Inspector-General of Taxation: “I’m ready to investigate the alleged tax fraud scandal if needed”

Inspector-General of Tax Ali Noroozi talks about the alleged tax fraud scandal that has engulfed the ATO

Introduction

Ross Greenwood: Welcome back to money use right around Australia of course last week there was this controversy that is really going to very much engulf the Australian Tax Office as a result of what has taken place with Plutus spiral Australia net. Plutus was the company that is very much at the center of the alleged tax fraud and we say alleged, because even though many individuals have already been charged it has to make its way through the courts to make certain that the proper outcome comes at the other end.

We also know that one of those people who has now been summoned to court and is likely to be charged when there is the most powerful attack dog of the Australian Tax Office over the past 35 years Michael Cranston. The interesting side of this is that the acting tax commissioner because what’s happened at the moment is the context commissioner is away on leave. Andrew Mills’ stepped in and basically, he’s indicated in a private briefing to some of his own people and the way they should react to others that in fact, this is good news for the tax office. The most of what has been said has been fake news.

This is a curious thing for Andrew Mills to say because again it’s got to get through the courts. What I would say to you is that I spoke with somebody who did and does work with many of these people from the Tax Office who have been summoned to court. Now we can’t say too much about this current situation but it’s Michael Cranston, Tony Polacrus and also Scott Paraz and we know from the warrants what it is that the police are alleging against him. The one thing I can say is I spoke to somebody who work pretty closely with them over the weekend and this person by the time that explained the situation how inside the Tax Office I feel I would say I was very emotional was almost in tears because he was at that time really upset by what has taken place.

That’s an important thing to understand that this has rattled the tax office. There was no doubt about that. Chris Jordan is the Tax Commissioner. He’ll be back in order to show the leadership to try and bring it all together and the operations of the tax office will go on. What is important right now is that there is due process that does come as a result of what’s taking place. Apart of that no doubt will go to the inspector-general of taxation if required. That’s Ali Naroozi who is on loan right now. Many thanks for your time Ali.

Interview starts with Ali Naroozi

Ali Naroozi: Pleasure.

Ross Greenwood: Now your role let’s just explain it to people what you do and what your role is in regards to the Tax Office.

Ali Naroozi: Basically individual taxpayers or business taxpayers can lodge complaints with us about the actions of the tax office and the tax practitioner board. We can also conduct broader reviews into systemic issues or broader issues that require reviewing but we review them and then we make recommendations for improvement. As I said our work is limited to the actions of the tax office and that processes their practices and the tax practitioner board.

Ross Greenwood: Okay so does this go to the actual function of the tax office or does this go to the policies of the Tax Office and the way in which the Tax Office is operating from an administrative point of view. Where does it go to?

Ali Naroozi: Yes it’s about the administrative action so it’s about that practices and processes, not tax policy as in for example, what tax write should apply to individuals.

Where can you go to investigate ATO?

Ross Greenwood: Okay so when it comes to those practices of the Tax Office where you will payouts? Where can you go to investigate the tax office if you choose to investigate?

Ali Naroozi: For example, in this case, we could review the practice’s procedures of what structures that have in place to detect, for example, fraud particularly where it involves their own staff. We can do all of that, however, there are occasions going on at the moment by the ISP and the ATF but more importantly, there are also court proceedings and any work we should do or we may do needs to be mindful of not prejudicing any of those existing processes.

Ross Greenwood: Okay. You can call for a review or an investigation yourself. Can anybody else call for a review or an investigation?

Ali Naroozi: Well some calling for it is not the right word. I wouldn’t call on myself obviously announce that I’m going to do a review. However, the minister can direct me to do a review in which case I would have to do it. The timing is then you know I have to manage but also the commissioner himself, the parliamentary committees or the parliament itself can also request that I might do a review. There are all those checks and balances.

Ross Greenwood: In this particular situation, however, it would be unlikely I would imagine unless maybe you are called upon to do it. It would be unlikely that you might seek a review until all of the court proceedings and all of these types of things have played out because you would be fearful of potentially prejudicing some of those inquiries.

Ali Naroozi: Well I think I’m not sure about unlikely but certainly we wouldn’t do anything to prejudice any of those reviews. Our preference would be obviously to outweigh any outcome of those investigations first. However, if for example, they are going to take a very long time if you know it is eroding public confidence in the system, if it is having an impact on voluntary compliance then we would take all of that into account but we would be very mindful of not prejudicing particularly in the court proceeding.

Voluntary Compliance at ATO?

Ross Greenwood: Okay because it is important that all taxpayers are seen to be treated equally and the Tax Office is treating all taxpayers equally and so as a result even what has taken place here it is still important that the voluntary compliance nature of our tax system that that remains robust. That’s one of your goals, isn’t it?

Ali Naroozi: I mean that is one of the reasons for the establishment of my office that it is proven that voluntary or research has shown that voluntary compliance improves when people have confidence in the system. An office like mine where people can pay issues and have it independently look at is one of those keys to fostering voluntary compliance. It is also the fact that there is this scrutiny available which is independent and can look into all aspects of the idea, those individuals and tax professionals take a great deal of comfort in that.

Ross Greenwood: There’s no doubt that there’s still plenty more information that will come out in regards to this particular situation with Pluto’s payroll but of course the man who will be watching at all stages is the inspector-general of taxation Ali Naroozi and, Ali, as always we appreciate your time here on the program.

Ali Naroozi Pleasure.

Paul Hogan’s lawyer reacts to tax fraud

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