The Australian Taxation Office (ATO) is grappling with the aftermath of a tax refund scam that involved 150 of its employees. An audit uncovered the extensive scheme, where participants, enticed by online ads on platforms like Facebook and TikTok, engaged in fraudulent activities resulting in $1.3 billion in losses between April 2022 and June 2023. The scam, promoting false methods of securing loans from the ATO, instructed individuals to create fake businesses, fraudulently apply for Australian Business Numbers (ABN), and submit fake claims for Goods and Services Tax (GST) refunds. While the majority of those investigated were former contractors or ex-employees not working with the ATO at the time, a dozen ATO staff members were found to have committed fraud during their tenure.
As part of the response to the scam, the ATO initiated Operation Protego in mid-2021 after receiving increased tip-offs about GST fraud. Financial institutions also contributed to the effort by sending alerts regarding suspicious GST and income tax refunds. The ATO’s actions prevented an additional $2.7 billion in suspect GST refunds, recovered $123 million, and led to numerous prosecutions. Despite these successes, the audit raised concerns about the ATO’s enterprise framework for fraud, indicating it is not fit for purpose. Additionally, the organization relies on dispersed registers of controls to detect potential GST fraud, lacking a centralized system for effective oversight.
