his tax evading exploits and never ever paying a cent to the ATO as much as they hounded him - he was very slippery and very sharp - he knew his stuff, but his ego was the problem, he just couldn't keep his mouth shut. Every time he would speak to the media he would give away tantalising tit-bits of tax evasion information and encouraged Australians to join his tax free crusade. You can only imagine what the ATO thought? Whatever, he got away with it for years!

Do you want to know how Clyne did it? It was so simple. He simply employed a PT (Perpetual Traveller) lifestyle. He just ensured he was never in Australia more than six months in every twelve month period thus eliminating his status as a tax paying resident. If he wasn't a resident - he didn't have to pay tax, simple as that!

What Clyne did to really set the government against him, was he told people openly that if they had any cash transactions, make sure they destroyed all proof of them and this was clearly encouraging people to break the law. While everything else he was doing was open to interpretation, this clearly was not. The problem with Clyne was his ego had gotten out of control - he was believing his own publicity. It didn't end there - he upset the Americans as well, he announced to the world how he had helped drug runners launder money and was lured into an interview with a US Drug Enforcement Agency undercover agent who was posing as a potential client in Texas. At the conclusion of this interview he was arrested - he just couldn't keep stuff to himself! To make things worse he jumped bail and went back to Australia. At the time, there was no way of extraditing him back to the US so he felt he had beaten the system yet again.

Back in Australia, Clyne was going on about his assets in Liechtenstein - He claimed he had over a million dollars of assets in that box and he wasn't paying tax on any of it! He also claimed he had never paid a cent of tax in his life. He was now really getting people offside - A lot of people were wondering "who was this #%@&!" Do you start to see what Peter did wrong? Terribly wrong?

The next thing the ATO did was send Clyne a bill for back taxes. They did this on the basis that he was indeed a resident and had been one for several years and should have been paying taxes the whole time. They based this on the fact that he had lived at the luxurious Sebel Town House in Potts Point, Sydney. They had reviewed his residency records, his bar and restaurant bills and worked out, based on this, he had exceeded his 183 days residency limits. They now had him! They were a little smarter than he thought. He had always regarded them as stupid. While they couldn't prove exactly what his income really was, they pieced together an "estimated" income based on his expenditures they could identify. He had a very lavish lifestyle which was public knowledge. The ATO simply said if his income was less than they had estimated, "Prove it!" The ATO was able to drag him to court and place him under oath and in risk of committing the crime of perjury. The sharks were closing in.

During the court case he was questioned about the assets in Liechtenstein and while he didn't want to give too much away he was also risking perjury. You see, by this stage he was totally rattled. He didn't know how much they knew of his affairs. He was worried.

Clyne stated, "There are no records but my major assets are indeed in a box in Liechtenstein". They questioned him about his income and how he lived such an extravagant lifestyle? He stated it was due to accumulated earnings from his days as a judge in Nigeria. As far as the assets in Liechtenstein were concerned he knew they wouldn't know much about them as it was against the law for any disclosure to be made regardless of who was asking and a "foreign" tax misdemeanour was hardly any reason to divulge any details. However, it soon became nasty for Clyne. The prosecutor wanted to place Clyne in jail for contempt of court if he didn't give the court power of attorney to retrieve the box and use the contents as evidence against him. But what the court agreed to do was place Clyne into bankruptcy if he didn't pay the outstanding tax bills and associated fines. The court's plan was that Clyne's bankruptcy trustee would retrieve the contents of the box with the power of attorney given to the court, pay the tax bill from the contents and Clyne would leave a free man. Which is just what the ATO wanted. The ATO also suspected the box may also contain further incriminating evidence of Clyne's clients - it may certainly turn out to a good day for the ATO if they retrieved those records. The court levied huge fines and tax bills against him which were made artificially high using their "estimates". They challenged Clyne to disprove their claims. Guilty before proven innocent it would seem.
The court placed Clyne in bankruptcy for non-payment of tax bills. They appointed a trustee to go to Liechtenstein and retrieve the box and bring it back. The worst had come true for Clyne. The unthinkable had happened - they had got him!

