One of the nation's top tax officers has confirmed he heard "bureaucratic whispers" the federal attorney-general was considering preventing the ATO intervening in a High Court case about the Bell Group litigation saga.
The parliamentary inquiry is examining whether the federal government sought to short-change taxpayers by doing a deal with the West Australian government on Alan Bond's liquidated assets and Attorney-General George Brandis' involvement.
The WA government believed it had an agreement with Canberra but was dudded when the Australian Tax Office and the Commonwealth successfully challenged WA laws relating to the Bell Group in the High Court.
ATO official Andrew Mills told a Senate hearing on Monday night he'd heard "bureaucratic whispers" about the possibility the attorney-general was considering making a direction.
"We had no direct knowledge. It was merely just rumours flying around," Mr Mills said.
"We heard (the rumours) and we decided the best position for us to be in was to be armed."
Asked about the source of the rumours, fellow official Robert Puckeridge said the information came from a number of sources hinting it could have been Australian Government Solicitor and Treasury.
The hearing was told on March 4, the ATO requested permission from the Attorney-General's Department to obtain legal advice from the Australian Government Solicitor about how it should respond.
Legal advice was not forthcoming and Mr Mills said they were concerned.
The ATO then went on with its decided course of action and sought leave to intervene in the High Court case on March 8.
ATO believed it was owed approximately $1.8 billion in total, made up of about $460 million in primary tax as well as $1.4 billion in accrued interest from the Bell Group.
The inquiry will table its report on June 21 after receiving a time extension.
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