Putting trust in the trusts cop

The Australian Tax Office is renowned among reporters as an informational brick wall - a dead end for many (almost) cracking yarns. It's understandable really, given the sensitive information to which the country's tax police are privy

So when deputy commissioner Michael Cranston, engaged with The Age late last year, it was a refreshing breakthrough.

We were researching family trusts, the tax "planning" tool of choice for the rich and powerful. The Tax Office had put us in touch with some lower-ranking tax officers who had been polite but guarded, offering little beyond the limited, dated information on the ATO website.

Then, in late December, we got to speak to Cranston, 57, the tax office veteran and specialist in pursuing rich tax dodgers, the man on constant alert for flash houses, boats, cars and jets at odds with tax returns.

He was altogether different. In a lengthy recorded interview, the ATO's head of private groups and high net-worth individuals, was relaxed, generous, jovial, almost knockabout.

Precious little public information is available about family trusts, even the number of Australians involved in trusts and the aggregate tax they do, and don't, pay.

Cranston acknowledged the lack of information and agreed to help by providing The Age with new unpublished ATO data. Importantly, for us, he said he would get staff to crunch some numbers on how many Australians were involved in trusts and how much tax was being paid on trust revenue.

As recently as last month Cranston signed off on public comments used in a series of stories highlighting problems with trusts, including tax avoidance and the secrecy that helps scam artists, criminals and terrorists to launder money.

He did so despite the political sensitivity of the matter, especially for the Coalition. Among the stories was the revelation that almost half of the Turnbull government's MPs or their immediate family members were involved in trusts.

Picking up on the first story, Melbourne radio announcer Neil Mitchell gave Prime Minister Malcolm Turnbull a rare grilling on trusts and tax perks for the rich.

We feared Cranston would pull out of the story to run the following day. He didn't. "People have got to continue to do the right thing with them (trusts) by reporting and paying the right amount of tax," he told Fairfax Media."The ATO jumps very quickly on those that don't do the right thing."

So it was something of a shock to find Cranston himself caught up in a Hollywood-like scandal that centred on his son Adam's alleged $165 million tax fraud syndicate and lavish lifestyle, with trusts an important conduit for the alleged laundering of ill-gotten gains.

To date there is no evidence that Cranston was aware of the detail of the alleged scam or the use of trusts as part of it.

Mr Cranston now faces being charged with abusing his position as a public official by accessing restricted information on an ATO audit of his son. Other ATO officers have been stood down.

With trusts used to hide proceeds from the biggest scam of this type in Australian history, and the ATO itself now embroiled, the cloud over this rarely discussed tax-slashing tool has darkened yet further.

It makes us wonder what Cranston really made of two reporters - clearly convinced of the need for reform - pressing him on the subject of trusts at the very time the scandal centred on his son was coming to a head.

Cranston acknowledged cases of tax evasion through trusts, but stressed the ATO's taskforce had been vigilant in its work, recovering almost $1 billion dollars. At no point did he support wider, fundamental reform of trust tax laws.

In the end, while helpful, Cranston did not provide all the information he indicated he would. Notably, the ATO baulked at making an estimate of how much tax was now being paid, or not, on trust revenue.

We speculated that, on reflection, Cranston may have seen such co-operation as politically unwise; especially given that, despite its budgetary woes, the Turnbull government has shown no appetite for trust reform.

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This story Putting trust in the trusts cop first appeared on The Sydney Morning Herald.