Clyne was placed in custody and after some time agreed to send a letter to his lawyer in Liechtenstein to allow the trustee to gain access to the box. Keep in mind that Clyne had stated under oath that all his assets were in this box. As it turned out, the contents were actually owned by a Liechtenstein foundation with the power of control with his lawyer in Liechtenstein. In complying with the request to give the court access to the box, they allowed him to leave jail and no bail was required under law. The court ordered him to hand over his passport, but what they didn't know was he had a second one (smart boy). Under normal circumstances he would simply go to the airport and slip out of the country and that would be the end of it - he would simply disappear. But no, this didn't happen, because he was so well known, and high profile he was apprehended at the airport and taken into custody yet again. He lost his second passport. What he was trying to do was beat the court to the box, remove the contents and disappear forever. He thought he could still pull a big win! But just in case he didn't make it in time he wrote to the bank (where the box was) and his lawyer, and told them to disregard all previous orders to open the box. Well, when the court appointed trustee arrived and was told "no", he informed the judge back in Australia what Clyne had done and and Clyne found himself back in jail on yet another charge of contempt. This time with no back up plan.

Because Liechtenstein had received so much bad publicity and there were claims that Clyne had been charged with crimes other than tax evasion, which isn't a crime in Liechtenstein, they considered not protecting him any longer and that the Liechtenstein court may order the contents be handed over to the Australian authorities. But then a break came. The Liechtenstein judge demanded before any decision was made, he read a transcript of the Australian court case. The fact that Clyne had refuted all charges and claimed under oath that he owed no taxes allowed the judge to refuse access to his records or the box on the basis of unproven charges and claims. They would only act if Clyne had been convicted. This was to prove the belief that few countries will enforce the tax claims of another. The Liechtenstein court believed the Australian action was nothing but a set up of Clyne to enforce a tax claim and had nothing to do with any criminal activity. The ATO was foiled. They were powerless to do anything. Had Clyne clutched victory from the jaws of defeat?

The ATO decided to try something else. They now had the name of Clyne's Liechtenstein lawyer and they thought they may try some leverage there. They knew he was the "controller" of Clyne's assets and maybe they could play one off against the other. They were in luck, they discovered the lawyer had substantial land holdings in Australia. The Australian Attorney General sent a registered letter to the lawyer that, due to his lack of co-operation in the case, the government had placed a lien over the property ensuring he could never sell it without first paying Clyne's bill. They did this on the basis that they knew he was holding assets on behalf of Clyne, assets that they believed they were entitled to. This caused chaos, the lawyer was beside himself. The problem one suspects, was that these properties were not his own, but belonged to several of his high powered clients that would be furious at this development. It was suspected that these clients were far more important than Clyne was. The result for the lawyer could be very bad unless something was done. What they did know, is they weren't Clyne's. This was a ploy often used by governments against uncooperative banks when chasing tax evaders. They would place a lien against their local assets in an attempt to get them to give up their clients. The lawyer dropped Clyne in it almost immediately. What lessons have we also learned? Don't use a trustee or agent that has links to your home country and the same applies to your bank. Offshore banks that have local branches can be a problem. And never ever use a bank from your home country, this is madness. Also, don't use governments that must cooperate with your home country for any one of a number of reasons.

The result of all this was the lawyer opened Clyne's safety deposit box in front of the trustee and all was revealed and Clyne was still in jail for contempt and was powerless to stop it. The assets were in an Anstalt (Foundation) and under normal circumstances the founder (Clyne) would have a say in what could happen to the assets but strictly under the law, the lawyer had full discretionary powers to do what he wanted, and used them to the detriment of Clyne. Clyne had lost big time or had he?

