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Sydney Law Society yet to pay off hefty tax debt

Australia’s largest law student society owe some people a whole lot of money, writes Bryant Apolonio

Faculty of Law. University of Sydney

When one thinks of the Sydney University Law Society (SULS), one thinks of flashy parties, business attire in tutorials, glossy journals, and, occasionally, massive debt. Specifically, the $90 000 it owed to the Australian Taxation Office (ATO) that managed to slip under the radar until the end of 2011.

The mistake that brought down a  USU faculty society with an income of $350 000 per year was small and sort of ironic. It was a legal confusion regarding the point at which an organisation stopped being tax-exempt. SULS had laboured under the assumption that, like other non-profit USU societies, it did not have to pay tax.

However, given its heavy corporate sponsorship and the fact that it could not really be classified as a “charitable organisation” when it spends a good portion of its money on social events (such as in 2012 when $189 000 was spent on social events, for example), this wasn’t the case.

By the time the USU auditors noticed a discrepancy in the books, SULS had racked up a hefty debt. Current President Isabelle Youssef told Honi that they were subsequently bailed out by the Union and have been paying them in installments ever since.

Troubles came to a head in 2011. A former executive told Honi that the society had an account which had been accumulating interest for several years: “rainy day money” donated by corporate sponsors. This account, by sheer luck, contained approximately enough to cover the tax liability. But because things that seem too good to be true usually are, that year’s executive spent $80 000 of this emergency fund on the annual Law Ball.

Eighty thousand. To put this into perspective, the gross expenditure on the Law Ball, last year, hovered around the $60 000 mark, and, after ticket sales, still meant that SULS had a net loss of about $5-6000. (Editor’s note: The gross expenditure in 2013 was $110 000 and the net cost after ticket sales was $9 000). Not only did the 2011 exec spend far more money than was necessary on an already lavish expense, but their actions meant that SULS would be paying off the bill for literally years.

Mark Khunnithi, the 2012 SULS Treasurer, told Honi that about one third of the liability had been paid by the end of last year, and that the society had broken even in terms of expenditure.

“We had to be more disciplined,” he said, though he did want to make it clear that the deficit did not “hamstring [the society] in a huge way.” Youssef is also optimistic. She anticipates that the rest of the debt ($45 000 as of the beginning of this year) will be completely paid next year, if not this one.

Where once SULS was a society which allegedly threw money away on ice sculptures at dinner parties, those elected to run it are now forced to be more financially responsible.

In May, the executive emailed every law student and asked for their Access card numbers (which, prior to 2013, were never rigorously recorded) given that USU funding is contingent on the number of registered members.

Youssef said that money from USU funding is primarily used for SULS’ programs which aren’t necessarily supposed to make a profit, like its social justice programs and moots.

Correction: SULS receives $160 000 in corporate sponsorship per year. Furthermore it was the ATO that notified SULS that it was not tax exempt, not the USU’s accountants.

Despite multiple attempts, we could not make contact with the current Treasurer.