Caught in the web?
“The ATO has zero tolerance to any fraudulent or corrupt behaviour that may in any way impact the ATO.”
The TikTok tax fraud is extensive and has several layers of impact across the 56,000 taxpayers caught up in it.
The closest circle are the scheme promoters and facilitators. To date, more than 100 people have been arrested including members of outlaw motorcycle gangs, organised criminal organisations, and youth crime gangs – and more than 10 people have been convicted for their involvement.
The maximum penalty for promoting a tax fraud scheme is 10 years in prison.
The second circle are those actively engaged in the scheme – who declared that they were carrying on a business, established an ABN, and submitted GST refund claims for expenses they did not incur. For those who received fraudulent GST refunds, the money will need to be paid back, penalties are likely to apply, and there is a risk of criminal proceedings. If the ATO have contacted you, engagement will be the key to reducing penalties and preventing an escalation to criminal proceedings. If you were engaged in the GST refund fraud but the ATO has not contacted you yet, it will be important to work with us as soon as possible to declare and manage the issue.
Where to now for identify theft victims?
The third circle is comprised of the unwitting identity theft victims whose details have been used to generate fraudulent GST refunds. The ATO have had reports of people offering to buy and sell myGov details in order to access refunds. The conversation within the accounting community is that the ATO are inundated at present trying to manage the fallout, not just from the TikTok GST refund fraud but identity theft in general. So, keep on top of your myGov account and if you notice any unusual activity, contact us asap.
The TikTok fraud timeline
“Nobody is giving money away for free or offering loans that don’t need to be paid back.”
ATO Deputy Commissioner and Chief of the Serious Financial Crime Taskforce (SFCT) John Ford.
| Late 2021 | Banks freeze suspicious accounts and refer unusual behaviour to ATO. |
| April 2022 | Operation Protego formed |
| May 2022 | ATO issue a warning on fake businesses, ABN applications and fraudulent business activity statements to generate GST refunds after around $850 million in potentially fraudulent payments made to around 40,000 individuals, with the average amount fraudulently claimed being $20,000. |
| June 2022 | ATO tallies the cost of fraudulent claims at $1.2bn. Between April and June 2022, the ATO rejected $1.7bn in fraudulent claims. ATO launches coordinated action across three days in 12 locations across NSW, Victoria, Tasmania, South Australia, Western Australia, and Queensland, which saw warrants executed against 19 individuals suspected of being involved in GST fraud. |
| July 2022 | ATO executes search warrants for five suspected offenders. |
| Dec 2022 | ATO tallies fraudulent rejected claims at $2.5bn by more than 53,000 individuals. |
| Feb 2023 | Warrants executed against 10 individuals suspected of promoting the fraud including on social media. |
| Aug 2023 | ATO tallies fraudulent rejected claims at $2.7bn. |
The upshot to date; $2.7bn in fraudulent claims rejected before being paid, $1.7bn fraudulent payments made with around $66m recovered by 30 June 2022. Another $700m in liabilities, including around $300 million in penalties, raised in 2023-24.
