Four Corners investigated the ATO whipping clean a near $1 million tax bill for former Prime Minister Paul Keating. What’s this all about? Would all taxpayers get such a fair go?

The ABC’s Four Corners has investigated former Prime Minister Paul Keating and a near million dollar tax bill that the usually unforgiving Australian Tax Office eventually relented on with their demands for payment. This saw the team from Aunty pose the question whether the rich and powerful get away with blue murder when it comes to paying their taxes?

Before presenting the facts of the case presented by abc.net.au, let me state clearly that I don’t take sides in the matter. I’d argue that from an objective and historical experience that government departments chasing money can be uncompromising, heavy-handed and in some cases totally wrong! However, it takes a lot of time, money spent on lawyers and lost productivity dealing with these matters, such that it’s not fair to assume rich, former Labor PMs are in the wrong when it comes to a tax bill.

On the other hand, it’s not unbelievable that a powerful politician could use their influence to get special treatment, though when it comes to the ATO with its record of toughness, it does surprise me.

Here's a summary of what Four Corners uncovered:
1. There was close to a $1 million bill dated back to a Keating company called Brenlex in 2012.
2. A matter like this usually gets sorted out in the Federal Court.
3. Lawyers for Keating fought it out with the ATO and over time a $600,000 tax bill plus penalties grew to over $900,000!
4. In April 2015, Mr Keating got hands on with the matter and his lawyers told the ATO that the former PM thought the tax bill had been paid.
5. This didn’t wash with the ATO.
6. However, 10 days later, Four Corners maintains the ATO backed off and “wrote off the almost $1 million debt”.

Interestingly, this case underlines the situation that five accounting bodies put to a Senate inquiry. They argued that when there’s a tax dispute with the ATO the only recourse is to go to the Federal Court, which is expensive and time-consuming.
They think there should be a review process internally with the ATO to make sure that some over-zealous public servant tax collector isn’t seeing the taxpayer’s potential tax bill with one eye rather than two objective ones.

In a plus for taxpayers in the future who think the ATO might be getting it wrong, the Tax Ombudsman is reviewing cases of whether the general interest charges imposed on taxpayers by the Tax Office are fair and reasonable.
The ATO wouldn’t comment on the Keating matter to Four Corners but typically, it “does not comment on the tax affairs of specific taxpayers due to confidentiality obligations”, which is fair enough.

While no one will know if Mr Keating got what his Labor colleague Kevin Rudd would call, “a fair suck of the sauce bottle” with this matter, if this publicity means that the ATO becomes fairer to other taxpayers who dispute a tax bill, then this story has value.

The cost of a Federal Court battle with the ATO is akin to a school kid taking on Mike Tyson in the boxing ring!