GST refund fraud scheme
The ATO has lifted the lid on its most recent operation to stamp out GST fraud: Operation Protego. It has done so to warn the business community not to engage in fraudulent behaviour and to encourage those who have fallen into the trap, to make a voluntarily disclosure or risk the application of severe penalties.
Operation Protego is investigating taxpayers who create fake businesses to obtain an ABN which is then used to submit fictitious BAS in order to claim a completely fabricated GST refund.
What is Operation Protego?
According to the ATO, Operation Protego was initiated when its risk models, coupled with intelligence received from banks, AUSTRAC-led Fintel Alliance, and the Reserve Bank of Australia, identified an escalation in suspicious refunds. Operation Protego is investigating taxpayers who create fake businesses to obtain an ABN which is then used to submit fictitious BAS in order to claim a completely fabricated GST refund.
The refund amounts involved in these fraudulent schemes are significant, with $20,000 being the average amount. The ATO are currently investigating around $850 million in potentially fraudulent payments made to around 40,000 individuals and is working with financial institutions that have frozen suspected fraudulent amounts in bank accounts. The ATO notes that while $850 million in fraudulent payments is substantial, under Operation Protego, it has stopped many more GST fraud attempts.
It may be the case that not all of the individuals involved in these fake GST refund schemes know that they are doing something illegal. For example, schemes promoting loans from the ATO or obtaining government disaster payments from the ATO have been on the rise on various social media platforms. These scheme promoters will also sometimes require the myGov details of the individual or business as a prerequisite to obtaining either the fictitious loan or government disaster payment.
According to Mr Will Day, ATO Deputy Commissioner and Chief of Serious Financial Crime Taskforce “We are working with social media platforms to help remove content promoting this fraud, but if you see something that sounds too good to be true, it probably is…[t]he people who have participated in this fraud are not anonymous…[w]e know who they are, and we will be taking action.”
Red flags and freezing
The ATO makes it clear that it does not offer loans or administer government disaster payments, and any advertisement indicating that they do is a rort. Government disaster payments are administered through Services Australia if they are Federal Government payments (e.g. Australian Government Disaster Recovery Payments), or through various State government bodies where they are State government payments (e.g. Disaster Relief Grants from the NSW government administered by Resilience NSW).
Another red flag the ATO is on the look-out for as a part of Operation Protego is backdating when a business is set up. The ATO notes that backdating in conjunction with seeking a refund will flag the business as high risk and will subject it to more scrutiny as well as compliance action.
While Operation Protego is operational, the ATO notes that legitimate taxpayers may be affected by the extra controls put in place to stop fraudulent refunds. Accordingly, these fraud controls may require taxpayers to take extra steps to receive their legitimate refunds. Taxpayers that have shared myGov login details for themselves or their businesses with scheme operators are encouraged to contact the ATO for assistance.
Have you been caught up (or out) and need help?
If you think you’ve been inadvertently caught up in these fraudulent GST refund schemes, we have the skills and expertise to help you. Or, if you’re a legitimate business that’s been affected by the extra fraud controls put in place, contact us for assistance.
Disclaimer: The information on this page is for general information purposes only and is not specific to any particular person or situation. There are many factors that may affect your particular circumstances. We advise that you contact Mathews Tax Lawyers before making any decisions.