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GST fraudsters to face ‘full force of the law’: ATO

The Tax Office has the tools and resources to uncover even the most elaborate schemes, a deputy commissioner has warned.

The ATO has declared a crackdown on GST cheats, warning businesses against becoming involved with illegal invoicing or financial schemes at the risk of facing “the full force of the law”.

The warning comes amid an increase in fraudulent claims for large GST funds across a number of industries, according to the Serious Financial Crimes Taskforce.

Deputy commissioner and SFCT Chief John Ford encouraged business owners to take the ATO’s warning seriously and make a voluntary disclosure if they were involved in the illegal schemes.

“Those who seek to defraud the tax and super systems will get caught and face the full force of the law.”

“We are equipped with the resources, sophisticated data matching, analytics capability, and intelligence sharing relationships to uncover even the most elaborate financial crime.”

“If you are involved in an illegal invoicing or financial arrangements, we strongly encourage you to come forward and make a voluntary disclosure rather than wait for us to contact you.”

According to the Australian National Audit Office, over 57,000 taxpayers have participated in GST rorts that proliferated in late 2021 due to their promotion on social media platforms like TikTok.

They claimed $2 billion in bogus refunds and the ATO stopped a further $2.7 billion from being paid out.

The audit office also found the ATO investigated 150 of its workers as part of the multi-agency response to the rorts, known as Operation Protego.

The ATO said it observed more “sophisticated” structuring arrangements between inter-related parties undertaken to obscure transactions and disguise artificial or fraudulent arrangements, resulting in high-value GST refunds.

“Through intelligence and information sharing with partner agencies, the SFCT have identified multiple specific groups who are involved in commercial arrangements which seek to exploit the GST rules,” the ATO said.

The ATO said the arrangements exhibited some or all of the following features:

False invoicing between related entities.
Deliberately misaligning GST accounting methods across the group.
Duplicating GST credit claims in related entities for a single high-value transaction.
Claiming GST credits for purported purchases, development or construction by related entities that never occurred.
The use of straw directors in an attempt to hide the true relationship between entities.

The ATO said enablers and recipients of the schemes used the fraudulent refunds to fund business ventures or personal purchases, disadvantaging taxpayers who did the right thing.

“We are targeting businesses who are participating in these schemes to ensure a level playing field for those who follow the rules,” Ford said.

“Not only is this behaviour putting honest businesses at risk, but it also takes funding away from vital community services such as hospitals, schools and transport.”

By Christine Chen
06 December 2024
accountantsdaily.com.au