Some 150 Australian Taxation Office (ATO) officials have been investigated as part of a massive GST fraud crackdown, resulting in criminal proceedings and employment terminations, according to a bombshell report from the auditor-general.
In the final paragraphs of a 75-page report, the auditor-general revealed that officials working for the ATO found themselves within the crosshairs of Operation Protego—the response to a tax fraud scandal that resulted in the payment of at least $2 billion in bogus GST refunds.
The ATO confirmed that 150 officials suspected of Operation Protego behaviors have been investigated through the tax office’s own internal fraud procedures. The report stated that a range of treatment strategies have been applied by the ATO, including termination of employment and criminal investigations.
The report did not provide specific details about the alleged behaviors or the number of officials under investigation who were fired or faced criminal probes.
However, the report suggests that the GST fraud scam, in which individuals acquired an Australian Business Number (ABN) and fabricated business expenses to claim false GST refunds, not only spread through the Australian community but also rattled the ATO itself.
The report also revealed that criminal investigations into the GST fraud epidemic had resulted in more than 100 arrests and 16 convictions as of August 31 last year.
The scale of the GST fraud was staggering, with at least $2 billion in false payouts identified as of June 30 last year. Additionally, $2.7 billion in suspect GST refunds were stopped before reaching attempted fraudsters’ accounts. The largest fraudulent refund amounted to approximately $2.4 million, and attempted claims reached as high as $32.3 million.
The ATO managed to recoup $123 million of the refunds in question as of August 31, 2023, using methods like bank account garnishing, which accounted for $67.6 million of the recoveries. The ATO also administered additional penalties totaling $120 million as of June 30, 2023. Furthermore, statutory interest reached $220 million by the end of August 2023, and will continue to increase for unpaid liabilities.
In addition to individuals who watched TikTok videos and created dummy ABNs, the report highlighted that some Australians had their identities stolen to participate in the scam. The ATO identified individuals who had their identities stolen or were coerced into participating or providing credentials to third parties.
The report indicated that more than 57,000 people are considered participants in Operation Protego.
While the findings regarding ATO officials’ involvement were concerning, the auditor-general report gave mixed marks to the tax office for its detection and prevention of GST fraud. It found that although the ATO had largely effective strategies to detect and deal with GST fraud, it lacked a strategy to deal with large-scale fraud events.
The report also found that the framework for assessing and managing GST fraud risk was inadequate. Confusion over roles and responsibilities hampered oversight and monitoring, making the prevention efforts partly effective.
The auditor-general made five recommendations for the ATO to address these issues and improve its approach to combating GST fraud.
With these revelations, it is clear that the massive GST fraud scam extended its reach to ATO officials themselves, resulting in significant legal and employment consequences. The report underscores the need to strengthen the ATO’s strategies and framework for detecting and preventing fraud to safeguard Australia’s taxation system.
This shocking report serves as a testament to the scale and audacity of the GST fraud epidemic, which not only impacted ordinary Australians but also infiltrated the ranks of the very organization responsible for enforcing tax compliance. As authorities continue to crack down on this widespread fraud, it is imperative that individuals remain vigilant and cautious to protect themselves from falling prey to such scams.
