The cunning scam that tricked the Australian Tax Office out of $1.6 billion
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It's no secret that there have been more than a few money-making schemes circulating the web, though some—in their attempt to make easy cash—often cross the line of legality.
Such is the case of a now-infamous social media scam that attempted to rip off the Australian government billions of dollars.
Thousands of false goods and services tax (GST) claims had been filed, and the Australian Tax Office (ATO) was out of pocket for a whopping $1.6 billion until they clued into the scheme and stopped the rort.
Taking advantage of the instantaneous global reach of social media, scammers began broadcasting details of the scheme all over the internet, particularly through social media.
The posts went viral, with people from all walks of life—including bikies, youth crime gangs, and everyday social media users—jumping on board.
Some attempted to scam over $100,000 through a single fraudulent GST claim. Initially, the average amount stolen was $20,000, but it has now escalated to an average of $80,000 per offender.
Since its launch in April of the previous year, Operation Protego has resulted in charges against over 100 individuals, and an additional 56,000 people have received compliance notices.
So how exactly did the scam work, and how did it get so many people to jump on board?
The scam was surprisingly straightforward: individuals only needed to apply for an Australian business number and sign up for GST registration. Once this step was completed, they could falsely assert that they had made significant expenditures on business-related equipment and supplies. They would then request a refund of 10 per cent of the total amount as GST.
The tax office would subsequently disburse the requested GST 'refund' to the supposed company, expecting to recover the funds through the GST on the business's overall turnover, as indicated in the claim.
However, many of those submitting fraudulent claims were unemployed or lacking genuine business operations. This situation resulted in the Australian Taxation Office (ATO) being unable to recover the money it had paid out in supposed GST 'expenses'.
Because of the rising cases of these scams, the government website issued a warning: 'Not everyone is entitled to an ABN. You may face prosecution or criminal charges if you apply for an ABN, register for GST and claim GST refunds when you're not entitled.'
However, the supposed 'money hack' quickly spread like wildfire, and the ATO found themselves backed into a corner.
The ATO is currently chasing $1.9 billion to be repaid to the government, including additional penalties and interest.
Fortunately, due to some vigilant banks predicting the issue, the ATO blocked another $2.7 billion of the many false invoices, though cleaning up the rest of the mess will likely take some time.
The Tax Office has confirmed a significant amount of $4.6 billion, but this number might be an underestimate, considering the circumstances.
Deputy Commissioner John Ford labelled this situation as 'the biggest tax revenue fraud against the community in the history of the ATO' during a speech in May.
Starting in late 2020, banks had been cautioning the Tax Office about a noticeable increase in cases of GST fraud. To address this, they froze accounts that were suspected to be involved.
However, the ATO's perceived lack of action was frustrating for the banks. They found themselves in a dilemma regarding how to handle these frozen accounts.
Although specific details about the scam were not openly discussed by the banks, an instance involving Westpac sheds light on the issue. In February 2022, Westpac's digital fraud team received an alert from their anti-money laundering software regarding a suspicious transaction.
While the idea of 'easy money' might be tempting, the increasing number of fraudulent schemes demands heightened awareness. In light of this, it's crucial to remain vigilant against these illegal activities.
It's also advisable to exercise caution when encountering opportunities on social media. Conducting thorough research is recommended to confirm the legitimacy of a deal or proposal.
If you ever find yourself in a situation where you're unsure about an offer, it's wise to consult experts for guidance.
We sincerely hope you found this article informative. Have you encountered any dubious money-making offers or scams lately? How did you handle such situations? We invite you to share your experiences in the comments section below.
Such is the case of a now-infamous social media scam that attempted to rip off the Australian government billions of dollars.
Thousands of false goods and services tax (GST) claims had been filed, and the Australian Tax Office (ATO) was out of pocket for a whopping $1.6 billion until they clued into the scheme and stopped the rort.
Taking advantage of the instantaneous global reach of social media, scammers began broadcasting details of the scheme all over the internet, particularly through social media.
The posts went viral, with people from all walks of life—including bikies, youth crime gangs, and everyday social media users—jumping on board.
Some attempted to scam over $100,000 through a single fraudulent GST claim. Initially, the average amount stolen was $20,000, but it has now escalated to an average of $80,000 per offender.
Since its launch in April of the previous year, Operation Protego has resulted in charges against over 100 individuals, and an additional 56,000 people have received compliance notices.
So how exactly did the scam work, and how did it get so many people to jump on board?
The scam was surprisingly straightforward: individuals only needed to apply for an Australian business number and sign up for GST registration. Once this step was completed, they could falsely assert that they had made significant expenditures on business-related equipment and supplies. They would then request a refund of 10 per cent of the total amount as GST.
The tax office would subsequently disburse the requested GST 'refund' to the supposed company, expecting to recover the funds through the GST on the business's overall turnover, as indicated in the claim.
However, many of those submitting fraudulent claims were unemployed or lacking genuine business operations. This situation resulted in the Australian Taxation Office (ATO) being unable to recover the money it had paid out in supposed GST 'expenses'.
Because of the rising cases of these scams, the government website issued a warning: 'Not everyone is entitled to an ABN. You may face prosecution or criminal charges if you apply for an ABN, register for GST and claim GST refunds when you're not entitled.'
However, the supposed 'money hack' quickly spread like wildfire, and the ATO found themselves backed into a corner.
The ATO is currently chasing $1.9 billion to be repaid to the government, including additional penalties and interest.
Fortunately, due to some vigilant banks predicting the issue, the ATO blocked another $2.7 billion of the many false invoices, though cleaning up the rest of the mess will likely take some time.
The Tax Office has confirmed a significant amount of $4.6 billion, but this number might be an underestimate, considering the circumstances.
Deputy Commissioner John Ford labelled this situation as 'the biggest tax revenue fraud against the community in the history of the ATO' during a speech in May.
Starting in late 2020, banks had been cautioning the Tax Office about a noticeable increase in cases of GST fraud. To address this, they froze accounts that were suspected to be involved.
However, the ATO's perceived lack of action was frustrating for the banks. They found themselves in a dilemma regarding how to handle these frozen accounts.
Although specific details about the scam were not openly discussed by the banks, an instance involving Westpac sheds light on the issue. In February 2022, Westpac's digital fraud team received an alert from their anti-money laundering software regarding a suspicious transaction.
Key Takeaways
- A social media scam has defrauded the Australian Tax Office (ATO) out of more than $1.6 billion via a GST fraud scheme.
- More than 100 people have been charged, and another 56,000 issued with compliance notices under Operation Protego, which started in April last year.
- The ATO has blocked an additional $2.7 billion of fake claims but is cognisant of potential further false invoices.
- The ATO continues pursuing those involved in GST fraud while working diligently to collect debts that attract penalties and interest.
While the idea of 'easy money' might be tempting, the increasing number of fraudulent schemes demands heightened awareness. In light of this, it's crucial to remain vigilant against these illegal activities.
It's also advisable to exercise caution when encountering opportunities on social media. Conducting thorough research is recommended to confirm the legitimacy of a deal or proposal.
If you ever find yourself in a situation where you're unsure about an offer, it's wise to consult experts for guidance.
We sincerely hope you found this article informative. Have you encountered any dubious money-making offers or scams lately? How did you handle such situations? We invite you to share your experiences in the comments section below.