The Mormon Church has been accused of engaging in significant tax evasion in Australia, allowing its adherents to collect hundreds of millions of dollars in tax exemptions that are not lawfully available to followers of other religions.
Some of its tax activities are run through a shell company, with no paid employees, that could be in breach of Australian tax laws, an investigation by The Sunday Age and The Sun-Herald has found.
The investigation has uncovered how the Utah-based Church of Jesus Christ of Latter-Day Saints (commonly called Mormons) appears to have structured itself internationally to minimise tax for its adherents and maximise benefits for itself, in particular in Australia and Canada.
In Australia, the church has ensured that donations and tithing – which are not tax-deductible – are routed through a charitable trust to gain 100 per cent tax deductibility. Mormons are required to pay 10 per cent of their gross income in tithing, a significant financial impost on followers.
Australia is unusual among English-speaking countries in that it does not allow tax deductions for tithing or church donations. But it does allow generous deductibility for charitable giving.
The Mormon Church has structured itself to maximise that tax benefit, and reports that it spends up to 70 per cent of its Australian income on charity. Globally, the church spends less than 1 per cent of its income on charity.
“It’s all a ... smoke-and-mirrors thing,” claims barrister Dr Neville Rochow, QC, who had senior roles in the church, including working as its representative to the European Union until 2018, and previously in pastoral and public affairs roles. He claims the church is “taking it off the back of taxpaying Australians”.
Dr Rochow said the church spent little on charity. “They don’t set up schools, don’t set up hospitals, don’t have homeless shelters, don’t have places for women to escape when they have bad marriages.”
The tax structure has meant that since 2015, Australian adherents have been able to draw on $400 million in tax deductions not available to followers of other religions or denominations.
A Mormon Church spokesman did not respond to written questions about this discrepancy, but said the church operated in accordance with tax laws.
In the mid-2010s, Dr Rochow was involved in a Mormon-instigated econometric study used to justify its tax status and to ensure that religious trust properties of other churches were not taxed. Soon after, it started to direct substantial donations and tithing through its charitable trust – a decision he was not involved in.
Before that, in a submission it made to Treasury, the church said it spent just $36,000 a year, on average, on charitable donations between 1985 and 2010. There has been little to no growth in the 61,600 Mormon adherents in Australia over the past decade that could explain the reported 2000-fold increase in charitable giving.
Each year, funds are transferred from the church’s charitable trust to a separate entity, Sydney-based LDS Charities Australia. From that entity, about $70 million a year is distributed to global charitable causes. The church spokesman said after LDS Charities Australia was created in 2012, “there was a desire and the ability to significantly increase the support of global humanitarian and development projects”.
That $70 million a year is close to the amount the global church – whose strongest following is in the United States – itself says it gives each year on average throughout the world, according to its own annual reports.
LDS Charities Australia has no paid staff, Australian website, expenses or infrastructure to run what purports to be one of the country’s major charities, collecting more in individual donations than Oxfam, Beyond Blue or Caritas Australia, the Catholic Church’s international aid charity.
It runs in parallel with the Utah-based Latter-Day Saints Charities, which apparently directs the church’s charitable spending throughout the world and includes all its senior staff, management and infrastructure.
A church spokesman denied LDS Charities Australia was run by Utah-based Latter Day Saints Charities and said it funded programs through other charities including the Red Cross, Water for the People and the World Food Programme, allowing it to keep costs low. “All decisions about which projects are funded are made right here in Australia,” the spokesman said. The programs it cited were also funded by its Utah-based charity.
University of Tampa professor of sociology Ryan Cragun, an expert on Mormonism, said it was inconceivable that the church was making significant global charitable decisions from Australia. “It’s a stunningly hierarchical religion,” Professor Cragun said. “So, any big decisions like that are going to be made in Salt Lake City.”
In 2019, the Australian Tax Office made a binding ruling that for an Australian charity to have deductible gift recipient (DGR) status – which allows tax write-offs for donors – it must have Australia as “the focal point of the DGR in a legal or organisational sense”.
Krystian Seibert, a charities expert at Swinburne University’s Centre for Social Impact, speaking in general terms, said the DGR rule meant the operations and management decisions of a charity needed to be made from Australia.
“It can, of course, engage and consult with partner organisations outside Australia, but if it effectively outsources operational and management decision-making to individuals or organisations that are outside Australia, that could raise issues under our tax laws.”
Mormonism is a US religious movement that began in the 19th century and has become incredibly wealthy.
A Washington Post investigation in 2020 revealed the church was secretly running a $US100 billion investment fund, Ensign Peak Advisors, that was accumulating vast tax-free wealth by investing in hedge funds, Chevron, Visa, Apple and some of the biggest landholdings in the US.
Professor Cragun said the church, for a time, disclosed its charitable giving, which equated to less than 1 per cent of its revenue. “It is shocking how little they give,” he suggested. ”But on the flipside, this is the part that’s really interesting: they advertise it every single time. And that’s where the ex-Mormon in me is like, ‘That’s exactly what Jesus said not to do’.“
He said many of the church’s current leaders – called apostles – had backgrounds in senior positions in the corporate world. The international church, he said, was run like a multinational corporation, with practices all but identical around the world.
According to Cragun, the church is likely to “milk the system for every tax deduction they can... And they’re very, very good at it”.
Senior ex-Mormon Simon Southerton has been involved in a complaint to the Australian Charities and not-for-profits Commission about the church’s tax practices.
A geneticist, he made a break with the church in the 2000s, after he found that its origin story, of some Native Americans being descended from Jews, was incorrect. “The big problem was I was a bishop (akin to a pastor),” Dr Southerton said. “I went in overnight absolutely knowing that the Book of Mormon was a 19th century fabrication.”
He wrote a book about the issue and was later excommunicated. He said it was implausible that $70 million a year was being donated through Australia.
The Sunday Age and Sun-Herald investigation has also found that in Canada, the church’s entire charitable giving is diverted to three campuses of a Mormon-run university in the US. The sum – about $C70 million ($74.5 million) a year – appears to be lawful, as the campuses of Brigham Young University have several hundred Canadian students.
The Canada Revenue Agency said it was prevented by confidentiality provisions from commenting on specific cases. It said any donations must be made to qualified charity recipients under Canadian law.