An American oil and gas drilling company, which operates two rigs off the WA coast, is running a 183-day-a-year roster for its overseas-based fly-in, fly-out workers so they are not resident in Australia for tax purposes, minimising or eliminating the Australian income tax liability on their six-figure salaries.
And the company, owned by one of New York’s most prominent business establishment families, has a workforce on a rig off Port Hedland that is one-third overseas workers, mostly Americans and many on subclass 457 visas, despite there being no current skills shortage for oil and gas operators in WA.
The West Australian has obtained crew logs, roster documents and internal emails from Houston-based drill rig operator Diamond Offshore, which owns the Ocean Monarch rig.
The Ocean Monarch is drilling the Phoenix South-2 exploration well for energy companies Quadrant and Carnarvon Petroleum, on the North West Shelf.
According to the crew list dated October 3, 2016, the Ocean Monarch had 122 employees across four crews.
Thirty-four of the crew were based in the US, four were based in New Zealand and one in the Philippines. The eight most senior members of staff on the rig — offshore installation managers, rig superintendents and tool pushers — are all American.
Diamond Offshore maintains a document called the “183 Day Chart Swap Out”, a list of 94 overseas-based workers, to track how long they have been in Australia.
Of those workers, 63 are described as being part of the “183 relief crew”, which a rig insider said was set up especially to relieve overseas workers and keep them under their 183-day limit.
The 183 days is a significant figure because the Australian Taxation Office uses a “183-day rule”, a test of whether a worker is considered a resident of Australia for tax purposes.
An insider on the rig toldThe West it was widely known and discussed among staff that overseas-based employees stayed under the 183-day rule so they could minimise their Australian tax obligations.
“They call it the 183-day schedule, but people in the Perth and Houston office refer to it as the ‘tax break’,” the insider said.
“It’s very obvious they don’t pay tax.”
The West does not suggest that Diamond Offshore or its employees are violating any law.
According to the Department of Immigration and Border Protection, subclass 457 visas are “designed to enable employers to address labour shortages by bringing in genuinely skilled workers where they cannot find an appropriate skilled Australian”.
Some Diamond Offshore workers also appear to be employed on subclass 400 visas, which are for “short-term, high specialised, non-ongoing work” with a duration of stay of three to six months.
The West Australian sent questions to Diamond Offshore’s Perth office asking if the company would confirm the reasons for its 183-day roster, and 183-day relief crew.
The West also asked if the company could demonstrate that it could not find qualified workers in Australia to meet its operations requirements, necessitating the employment of overseas workers.
The company did not respond to multiple attempts to get comment.
The WA Government’s priority occupation list does not regard oil and gas operator to be an occupation in short supply of workers. The occupation “has been identified as experiencing industry or regional issues but there is not currently enough evidence to support claims of unmet demand or other, non-market factors which would see their elevation to a priority status”, the priority occupation list guidelines say. A spokeswoman for the tax office said the ATO could not comment on the tax affairs of any individual or entity because of obligations of confidentiality under the law.
Diamond Offshore had revenue of $US2.4 billion in 2015, employs 3400 people and owns 28 drilling rigs, which are deployed worldwide including in the Gulf of Mexico, the North Sea, Trinidad and Brazil, according to stockmarket filings.
Diamond Offshore is a subsidiary of Loews Corporation, which is controlled by the Tisch family. Loews’ other interests include pipelines, hotels and insurance. Both companies are listed on the New York Stock Exchange.
The Ocean Monarch rig featured in the 1998 Bruce Willis movie Armageddon, when it was called Garden Banks under a previous owner, but was stripped down and rebuilt in 2006 after it was acquired by Diamond Offshore.