Tax officers 'did exactly what Michael did', Cranston trial told

"That's not my understanding of the tax office position," Mr Collins said.

He said the essential step in handling conflicts of interest was for the officer to remove themselves from the decision process on the matter.

"Notifications didn't have to go up the food chain," he said. "It was acceptable to pass it to a subordinate, and notify the person you referred it to of your conflict of interest and say, 'I can't take part in it'."

"Not that they should get any special treatment, but that they should get the same treatment as everybody else."

He said Mr Cranston had done this on an earlier occasion involving a relative who was a tax practitioner who had approached him. He said Mr Cranston had passed the matter to him to deal with, together with the contact details of the tax practitioner.

Mr Cranston has said when he referred tax matters to Assistant Commissioners Scott Burrows and Tony Poulakis he was concerned the tax office might have overreached, and that the ATO might be embarrassed by adverse media coverage.

Mr Collins co-chaired with Mr Cranston an inter-agency committee targeting phoenix companies, and had managed Mr Burrows and Mr Poulakis at various times.

He said Mr Cranston was very concerned about the public image of the tax office.

Was Mr Cranston concerned about tax officers being gung ho, defence counsel David Staehli SC asked.

"Oh God, yes," Mr Collins said. "Michael's job was to make sure that the wheels didn't come off and embarrass the tax office."

Mr Cranston had referred tax matters to him "hundreds of times" where he feared the tax office had been too aggressive, and his role was to "manage the enthusiasm" of some tax officers.

He told prosecutor Peter Neil SC that it would be unusual for a tax officer's son to be involved in a case, but it would still require some initial inquiries.

"I would need to make inquiries to find out who to pass it on to," he said.

"Otherwise it's a Catch-22 situation – I don't know who to refer to."

"Just passing it on with a name and a [phone] number wouldn't be doing my job."

Earlier, former KPMG partner David Drummond and PKF partner Stephen Williams described regular contact with senior tax officers to escalate tax disputes, as part of a process of engagement under Commissioner Chris Jordan's Reinvention of the ATO project.

Urgent interventions could be sought for clients under severe financial pressure, "trying to have a discussion about resolving the matter without a two or three-year delay in the courts," Mr Williams said.

Mr Williams and Mr Drummond previously worked with Mr Cranston in the tax office.

On an intercepted telephone call Mr Cranston told Mr Williams that he was considering working for his son's companies when he retired.

Mr Williams said this was part of a long-running conversation about each other's future.

"For years I tried to convince him to work for PwC, I thought he would do very well there," he said.