SYDNEY — Australian police have smashed a massive fraud syndicate and seized planes, guns, and luxury cars, they said today, with a top-ranking tax official and his son embroiled in the scam.

Nine people were held during raids on homes and businesses across New South Wales state on Wednesday, accused of conspiracy to defraud the government of A$165 million in one of the biggest ever white collar crimes in Australia.

Australian Tax Office deputy commissioner Michael Cranston was charged with abuse of power and faces five years in jail, while his high-flying son Adam was allegedly one of the masterminds of the elaborate scheme.

"The allegation of the value of the fraud in this conspiracy is A$165 million taken from the taxation system," said Australian Federal Police Deputy Commissioner Operations Leanne Close.

She said the motivation appeared to be to fund lavish lifestyles.

They were using the scheme "to divert the taxpayers’ money into cars, jewellery, cash, motorbikes".

Assets seized included A$15 million in cash, two planes, 18 properties, 24 luxury and vintage cars, firearms, artwork and rare wines.

Police will claim a legitimate payroll company allegedly funnelled wage payments through a series of subcontracted firms, controlled by the syndicate, who then paid the ATO only a fraction of the required income tax.

The remaining withheld tax then allegedly flowed into the pockets of the scam’s operators through a complex series of companies and trusts.

Michael Cranston is not accused of being directly involved in the fraud, but allegedly accessed information from ATO systems for his son.

"It appears that his son has asked him to access some information potentially," said Close.

"We don’t believe that at this point that he had any knowledge of the actual conspiracy and the defrauding."

Among those arrested, six were charged with defrauding the Commonwealth, two with money laundering and one with alleged extortion of the syndicate.

ATO chief Andrew Mills said four other tax office officials were being investigated internally, but he insisted his organisation had not been compromised.

"The information that I have to date shows no compromise of the operation of our administration," he said.

"Our systems, controls and procedures worked effectively and we have been able to successfully isolate and protect the investigation, working well with the police over many months to build a picture of what has been happening." — AFP