The Tax Office has won the right to sack a whistleblower who complained about what he said were unlawful "covert operations" against innocent taxpayers – because he refused to do his work.
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Former intelligence analyst Ron Shamir lost his job a year ago after a restructure left him working as a tax auditor, a role he said he was untrained for.
The Fair Work Commission initially ruled his sacking was harsh, unfair, unreasonable and indefensible.
But its full bench overturned that decision this week, saying there was "no justification for [Mr Shamir's] non-performance of duties".
Independent senator Nick Xenophon had championed the employee's case before the appeal, saying Mr Shamir was "a man who has always wanted to do the right thing".
"He's been involved in a Kafkaesque nightmare, a dispute that has been a legal nightmare for Ron, and the law lacks clarity and certainty for those who speak out in the public interest," Senator Xenophon told Fairfax Media last month.
However, the Australian Taxation Office said it sacked Mr Shamir because he failed to show up to work and did not perform his tasks, adding it had "made every effort over two years to accommodate his preferences and development needs".
Mr Shamir said he was dismissed after he told the tax watchdog that senior ATO staff had, without evidence, cancelled a large number of business activity statement refunds on the suspicion the taxpayers were cheats.
The taxpayers were told neither of the decision nor of their right to object, and the Tax Office used what Mr Shamir said was a misleading justification that "ID takeover" had occurred by an "unknown third party".
Mr Shamir had refrained from describing his allegations in full for fear of breaching the ATO's confidentiality rules.
However, the commission focused on his failure to do his new job, not his whistleblowing claims.
Mr Shamir, an executive level 1 officer earning about $100,000 a year, had been reassigned to tax audits, which required him to meet clients, their lawyers and accountants.
He felt he lacked the skills to do this, but the Tax Office argued he had completed 68 training courses directly relevant to his new role. It also said he didn't need to be able to answer all clients' questions as he could take them on notice.
In the two months before he was sacked, Mr Shamir attended work for just over two weeks and did not perform the tasks he was given.
The commission's full bench ruled there was a "sound, defensible and well-founded reason for his dismissal" and that it was "not a result of capricious, fanciful, spiteful or prejudiced" reasoning.
Mr Shamir said on Wednesday he was disappointed and considering his options.
Tax Office defends whistleblowing procedures
The ATO has defended its staff's conduct and its internal procedures in the wake of the allegations raised by Mr Shamir.
A spokesman for the agency said all of its former employee's claims and complaints "have been considered, investigated and found to lack substance, and Mr Shamir has been advised of the outcomes".
"We have an internal, independent team dedicated to investigating fraud cases and ensuring the ATO's actions are appropriate, consistent with the law and principles of procedural fairness ..." the spokesman said.
"Employees who raise concerns about ATO activities are not subject to any adverse actions or reprisals during and following the investigation of their claims."
The agency said Mr Shamir's claims that business activity statement refunds were inappropriately withheld under "Operation Whip" were investigated and independently analysed, but rejected.
"In this instance, the concern was found to be based on limited information and incomplete knowledge of business practices," the spokesman said.
"[The] withholding of BAS refunds as part of this operation resulted in over $6 million in fraudulent refunds being denied. Every withheld refund was linked to fraudulent activity. No innocent taxpayer was adversely impacted as a result of ATO actions under Operation Whip."
The Tax Office also denied it "secretly or routinely" cancelled large numbers of tax refunds.
"We use sophisticated analytics to uncover identity crime and refund fraud and consistently monitor our online systems to pick up any instances of unusual activity," the spokesman said.
"Our systems help us stop incorrect, invalid or fraudulent refunds before they are paid out."
