The Australian Taxation Office (ATO) sacked staff and downgraded its fraud risk leading up to the scam in which Australians stole $2 billion in fake GST claims, despite being warned for years its fraud detection scheme was inadequate.
The fraud – which took off when how-to videos were shared to social media in 2021 – involved individuals inventing a fake business, lodging a fraudulent ABN application and making false GST claims to the ATO, which continued to pay out millions of dollars despite having discovered the fraud, a Four Corners investigation has found.
The Australian Taxation Office.Credit: Luis Enrique Ascui
A 2018 report revealed the inspector general of taxation found the ATO’s risk assessment systems were only slightly more effective than random selection.
The ATO did not immediately respond to these concerns, and even downgraded its external fraud risk from “severe” to “low” two months before the scam exploded online.
About half of the division responsible for GST – 1000 staff – had been sacked following the Abbott government’s ascension in 2013, and the ATO began moving towards automation over human verification.
The ATO estimated it was scammed by about 57,000 people. Just 122 have been convicted, and only 5 per cent of the money – $96 million – has been recovered, Four Corners reports. Banks have helped to recover another $64 million by freezing accounts.
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