The $165 million Plutus tax scandal has "tarnished" the reputation of Australian Taxation Office, tax commissioner Chris Jordan has conceded, saying the wealth allegedly accumulated by members of the syndicate was "staggering".
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ATO boss formally charged
Michael Cranston has been formally charged in connection with a $130 million fraud.
In a speech on Wednesday, Mr Jordan also zeroed in on the "startling" level of rorting by individuals among $22 billion of work expenses claimed in tax returns. He foreshadowed a boosted focus on compliance among individuals and small businesses and suggested their tax avoidance through deductions likely topped that of large corporations.
Mr Jordan said the Plutus revelations had brought the ATO's integrity into question and ruined the career of former deputy commissioner Michael Cranston, who has been charged by the Australian Federal Police following his son's alleged role in the scam.
"I understand only too well we have ground to make up. While we may have had some credits and credibility from the positive changes we have made in the last few years, we have lost a bit of ground with [Operation Elbrus] and our systems outages," Mr Jordan said in an address to the National Press Club in Canberra.
"It is at the heart of what we do and that is why I said it has been an ugly process over recent times. It is unfortunate because we have been doing some good stuff."
More than 10 people have been charged in relation to the alleged scam, which the Australian Federal Police have alleged was a conspiracy to divert tax owed to the ATO over the past year. The matter is now the subject of multiple investigations, including an ATO review.
Mr Jordan, tax chief since 2013 and recently re-appointed for another seven years, said the alleged involvement of Adam Cranston, the former deputy commissioner's son, was "difficult to comprehend".
![Chris Jordan, Commissioner of Taxation, at the National Press Club](http://web.archive.org./web/20170705221732im_/https://www.fairfaxstatic.com.au/content/dam/images/g/x/5/0/z/f/image.related.articleLeadwide.620x349.gx52q9.png/1499239969252.jpg)
"The charges against Michael Cranston too have been equally hard to believe and at the ATO we are dismayed at the events that have unfolded in this regard," he said on Wednesday.
"The connection with and alleged actions because of his son have ruined his career and his reputation and have compromised our standings and raised questions about the integrity of others within the ATO. This is a precarious situation."
![Former deputy commissioner Michael Cranston.](http://web.archive.org./web/20170705221732im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/p/x/n/1/image.related.articleLeadwide.620x349.gx52q9.png/1499249570593.jpg)
He said the "tension" of the father-son relationship had been anticipated and safeguards had been put in place that would have successfully prevented Mr Cranston accessing protected files if he had tried.
AFP investigators taped phone calls in which Mr Cranston allegedly warned his son he "could be the subject of search warrants" and counselled him on how to avoid prosecution.
![Adam Cranston is one of eight people charged over an alleged $130 million ATO tax fraud. He is the son of former ATO ...](http://web.archive.org./web/20170705221732im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/9/n/j/8/image.related.articleLeadwide.620x349.gx52q9.png/1499239969252.jpg)
In his Wednesday address, Mr Jordan said approximately 6.3 million Australians claimed a $150 tax deduction for clothing expenses, totalling $1.8 billion. He questioned whether people knew they were not simply entitled to it.
"That would mean that almost half of the individual taxpayer population was required to wear a uniform - suits are not uniforms - or protective clothing or had some special requirements for things like sunglasses and hats and a variety of other things. Half the population."
Mr Jordan said the "tax gap" - the difference between the tax that should be collected and the reality - was larger among individuals and small business than large corporations. The latter, he said, was probably $2.5 billion, meaning they are collecting approximately 95 per cent of what they should.
"I want to indicate to you this is well and truly in our sights and we will be lifting our education, our support, our attention, our scrutiny and our enforcement in this area."
He said the level of rorting among individuals was so "startling" that the ATO had doubled the number of random audits.
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