The Australian Taxation Office has opened up about its investigation into an alleged tax crime syndicate that led to the arrest of ten people, and charges against the deputy commissioner of the ATO.
Commissioner of taxation Chris Jordan presented a timeline of events during a senate estimates hearing in Canberra and gave an update on the position of affected contractors.
The issues surfaced with legitimate payroll company Plutus Payroll earlier this month, when contractors complained about missing payments. The company blamed the ATO for freezing its bank accounts over a dispute, which was later revealed to be the result of an 18-month investigation into the crime syndicate running Plutus.
The ATO began its investigation, dubbed 'Operation Elbrus', early last year, and was joined by the Australian Federal Police in September. The ATO found a number of entities that went into liquidation that showed evidence of phoenixing activity in the IT and construction labour hiring industries.
Over the year, the ATO progressively uncovered a complex web of suspected tax evasion, comprised of more than 200 entities in layered structures, complex transactions and business relationships.
"The identities and details of those involved were not all apparent to start with – as many of these kinds of syndicates, their identities, roles, activities and arrangements are deliberately opaque, deceptive and complicated and they take time to piece together," the ATO's Jordan said.
In December and January, the ATO moved to recover unpaid taxes against the companies through garnishee notices. So far, the ATO has raised liabilities of more than $130 million, and collected a third of that amount.
In February, the ATO and AFP joined their crime investigation teams and in April, the ATO froze the syndicate's bank accounts fearing funds might be removed by the owners.
Two weeks ago, warrants were executed by the AFP, who seized a large volume of cash and luxury assets. Plutus was then revealed to be the company at the centre of the crime syndicate when founder Simon Anquetil was arrested. He faces a maximum of ten years in prison if found guilty.
Jordan denied that the ATO stopped legitimate contractors from being paid, despite accusations from Plutus prior to the arrests after its bank accounts were frozen.
"Conscious of the impact this can have on innocent third parties, especially regarding wages, we established the names of those due to be legitimately paid so that funds could be released to pay the wages owing," he said.
"We are continuing to look into how we may be able to have any of the remaining funds released to pay outstanding superannuation guarantee amounts."
Yesterday, the ATO promised that workers caught up in the scandal would not be penalised if Plutus had not paid the correct amount of tax on their behalf.
The ATO has also set up a number of support options for those affected, such as a dedicated helpline. The ATO said it would honour pay-as-you-go wages that were deducted from contactors' pay.
Deputy commissioner charges
Two weeks ago, it was revealed that the son and daughter of ATO deputy commissioner Michael Cranston were members of the alleged syndicate and were arrested. Cranston was charged for abusing his position as a public official. Police allege that Cranston accessed ATO information on behalf of his son, Adam, for use in the scheme.
Jordan told senate estimates that when the ATO became aware that one of the members of the syndicate was related to Cranston, the office took steps to further isolate and lock down casework. AFP commissioner Andrew Colvin informed Jordan of Cranston's personal relationship in January, though he was not suspected of being involved in the syndicate.
The ATO was asked to leave Cranston in his position while further information was gathered. Jordan said there was no evidence that Cranston ever directly accessed taxpayer data during the investigation
Jordan said he was aware the ATO may have lost trust in the community after the allegations against members of the organisation.
"While it was a success story, what has detracted from the story is the alleged wrongdoing of an ATO officer. I cannot overstate how much those allegations have struck at the heart and values of those who work at the ATO – and how seriously we are taking these," Jordan said.
"We are keenly aware that the community must have full trust in us – in our integrity, objectivity and expertise – we cannot do our job effectively without this."
He added that the ATO would be reviewing its policies, practices and procedures to ascertain whether they need to be strengthened.
"I will, however, also make the point that no system involving humans will ever be infallible," he said.
Cranston will face court on 13 June.