What’s the Scam with GST, sex scandals, ASIC and the fashion house?

by Wally The Chartered Accountant | Jan 21, 2024 | What's the scam?

Squeezing ASIC, GST and sex into one headline is challenging but – drawing a bow of Odyssean length – Wally the Chartered Accountant has managed to do it. Is fashion house Abercrombie & Fitch pulling a GST scam in Australia?

A recent explosive report from the BBC reveals that the FBI is investigating claims that Abercrombie & Fitch chief Mike Jeffries sexually exploited and abused men at events he hosted around the world for between 2009 and 2015.

Eight men told the BBC that Mr Jeffries and his partner Mr Smith would engage in sexual activity with them or direct them to have sex with each other. A lawyer for Mr Jeffries declined to respond to the BBC claims.

Abercrombie & Fitch however told the BBC that it was “appalled and disgusted” by Mr Jeffries’ alleged behaviour. Perhaps the company should be more appalled and disgusted in itself for failing to govern the behaviour of its own CEO for over 6 years.

Perusing this coverage of the scandal we were moved to examine the corporate exploits of Abercrombie and Fitch (A&F) in Australia. Was there a scandal here too?

There are no A&F physical stores in this Great Southern Land, but Australians can go to A&F’s online store to purchase ‘the highest quality All-American clothing’ and the ‘coolest clothes’.  

There is currently free shipping on orders over $US150. Which begs the question, does A&F meet its obligations for collecting GST when selling clothing to Australian customers from its online store? It is a fair call that, as the clothing is so cool, sales into Australia must surely exceed the registration threshold for GST of A$75,000 in a 12-month period. 

When turning to the ABN Lookup online resource, neither Abercrombie & Fitch Co. or any of the wholly owned subsidiaries mentioned in Schedules to its 2022 annual report are currently registered for the GST in Australia.  

It appears that Abercrombie & Fitch are selling goods into Australia without collecting the Goods and Services Tax that is required. If this is true, then you are welcome ATO, and please donate a finder’s fee of $1000 to the Australian Red Cross.

Multinational companies operating in Australia and skiving out of GST is nothing new, as evinced by our investigations into the likes of Google and Booking.com.

Booking.com: what the online travel giant owes Australia

One company that emerges from ABN Lookup is Abercrombie & Fitch Australia Pty Ltd.  This company has an ABN but is not registered for the GST. Presumably, this proprietary company is either foreign controlled or a company registered with ASIC – that is name squatting.  

If Abercrombie & Fitch Australia Pty Ltd is foreign controlled, then it should file an annual financial report with ASIC each year. Alas, there are no annual financial reports for Abercrombie & Fitch Australia Pty Ltd to be found when conducting a search on ASIC’s website.

No tax in Australia, no disclosure in Australia. Although we have not uncovered a sex scandal in A&F Australian operations, a disclosure and GST scandal is surely far more titillating.

Wally the Chartered Accountant (not his real name) is a veteran of the accounting profession who is concerned about dishonesty and falling professional standards. Wally's true identity is known to MWM.

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