Monday, 21 May, 2018

Son of ATO boss arrested in alleged $165m tax fraud ring

T021042Z_1915147592_RC1908EFFF60_RTRMADP_3_AUSTRALIA-TAX-940x580 Son of ATO boss arrested in alleged $165m tax fraud ring
Melinda Barton | 19 May, 2017, 05:31

The alleged fraud involved a payroll company which filtered payments through another company, to avoid paying full income tax. The ATO deputy commissioner is slated to face Sydney's Central Local Court on June 13 for the charge of abusing his power as a public official.

Australian Taxation Office (ATO) deputy commissioner Michael Cranston has been ordered to attend court for allegedly abusing his position to access information for his son, who has been arrested in connection with a major tax evasion scheme.

Six people have been charged with conspiracy to defraud the Commonwealth while two face money laundering charges and another with extortion.

The 30-year-old Cranston is the son of ATO deputy commissioner Michael Cranston, but there is no suggestion Michael Cranston had any involvement in or knowledge of the criminal syndicate.

He has been charged with conspiracy to defraud, the maximum penalty for which is 10 years imprisonment, and is slated to appear in court on Friday.

Nearly 300 federal police (AFP) officers raided 28 properties, arresting nine people and seizing 25 cars, 18 residential properties, two planes, guns, AU$1 million in cash, vintage wine and artworks.

The younger man was arrested yesterday at his Bondi home.

She said she had been told to pay $128,000, as well as fines and penalties.

Michael Cranston is not believed to be a conspirator, police said. Investigators have said it was worth about $165 million, but it is understood the true figure is hard to estimate.

This business, which is understood to be Plutus Payroll, was controlled by alleged members of the syndicate and served legitimate clients, including a number of IT contractors across the country.

The senior tax official, who was in charge of high-worth individuals and private groups, also allegedly sought to intervene in the investigation taking place and pressure colleagues to cut a deal with his son, sources said. The assets include houses, jewellery, luxury cars, motorbikes, firearms and two aircraft.

It is understood that Michael Cranston allegedly inquired if a deal could be struck to resolve any probe.

The AFP points out that Plutus was a legitimate company, but asserts that "directors of these Tier 2 companies ... are essentially a front - individuals recruited to appear to be running the companies, but the syndicate members retain effective control".

On Thursday, nine people were arrested over the "unprecedented" fraud that is estimated to have cost Australian taxpayers $165 million.

The scale of the AFP sting is sure to raise issues around how closely federal and state agencies check and vet payroll services suppliers used to pay contractors, especially around the information technology arena.

A year ago, he was part of the ATO's public response to the Panama Papers, the massive leak of documents from Panama law firm Mossack Fonseca, which revealed widespread use of offshore tax regimes.

The remaining withheld tax then allegedly flowed into the pockets of the scam's operators through a complex series of companies and trusts.