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Wednesday, 8 May 1957

Sir ARTHUR FADDEN (McphersonTreasurer) - by leave - I desire to make a statement about a matter concerning which the honorable member for Hindmarsh (Mr. Clyde Cameron) asked a question on Thursday last. It relates to certain improper activities by members of the staff of the Adelaide office of the Taxation Branch. 1 informed the honorable member that I would see what information I could obtain for him. In view of the amount of publicity, some of it, unfortunately, not accurate, that has been given to this matter, ] feel that it is desirable for me now to inform the honorable member in some detail of the true position. Some months ago it was discovered that two officers of the income tax section of the office in Adelaide were involved in collusion in the fraudulent manipulation of used tax stamps for the benefit of themselves and taxpayers. When this discovery was made, the two officers were immediately suspended from duty, and an intensive examination of the procedures within the office was begun. In the course of the examination, it was found that another officer of the branch was involved in the tax stamps frauds. That officer also was suspended from duty. Subsequently, criminal charges were preferred against all three, and they are now serving gaol sentences. The amount involved in the stamp frauds was about £17,000. The three officers have already made restitution of approximately £10,000. The remaining £7,000 either will be made good by the officers concerned or will be recovered from the taxpayers involved.

Because of discoveries made when the procedures of the office were being overhauled, the Commissioner of Taxation decided upon an investigation of the activities of the staff generally in the Adelaide office. That investigation disclosed malpractices of a different kind by other officers. Two junior female officers were dismissed because they had suppressed evidence relating to the activities of the three officers involved in the tax stamp frauds. The action of the female officers was regarded as foolish rather than malicious, and with the advice of the Deputy Commonwealth Crown Solicitor in Adelaide, no criminal proceedings were taken against them. Six officers were found to have been engaged in either preparing, or assisting to prepare, income tax returns, contrary to a specific instruction forbidding the preparation of returns by officers. In some instances, officers were found to have assessed returns either prepared by them, or in the preparation of which they had assisted. In some of them, excessive claims were made for concessional deductions. Proof that a fee for the assistance given in the preparation of returns was accepted by some of the six officers was obtained. All six officers were suspended from duty pending action against them under the Public Service Act.

One of the officers has already been prosecuted under the Income Tax and Social Services Contribution Assessment Act and was fined for having, in his own personal income tax returns, made excessive claims for medical expenses and other concessional deductions. Similar action was taken against several of the taxpayers for whom he had prepared returns. Several of the persons for whom another officer had prepared returns were also prosecuted and were fined for having lodged false returns. Prosecutions for lodgment of false returns are in course against three other officers and a number of the persons for whom they prepared returns. In the sixth case, no evidence was discovered that the officer's own returns were false or that the overclaims in the returns prepared by him for- the taxpayers were his responsibility. He had, however, flagrantly disregarded an instruction lawfully given that he must not prepare returns for taxpayers. He was suspended from duty and subsequently his dismissal was recommended to the Public Service Board. On appeal to the appeal board established under the Public Service Act the punishment recommended was reduced and in place of dismissal the board imposed a reduction in classification.

Another officer whose activities came under suspicion suffered a heart attack during the investigation and retired because of his illness. As nothing more than disobedience had been discovered against him, no disciplinary action has been taken.

Charges of improper conduct for having engaged in outside employment without the specific approval of the Public Service Board, and of having failed to include the income from that source of employment in his returns, have been preferred against a junior officer.

The honorable member for Hindmarsh asked whether it was true that a suspended officer who had only one year's service remaining had threatened that if he were dismissed, he would disclose the names of other officers guilty of improper practices. The Commissioner of Taxation states that he knows of no such threats. Two of the officers suspended on account of their activities in preparing returns might be said to be nearing the retiring age. Neither of these officers, so far as the Administration is aware, has made any threat to disclose the names of other guilty parties if proceeded against. No request for immunity from disciplinary action and no promise of immunity therefrom on such terms has been received from, or given to, any officer and no such request would be entertained.

The Commissioner states that he has gone to some lengths to unearth all cases where officers are involved in irregular practices, to discipline offenders, and to discourage recurrences.

I would like to point out to the honorable member that the irregularities discovered are very small by comparison with the size of the organization coming under the administration of the Commissioner of Taxation. Altogether some 7,000 persons are employed on the Commissioner's staff, assessing and collecting some £800,000,000 annually from some 4,000,000 taxpayers. In the circumstances, the high degree of fidelity maintained is notable. It is not unnatural that on odd occasions there are diversions from the narrow path of honesty and rectitude. When these are discovered they are ruthlessly dealt with so that the high reputation which the organization enjoys may be maintained.

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