ATO fraud: how did it happen?

The man responsible for investigating tax fraud is now at the centre of a $165 million Australian Tax Office (ATO) fraud investigation.

The $165 million rort is believed to be Australia’s largest ever white collar crime.

ATO Deputy Commissioner Michael Cranston is just one of the subjects of an investigation of the alleged tax fraud, along with his son Adam, his daughter Lauren and at least eight other people.

Although the Australian Federal Police (AFP) does not believe Michael Cranston knew about his son’s activities, it is likely he’ll still be charged with abusing his position as a public officer.

Nine people were arrested following an eight-month long investigation codenamed Operation Elbrus. After 27 raids on homes and businesses across Sydney on Wednesday, Mr Cranston’s son was arrested and charged with conspiracy to defraud the Commonwealth.

Among those also charged were veteran reporter Steve Barret, Daniel Rostankovski, jailed NSW Labor powerbroker Eddie Obeid and Mr Obeid’s former lawyer Sevag Chalabian.

Mr Barret and Mr Chalabian have been accused of blackmailing the syndicate.

The conspirators ran a legitimate payroll firm Plutus Payroll, accepting money from clients and processing payroll on their behalf. This money was the funnelled to subcontracted ‘tier-two’ companies that made the payroll payments. These tier-two companies were ‘fronts’ that were headed by people such as unemployed tradies, business owners and a now-missing woman from Gerroa, New South Wales.

Although the initial activity was legal, the tier-two companies failed to honour their Pay-As-You-Go (PAYG) commitments to the ATO. This set alarm bells ringing.

Police say the group spent these diverted taxpayer funds on a lavish lifestyle. So far, officers have seized 25 motor vehicles, $15 million in bank accounts, 18 residential properties, two aircraft, $1 million in a safe deposit box and much more.

Acting Commissioner of Taxation, Andrew Mills, is confident that the ATO’s systems have not been compromised.

“The information that I have to date shows no compromise of the operation of our administration. Our systems, controls and procedures worked effectively,” said Mr Mills.

“We have been able to successfully isolate and protect the investigation, working well with the AFP over many months to build a picture of what has been happening.”

Prime Minister Malcolm Turnbull said the alleged fraud was a regrettable criminal activity.

“I’m not suggesting that this alleged conspiracy is anything other than a very regrettable criminal activity, the fact that there has been a person in the ATO that has been associated or involved,” said Mr Turnbull.

“But the important point is that the system has worked.

“The conspiracy has been uncovered and the people who are alleged to be involved in it are being brought to justice.”

“No matter how high they may be in a government department … they are being watched,” he said.

According to Acting AFP Deputy Operations Commissioner, Leanne Close, the evidence found so far only goes back to 2016, so it’s possible that more information will come to light.

Read more at The Australian

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Written by Leon Della Bosca

Publisher of YourLifeChoices – Australia's most-trusted and longest-running retirement website. A trusted voice on Australia's retirement landscape, including retirement income and planning, government entitlements, lifestyle and news and information relevant to Australians over 50. Leon has worked in publishing for more than 25 years and is also a travel writer and editor, graphic designer and photographer.

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