When the box was opened, there was no million dollar asset. All there was in the box were a few gold coins, a reel of audio tape and a couple of receipts for the coins that had been bought many years earlier and some documents that supported his story that he had in fact lived off his saving from being a judge in Nigeria. Could Clyne have been telling the truth the whole time? Was the million dollar asset story a red herring? Could the case, that had cost Australian taxpayers millions of dollars, proven to be the biggest goose chase in our history? But what of the audio tape, could this be the evidence they were seeking, maybe the names of clients would be revealed, possibly financial records exposing other assets?

When the tape was played by the authorities, it was nothing but a recording of an orchestra playing an opera. But could it have been some sort of code directing Clyne to stashed away millions? After some time, Clyne was released from jail and was declared bankrupt. But again, he couldn't help himself and went straight to the papers and announced that the million dollar asset was indeed the tape. But how could it be worth a million dollars? "Yes" everybody thought, "it is a code". But they were all wrong. The tape turned out to be The Vienna Symphony Orchestra playing a rendition of "The Bell Song". But something else was strange about the tape, it had the worst singer anybody had ever heard on it - what was going on?

Peter Clyne had spent one million dollars hiring a hall and the entire Vienna Symphony Orchestra so his tone deaf girlfriend could perform with them. She dreamt of a operatic career and Peter decided to make the dream come true, for one night at least. The Australian public were once again right behind Peter Clyne, he was now elevated to Ned Kelly status and a folk hero. The ATO dropped the case under howls of derision and protest from the public. The ATO were now the bad guys - they had lost and lost in more ways than one. They were angry at this loss. From that point on they embarked on a campaign of disinformation, harassment and attempted to catch him out one day. They were relentless. They made up charges dragging him into court time and time again trying to break him. He was under 24 hour surveillance and they knew he knew it, they were trying to make his life a living hell, and they succeeded. His clients were harassed and audited relentlessly, they never gave up. It was to the point where he was arrested almost daily for questioning. These days no government or bureaucrat would dare do this - the 70's and 80's were less enlightened times. Unfortunately, for Peter he couldn't leave the country, he wanted to as you can imagine but he had no passport, so he had to bear the full weight of the government harassment. He applied for a new passport and because he wasn't being charged with any offence, he was entitled to one, but they kept "losing" his application. They were now getting even - this was no longer a government playing fair - it almost seemed as though they were trying to kill him, mentally.

Years later, after going through all his testimonies with a fine tooth comb, they found enough evidence to charge him with perjury on the most minor of issues, it was a technical breach, but a breach never the less. Finally, they had him. He was convicted of the charge and while he was out of jail on appeal he decided to take a legal action against the government for trying to frame him, harassment and many unproven accusations. He claimed he was nearly broken by the relentless attack. He couldn't stand up against the teams of tax payer funded lawyers and continuous attacks. His attack failed, he was finished. He had no money to defend himself and still the attacks came. His friends deserted him - he was alone.

The government had won, they even stole his gold coins and tape. The government would pursue him until he died, he knew that. His life was over, destroyed by his own government. A man destroyed because he felt that paying tax was optional. Big brother won - the little guy lost. Soon after Peter Clyne died of heart failure, the strain of years of fighting had finally taken their toll. A folk hero was dead. Government 1, Citizens 0. It wasn't so much that Clyne was cheating on his tax that the public supported him, it was the fact that he was a little guy fighting bureaucrats. The public would always support the underdog.

What can we learn from Peter? Here is a list of lessons learned:

· Remain low profile at all times
· Never brag about your exploits
· Receive sage advice and keep it to yourself
· Never break the law unless you want to end up like Peter
· Keep your finances private
· Don't cheat on your taxes - Legally minimise them
· Don't get caught up in court cases of any kind - especially with the government.
· Always understand when it comes to court battles - He who has the most money wins - There are no winners and losers - everybody loses in a court battle
· Be careful where and whom you establish your finances with - it may bite you on the backside one day.
· And most important of all - Don't start fights you can't afford to lose. Peter lost - He lost his life, how much are you willing to lose?
This brought back sooo many memories of my childhood.

