A cautionary tale - GST refund fraud and ABN scams

The Australian Taxation Office (ATO) last year brought to light a significant upswing in attempts to perpetrate Goods and Services Tax (GST) refund fraud, resulting in an astonishing $850 million in fraudulent claims involving approximately 40,000 individuals.

This revelation underscores the ramifications of fraudulent activities associated with registering an Australian Business Number (ABN) and false claims for GST refunds.

Comprehending the scam

The modus operandi of this scheme involves individuals fabricating fictitious businesses and ABN applications. Subsequently, they submit contrived Business Activity Statements (BAS) to obtain illegitimate GST refunds. The sophistication of these schemes has prompted the ATO to deploy advanced risk models, collaborating with financial institutions such as the Reserve Bank of Australia and the AUSTRAC-led Fintel Alliance to identify and mitigate such fraudulent activities.

Real-Life implications

An example of this is a woman who garnered over $250,000 in fraudulent GST refunds from 63 false returns lodged between February and July 2022, resulting in a 20-month jail term. This underscores the gravity with which authorities are addressing such fraudulent behaviour.

Red flags and reminders

The ATO has disseminated critical reminders to the broader community to prevent falling victim to such scams:

1. The ATO does not extend loans, and any claims suggesting otherwise are false.
2. If one is not engaged in a business or enterprise, there is no necessity for an ABN or to file a GST return.
3. Attempting to register a business to claim a refund retroactively is a high-risk endeavour.
4. False declarations may affect eligibility for other government payments.

Impact on legitimate businesses

Regrettably, authentic businesses may encounter additional challenges as the ATO intensifies ABN and GST registration controls to forestall fraudulent claims.

What to do if involved

In the event of inadvertent entanglement in such a situation, the ATO encourages disclosure as soon as possible. Proactively coming forward may lead to a more favorable outcome than facing later, more stringent consequences. Seeking assistance from the ATO or engaging a trusted advisor, is pivotal to rectifying the situation.

Staying well-informed and exercising caution is paramount in a landscape teeming with fraudulent schemes. Remember that seeking independent advice before taking action is essential if something appears too good to be true.

Disclaimer

The information provided in this article does not constitute advice. The information is of a general nature only and does not take into account your individual financial situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.