IGT says staff should be made to keep notes of requests made by one ATO officer to another to access taxpayer information

This article is more than 1 year old

This article is more than 1 year old

An independent investigation has recommended Australian Tax Office staff should be required to make notes of any request from a colleague for help accessing a specific taxpayer’s information, after last year’s multimillion-dollar fraud involving a senior ATO official.

The inspector general of taxation (IGT) has said concerns have been raised that certain taxpayers may have received favourable treatment in ATO audits and disputes after the taxpayer’s representative directly contacted a more senior officer with whom they had a pre-existing relationship.

The IGT said there was no evidence of systemic internal fraud or corruption within the ATO, but the ATO should improve its internal processes to prevent actual or perceived undue influence by relevant senior officers in individual matters.

ATO official Michael Cranston 'unwittingly' caught up in alleged fraud Read more

It has made 13 recommendations for the ATO to improve the way it manages potential conflicts of interest, including how senior ATO officials intervene in individual tax cases.

The IGT released its review on Monday of the multimillion-dollar fraud last year involving a senior ATO official.

In May 2017, the Australian federal police revealed that a deputy ATO commissioner, Michael Cranston, had been “unwittingly” caught up in an alleged multimillion-dollar fraud involving his 30-year-old son, Adam, and his 24-year-old daughter, Lauren.

The AFP investigation led to the arrest of nine people across the greater Sydney area. The fraud was thought to be worth $165m at the time but that was later reduced to $157m.

Cranston was eventually charged with abusing his position as a public official of the commonwealth for allegedly obtaining information and exercising influence to obtain a benefit for his son. His trial date was set for 21 January.

The IGT was asked to investigate the matter by a parliamentary committee.

Ali Noroozi, the inspector general of taxation, released his report on Monday.

“The review has not found evidence of systemic internal fraud or corruption,” Noroozi said in his report. “[But] one of the areas identified for improvement concerns the ATO controls to appropriately identify and manage conflicts of interest as inadequate management of such conflicts can lead to risk of corruption.”

Noroozi has made 13 recommendations to the ATO to improve its internal processes, including:

Require staff to make notes of any requests made by one ATO officer to another to access taxpayer information

Strengthen the ATO’s staff recruitment processes, ongoing checks and mandatory fraud awareness training to ensure its workforce maintains integrity

Improve the independence of the ATO’s audit and risk committee by ensuring that the majority of its members, including the chair, are external to and independent of the ATO

Maintain the role of the ATO’s integrity adviser and enable staff to discuss ethical or fraud related concerns with him or her

The ATO has agreed to all of the recommendations, in full or in part. It says many of the IGT’s recommendations were already being implemented anyway.

The IGT also made a recommendation to the federal government to consider a broad review of the framework for inter-agency collaboration to combat tax crime. The Morrison government has agreed in-principle to the recommendation.

Neil Olesen, the ATO’s second commissioner, has welcomed the IGT’s finding that there is no evidence of actual internal fraud or corruption of a systemic nature in the ATO.

“We already have an extensive range of strategies, processes and procedures in place to address the underlying issues considered in this review,” Olesen said.

Andrew Leigh, the shadow assistant treasurer, said Labor wanted to give the ATO more tools to crack down on wrongdoing, both inside the organisation itself and the wider Australian community.

“This includes ensuring that the ATO remains properly funded and sufficiently staffed,” he said.