Influencers on TikTok are being blamed for an explosion of fraudulent GST claims that banks and accountants say went unchallenged for years.
An explosive wave of fraud that has shaken the Tax Office’s GST system had been building for months before accountants began to notice early last year. By then it was everywhere and no one wanted to talk about it.
It was “the biggest tax revenue fraud against the community in the history of the ATO”, deputy commissioner John Ford said in a speech in May. “He hasn’t had to pay it back. He got this at the end of 2022. This isn’t being picked up as fraudulent activity. “We notified the ATO, and they didn’t want anything to do with it,” a bank executive told an adviser.
The Tax Office’s position is that it couldn’t share what it was doing because of taxpayer secrecy, but within the agency there appears to have been disagreement over which section should handle the investigation. “But you’ve lodged an activity statement,” the tax agent said after looking at his MyGov account. “You’ve claimed you spent half a million dollars buying equipment.”
At this point several bank executives contacted the Reserve Bank informally to express concern about the rising fraud. By May, Operation Protego was reporting $850 million of fraudulent payments to 40,000 people. By June, the estimate was $1 billion in payouts and up to 70,000 people involved.By August, the Tax Office annual report said, tax officers had blocked $1.9 billion in claims and raised $1.2 billion in liabilities.
Remarkably, while fraud generally involves identity theft to provide a false name, people are committing the GST fraud under their own names. Once caught they are left with a huge and increasing tax debt – which means an end to any future tax returns.Along with the 56,000-plus people caught up by Protego is a trail of personal disaster among some of Australia’s poorest communities.Advertisement
The case prompted a change in the law to overcome the court’s findings. The new law enables the ATO to suspend GST credits but only if it’s reasonable to require verification, for example if there’s a likelihood of fraud.
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