My dad was the bankruptcy trustee for Peter Clyne. We heard stories nearly every day about his exploits and what he was up to this time. I couldn't really remember any details to provide you with any inside goss. I just remember that he lived at the Sebel and owed the tax dept lots of money!

But I'm sure if you want more information, Dad has a good memory, and you could tell you what is truth and what's not! Peter put out a book as well, from memory. but my dad never got to go to Lichtenstein.... from memory, I think Mr Clyne was excellent at making up stories, so you have to be careful believing what he said!

Ahh, those were the days.

To me he sounds like a crafty old bludger (too clever by half) who has nothing to blame for his predicament but himself, while families on $40, 50 or 60k per year pay more than their fair share.

Taking principles of 'abundance' on board, wouldn't he have been wealthier if he devoted even half his energies to building wealth & increasing income rather than cutting tax? Yes the taxman gets a slice, but it's better to share a profit with him than bear a loss all by yourself and lead a free and quiet life into the bargain!

And I also loved the memorial lecture - thanks Geoff!

Regards, Peter
I showed this thread to my dad to get his feedback on the accuracy of the story. I think the general gist is accurate, although there were some things he said were wrong.

Apparently, he was never a judge in Nigeria, but he was a magistrate in Zambia.

My dad doesn't ever remember him being in jail in Australia. He admitted that he could be wrong on this, but he knew Peter for around 20 years, and his memory is pretty good.

But the part about the tape of his girlfriend in the case in Lichenstein is correct, although dad thinks the box was in Switzerland, not Lichenstein.

My mum told me that they were basically at the stage of giving up their business - they didn't have enough clients, and then along came Peter Clyne and it totally transformed their business. The publicity etc meant their business grew rapidly. My dad was the bankruptcy trustee for his first bankruptcy, which wasn't related to tax at all - it was actually related to property investing! Apparently, peter's first book related to managing tenancies. in that bankruptcy, the creditors got over 50c in the dollar payment of their debts, which is pretty good.

Both mum and dad have very fond memories of Peter. I think it's often the case with someone like that - while they may be stealing from the govt, they are often great people to have around, very generous and fun people.

So, that is the additional light that I can throw on this story!

Wow! Very interesting read even if it needs to be taken with a grain of salt.

How true it is that he with the deepest pockets always wins :)

Good on you Dr Clyne - you chose to live by the sword and so you did.

Dear Penny,

Thanks for sharing the additional information, also please pass on my thanks to your Dad as well. :)


Hi Sunstone,

Peter Clyne was a bit of a legend amongst (some) lawyers. Out of interest I ordered a book of his quite a few years ago..."How to survive a financial crisis...and then make more money than ever". The book is a bit out there but I preferred it to the Trident Press stuff. Both deal with the concept of the Perpetual Traveller.

Clyne has a chapter on public examinations by the Registrar in Bankruptcy..and a memorable line with an accompanying cartoon..."The Registrar has no judical powers.. He's just a scarecrow in a wig and gown".

Other chapter titles include "How to evade service", "How to file a non-defence", "Don't just go bankrupt-plan to go bankrupt" "How to block a bankruptcy investigation" "How to rob a bank-the stalking of bank managers", "How never again to file a tax return" and "International bankruptcy planning".

At the end of the day it would be a very stressful life if you spent most of it playing these games with the taxation office, banks and bankruptcy courts. However some people are unfortunately caught in these situations...and Clyne presented some interesting ideas for them.

Thanks Sunstone,

Today I picked up 'Adventures in Tax Avoidance' by Peter Clyne (written 1969) from an op-shop in Ringwood. Cost $6 (which included a bundle of 5 other books). A google search reavealed a Monash Uni website which mentioned it as being somewhat rare and/or historically significant.

