By Shane Wright
The outgoing head of the Australian Taxation Office, Chris Jordan, says the agency needs police-like powers so it can chase down tax criminals amid a surge in illegal activity including the creation of 30,000 superannuation accounts by bots started on the dark web.
Jordan, in his final public address before retiring after 11 years heading the ATO, also revealed on Wednesday that the Tax Office had discovered “trickery” within the self-managed superannuation sector with more than $600 million illegally accessed from funds.
Outgoing ATO boss Chris Jordan says the agency needs stronger powers to deal with the rise in criminal activities.Credit: Alex Ellinghausen
Jordan was the first person from outside the ATO appointed to head the organisation which last financial year collected $730 billion in tax. The Tax Office was instrumental in the Morrison government’s COVID-stimulus rollout while it has been world-leading in its approach to collecting tax from multinational corporations.
In an address to the National Press Club, Jordan said one ongoing problem for the ATO was its lack of policing powers.
While tax agencies such as those in the United States and New Zealand could effectively launch raids against people or businesses thought to be involved in criminal tax arrangements, the ATO had to rely on the Australian Federal Police.
At a recent meeting of five tax agencies – from the United States, Britain, Netherlands, Canada and Australia – the representative from the ATO could not participate because of their lack of policing powers. Someone from the Australian Criminal Intelligence Commission had to stand in for the Tax Office.
“Unlike many revenue authorities around the world, we do not have criminal investigation powers. This means we rely on others, such as the Australian Federal Police, to be able to do our job. Unfortunately, this also means we have to get in line with their priorities,” Jordan said.
“The majority of revenue agencies including France, Germany, New Zealand, the UK and even our mates in the IRS [Internal Revenue Service] ... are authorised to obtain third-party documentary information and conduct searches to obtain necessary evidence.”
The ATO holds 50 petabytes of information, or the equivalent of one billion tall filing cabinets.
Jordan said the office was now facing 4.7 million cyberattacks every month.
Not only were criminals trying to break into the ATO, but they were using technology such as bots that were used to create 30,000 superannuation funds in a short period of time, based on hacked information sold on the dark web.
“The criminals couldn’t fill out the forms to create the new super funds quick enough, so they devised a bot to do that work for them. Now, this is scary stuff,” he said.
“This is things that we really have to keep on top of. We really have to keep investing in. We have to keep convincing government that is something that continuous funding will be required [for].”
But the Tax Office also continues to deal with other types of fraud. It recently revealed 57,000 people stole $2 billion through fraudulent GST refunds, a scam that started as a social media video.
Jordan said in 2020 more than $380 million was illegally taken from self-managed super funds with another $250 million taken the following year.
Over the same two years, $295 million was blocked by the ATO before it could be withdrawn while SMSFs entered into $200 million worth of prohibited loans.
“This needs to stop. Super is for retirement. If people are experiencing genuine hardship, there are rules in place for when you can legally access super to help,” he said.
“I want to make this clear: we don’t ‘set and forget’ when it comes to managing compliance. From multinational tax avoidance to SMSF trickery – we try to be ahead of the game.”
Deputy Commissioner Emma Rosenzweig, addressing the Self-Managed Super Funds Association national conference, said it appeared newly created funds were more likely to be involved in illegal behaviour.
She said about two-thirds of the illegal withdrawals or loans were from people who had entered the self-managed super system with no genuine intent to run a fund.
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