News of Australian Taxation Office’s deputy commissioner Michael Cranston facing a looming charge for accessing internal agency documents involving his son’s alleged $165 million tax fraud syndicate has been described as “shocking” and “disgusting” by tax professionals, and some fear that stains may be far wider at the agency.
Mr Cranston is an ATO old-timer who has spent years chasing down the wealthy for leading lavish lifestyles – including indulging in fancy cars, boats, and even private jets – that don’t match up with their tax returns. He is one of the few who survived Tax Commissioner Chris Jordan’s “cultural reinvention”, which involved sacking a number of long-time bureaucrats and replacing them with fresh blood, often from the private sector.
Now Mr Cranston is set to be charged with abusing his position as a public official by accessing restricted information on an ATO audit of his 30-year-old son Adam Cranston, who with Mr Cranston’s daughter, has also been charged over the large-scale alleged tax fraud.
While police do not believe Mr Cranston, when accessing the internal documents, knew about his son’s alleged fraud syndicate, there are new allegations that he allegedly sought to pressure colleagues to cut a deal with his son after he learnt his son was the subject of a major tax fraud investigation.
ATO you can trust?
ATO second commissioner Andrew Mills said two other ATO officers were also being investigated internally for potential code of conduct breaches. It’s believed they tried to look up information on the ATO’s audit at the behest of Mr Cranston.
Mr Mills said in a statement: “The investigation has so far not revealed any evidence of actual intervention or influence on audit cases, or of money being refunded, or of tax liability being changed”.
But his statement went on to say: “I cannot overstate the seriousness of these matters. Australians must have a tax administration they can trust and the people of the ATO must be of utmost integrity and good judgment. This is even more important for those in leadership positions.”
Inspector-General of Taxation Ali Noroozi, the man who keeps a check on the ATO, told Fairfax Media: “We have been briefed by the ATO [about the case]. It has come as a shock.”
Chris Wallis, a Victorian barrister of 30 years standing, said his phone had been “ringing hot from colleagues expressing their concern”.
“It would be fair to say that I, along with many of my colleagues, are devastated by this news,” he said. “The potential cost to the community is inestimable.”
He said that, if what was alleged was proved to be true: “It’s disgusting. Absolutely disgusting.”
Mr Wallis said he had personal experience with the ATO that involved certain officers illegally accessing information. He said the Cranston affair was “not isolatable”.
“Practitioners know that illegally accessing information in the ATO is not uncommon.
“The stain may be far wider within the ATO.”
Mr Cranston often addressed tax professionals at various internal and external forums and was the man who led the ATO’s tax amnesty that allowed the rich with secret money stashed away in Swiss and Israeli bank accounts to bring funds and assets back onshore to avoid criminal prosecution.
“It’s difficult to reconcile the statements made by [Mr Cranston] standing in front of us at professional events,” Mr Wallis said. “It’s always been of the type ‘we’re going to get the bad guys’.
“There’s just absolute revulsion among professionals because he’s been sanctimonious when he’s stood in front of us.”
He said that, if he was involved as alleged, this would “inflict massive reputational damage on the ATO”.
“The government will be absolutely furious. [Tax Commissioner] Chris Jordan will be furious. This is just massive.”
Former Tax Institute counsel, now with the University of Sydney, Michael Dirkis, said Mr Cranston had always struck him as being “honest”.
“He’s a straight shooter, an older-school tax officer,” Mr Dirkis said. “He’s not in the category of someone you’d say is hopeless.”
Thomson Geer tax law specialist and former Tax Institute president Arthur Athanasiou said the news had come “as a total shock”.
“I find it incomprehensible that a senior public servant of Michael’s standing within the ATO would be knowingly involved in anything that is contrary to the law and what the ATO stands for,” Mr Athanasiou said.
“We should be very careful not to rush to judgment. The principle of the presumption of innocence must be adhered to and the proper process must take its course to allow the truth to emerge.”
A number of other tax professionals who have worked closely with Mr Cranston, including on the recent tax amnesty, did not wish to be quoted, but also described the events as “shocking”.
Australian Federal Police said nine people were arrested during raids across Sydney and the Illawarra on Wednesday.
Adam Cranston was allegedly involved in the unlawful tax fraud scheme from the middle of 2016.
He was part of a legitimate company that was required to remit pay as you go (PAYG) withholding tax payments to the ATO on behalf of the clients.
But police said investigators found only part of these tax obligations were paid.
The remaining money was allegedly siphoned off by the syndicate members and channelled through a complex series of companies and trusts for their own personal gain.
Among the items seized under proceeds of crime were 25 motor vehicles, including luxury cars and racing cars, 12 motorbikes, 18 residential properties, two aircraft, $1 million from a safe deposit box, firearms, jewellery, bottles of Grange wine and artworks.
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