I've only read the first few pages, but it's clear he was a very witty author, good at expaining and has the gift of making a dry topic fun.

He regarded it as a 'game' of outfoxing the taxman and was very firm in this (not using weasel words like 'tax minimisation' or 'tax efficiency'). Maximising income or standard of living seemed less important than legally minimising tax.

Rgds, Peer
Whether Peter Clyne was right or wrong in his handling of his business affairs I remember we actually felt sorry for him as he had the most extraordinary wife- .She was Densey Clyne-- The Spider Lady on early editions of was it "Burke's Backyard"? or a similar show-- She could just as easily have been known as the Bat and Batty Lady-- for her looks and demeanor. Given Clyne's supposed love of culture and beauty it must have been a terrible penance to be married to her. and probably the reverse view could justifiably be taken by Densey. LOL. Also all this reported wealth story we felt was strange as Densey lived in a tinpot house down the west side of Turrumurra which if, in those days, one had any money or investing sense one would not have chosen. We could assume that Clyne had some input in choosing a house for his ex wife as they purportedly remained on good terms. A case of "Reports of my Wealth have been greatly Exaggerated" ? In addition that Sebel Town House always seemed a bit of a sleazy sort of place,its "luxury" content also exaggerated. In its later days it was used as an Auction venue. I did bid (successfully) for an apartment there.once. It has now been re invented as luxury( what new apartments in Sydney aren't called that?) apartments
lizzie said:
moral of the story - don't piss off the tax office.

Which he more or less said in his 1969 book, which contains such things as:

- drawing a distinction between evasion and avoidance
- complete honesty (inconsistent statements in media etc WILL be found out)
- moderation - aim low
- don't disguise what you're doing in fancy language as 'C' will see through it

The rest of the book covers topics like obeying the letter rather than the spirit of the law, tax havens, getting a very old relative to set up a $1 'mini trust' and leaving it to you when they 'shuffle off', income splitting and other things that CGT & FBT have made harder.

But overall it seems to have been more cautious than his later cockiness that caused him to disregard his previous advice and got him in trouble.

Rgds, Peter
Very interesting reading, but why bother?

Most people with the ability to do things like this also have the ability to make lots of money for themselves.

Why wouldn't you be prepared to pay up to half to the tax office and still be able to enjoy living in one of the best countries in the world and do pretty much as you please?
Dr Clyne

I seem to recall from many years ago, there was a bloke going around doing, and saying, the same things that this Dr Peter Clyne was. His name, from memory, was a Dr Klajn ....and it was pronounced Clyne.....
Could this be the same fellow?
Seems too much of a coincidence, and perhaps PennyK may be able to shed some light.
Thank you,
Sleeper said:
Very interesting reading, but why bother?

I can think of at least four reasons:

1. The Everest excuse, ie 'I did it because it was there'

2. An obsession with 'getting the last dollar out' that extends beyond what is efficient. Eg rather than getting 95% of your tax deductions through an orthodox application of the rules all for a $500 accountant fee, this sort of mindset may encourage getting 100% (or 105%) even though it might involve $5000 in legal advice, and (possibly) $50 000 if court representation is required.

In this case, though the medium may be money, it may not even be the main driver; it could be, as any obsessed man will say, 'the PRINCIPLE not the AMOUNT!'

Or the perpetuator may also see a certain intellectual beauty, challenge or curiousity in picking and exploiting loopholes, even though on any cost-benefit analysis it is unlikely to be an economically productive use of time. This seems to come through in Clyne's book.

3. A certain inclination to upset or subvert 'the system', as with computer hackers, adbusters and culture jammers.

4. Self-interest. Helped Clyne sell more books (not that I've seen very many of them in my examinations of society's cast-offs). If you get paid to use your hammer, every problem will look like a nail!

A fascinating read…nice sunstone

PennyK, thanks for the additional info....

He was one brave, crazy, intelligent and unique individual.....