Misleading ATO statement could have put trio in jail for a decade

A misleading witness statement tendered to court by an ATO officer that could have sent three innocent Australians to jail has been uncovered.

The document was discovered by businessman Jae Jang through Freedom of Information laws and will now form part of an independent investigation by the Tax Ombudsman into a decade-long case first exposed by A Current Affair and published by this masthead.

ATO officer Anthony Rains was the lead investigator in the criminal prosecution of Jang and two of his employees, Gold Coast-based Debbie and Bill Ingleton.

Jae Jang, who had sought all necessary approvals for a new alcohol product, was pursued by the ATO for alleged fraud.Credit: A Current Affair

The trio were charged in late 2017 with conspiracy to defraud the Australian Taxation Office, which carries a maximum sentence of 10 years’ jail.

Jang was arrested just days before Christmas that year, and may have spent three weeks in jail had his extradition to Queensland been successful.

After 2½ years with strict bail conditions, the charges were dropped with “no evidence to offer”.

It can now be revealed that a witness statement, tendered by another ATO officer, appears to have had a crucial line added to it by Rains.

“Anthony Rains is the criminal investigator taking witness statements, he should be independent,” Jang said.

“However, in this case, it’s clearly shown that he has actually written that for the witness, which, in my view, is totally wrong.”

On top of that, the line added creates a false impression.

It states officers could not find a crucial private ruling on the ATO database relating to one of Jang’s businesses.

Anthony Rains, the ATO investigator at the centre of Jae Jang’s case.Credit: A Current Affair

But that ruling did exist and was sent to Jang’s legal team the night before his committal hearing at Southport Court, a vital step to his criminal charges being dropped.

Jang said the mistake could have “put me in jail for 10 years”.

“If those documents existed, there would have been no criminal charges,” Jang said.

Citing “confidentiality obligations”, an ATO spokesperson declined to answer detailed questions surrounding the failed criminal prosecution.

They did point out that “all decisions to commence a prosecution and continue with it are made by the Commonwealth Director of Public Prosecutions, independently of the ATO”.

A spokesperson for the CDPP said its policies state that “a prosecution should not proceed if there are no reasonable prospects of a conviction being secured”.

It declined to answer further questions as to why it reached that position in this case, or any questions regarding the accuracy of witness statements.

“I need to know why this document [private ruling] was not found, and I need to know why there was no oversight in such an important criminal investigation because clearly they did exist,” Jang said.

Tax Ombudsman Ruth Owen will now investigate the entire case.

Debbie Ingleton and her husband worked alongside Jang when the ATO turned its attention to his tax affairs.Credit: A Current Affair

“The Tax Commissioner Rob Heferen has asked me to undertake an independent investigation into this case and any systemic issues related to the ATO’s handling of it,” Owen said.

“I have agreed to do so, and I will establish a review team to start work as soon as possible.”

Assistant Treasurer Daniel Mulino added that he was watching the “serious issues” raised and welcomes the independent review.

“I will wait for the findings of that review before making any further comment,” Mulino said.

Former federal MP Jason Falinski believes cases like this reveal the extent of the ATO’s extraordinary powers.

“The ATO is the only agency that can knock on your door, enter your house, take away whatever it wants – or it deems necessary to take away – without once getting a warrant from the court,” Falinski said.

He spent 15 months looking into the ATO’s conduct whilst chairing a House of Representatives standing committee on tax and revenue.

“Most Australians have no idea that the ATO has been granted these powers. The idea of giving the ATO these powers has never been put to the Australian people, and I think if they were aware of them, they’d be shocked and horrified at how many people have been impacted by this,” Falinski said.

A key recommendation from a report he authored in 2021 was to bring the ATO into line with all other legal agencies, requiring it to prove its case against taxpayers.

“The onus of proof should lie not with the taxpayer but with the ATO,” the report stated.

It also called for legislation that gives taxpayers “the same protections enjoyed by all other citizens when dealing with debts, namely, it is not payable until it has been proved, and cannot be collected until that time.”

That report is now gathering dust, with no changes made to either of those points.

“This is a principal of law that has been in the common law for millennia, and we reversed all of that with very little debate, and so reversing that and making the ATO prove its case is critical,” Falinski said.

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