The operation at the heart of bottom of the harbour schemes involved a company that would be stripped of assets and accumulated profits before its tax fell due, leaving it then unable to pay.
The DCS was uncertain of the prospects for the case, but in late 1974 had a Queen's Counsel opinion strongly recommending charges of conspiracy to defraud the Commonwealth be brought against the promoter and two other individuals.
After five full years, in April 1979, and based on miscommunication, the Crown Solicitor in Canberra advised the ATO that the evidence was insufficient and the case was dropped.
[citation needed] The abandoned case came to light in only 1982 in the Costigan Royal Commission investigating activities of the Federated Ship Painters and Dockers Union.
The Commission came upon bank account transactions for millions of dollars, and the "paper trail" led eventually, and among other things, to the bottom drawers of the DCS Perth.
It made it unnecessary in the future to address the activity as a crime of defrauding the Commonwealth through the Deputy Crown Solicitor office, which up to this point had been poorly managed.
Tax matters might normally be addressed by closing a revenue loophole, the act instead treated bottom of the harbour schemes like frauds.
[2] Treasurer John Howard said on 23 September 1982 during the second reading of the bill in the House of Representatives that the normal reluctance against retrospectivity was "tempered by the competing consideration of overall perceptions as to the equity and fairness of our taxation system and the distribution of the tax burden.