As a part of a wide-ranging operation to stamp out GST fraud, the ATO initiated Operation Protego in May 2022 in response to intelligence which identified the escalation of suspicious refunds. Operation Protego was investigating whether taxpayers were inventing fake businesses to obtain an Australian Business Number (ABN), which was then used to submit fictitious Business Activity Statements (BASs) in order to get a false GST refund.

According to the ATO, this scheme has been widely circulated in online advertising and content, particularly in social media. While it is working with various digital platforms to shut down the advertising, it is also urging the community to avoid getting entangled in the scheme.

“We have seen social media play a key role in promoting this type of GST fraud, with some accounts even claiming to be financial advisors. We’ve also had reports of people offering to buy and sell myGov details in order to access these refunds.” – Will Day, ATO Deputy Commissioner and Chief of the SFCT.

The ATO has previously noted that the refund amounts involved in these schemes are significant, with $20,000 being the average amount.  The ATO has also encouraged individuals involved in the scheme to come forward to avoid further action and consequences. Following that, the ATO recently announced that it has acted against approximately 40,000 individuals suspected of being involved in GST fraud. This action included search warrants executed with the support of the Australian Federal Police and NSW police in relation to 5 suspected offenders, which is in addition to raids across the country in June 2022 against 19 individuals. According to the ATO, the raids are only the beginning, with the ATO-led Serious Financial Crime Taskforce (SFCT) progressively sharing information relating to all individuals participating in this fraud. Details of approximately 29,000 individuals have been provided to the Australian Criminal Intelligence Commission (ACIC) to date.

The ATO notes that GST refund fraud is more than a careless or accidental mistake and is always undertaken in a deliberate and deceitful way. This means it will not hesitate to apply the full force of the law such as prosecution or criminal charges. However, it is aware that there might be instances where individuals involved in GST refund schemes may not know that they are doing something illegal, especially in cases of compromised identity which could lead to false applications.

Individuals that have been swept up in this scheme may be able to self-correct to avoid tougher penalties. This involves revising the fraudulent activity statements, cancelling the associated ABN and GST-registration, and setting up a payment arrangement with the ATO to return the GST refund that was fraudulently obtained. If that is too difficult, the ATO notes that voluntary disclosures of involvement will also lead to better outcomes.

Those individuals that have inadvertently had their myGov details compromised and have had their details used to either apply for an ABN or lodge a fraudulent activity statement should contact the ATO immediately. It will be able to help protect individual’s identities and prevent further tax fraud.