Fraud Costs ATO 10% Of GST Revenue Say Experts

by Mary Swire, Tax-News.com, Hong Kong

22 July 2003

Some Australian tax experts believe that fraudulent claims for GST refunds by bogus businesses and criminals are costing the ATO some 10% of its revenue.

In addition to the submission of false and inflated claims for GST refunds, fraudsters are using various methods to fool the tax man, including the creation of non-existent firms, and the theft of certain key elements of a person's identity. One scheme involves stealing students' tax file numbers to set up bogus Australian Business Numbers which can then be used to submit a claim for a GST refund.

Investigators have also encountered more sophisticated plans, where criminals advertise for employees for a supposedly legitimate firm. The would-be employees are asked to provide sensitive information such as their tax file numbers and proof of identity. However, once the fraudster has stolen the information needed to submit false claims, the 'company' disappears.

According to reports, tax office investigators have also found evidence of fraud within the accounting profession, including accountants who will submit an inflated claim on behalf of a client, pay the client the legitimate amount, and pocket the remainder. Another factor thought to have exacerbated the problem is the ease with which GST refunds are paid by the tax office's electronic claims system.

A House of Representatives Economics Committee report published in 2000 found that there were 5.3 million excess tax numbers, many of which were being used for fraudulent purposes.

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