By Shane Wright
Pandemic stimulus payments gave some Australians an “appetite to commit fraud”, the head of the Tax Office believes, which drove their involvement in a TikTok-fuelled scam that stole $2 billion from the nation’s taxpayers.
Australian Taxation Office commissioner Chris Jordan told a Senate hearing on Wednesday night that the fraud, in which at least 57,000 people took part, effectively overwhelmed the Tax Office’s fraud detection systems.
Tax commissioner Chris Jordan says pandemic-era stimulus payments had encouraged an “appetite for fraud” among some people.Credit: Alex Ellinghausen
The Tax Office created Operation Protego in 2022 after banks, led by Westpac, noticed unusually large payments going into the accounts of its customers, particularly those whose main source of income was welfare payments.
The scheme started as videos on social media sites such as TikTok explaining how people could get the Tax Office to deliver money directly into their account. Facilitators then emerged who promised to help people gain the “free” cash by handing over personal details.
This was used to invent fake businesses with their own ABN, which then submitted fake business activity statements to claim GST refunds.
Up to 150 people with links to the Tax Office, either as contractors, former staff or current employees, were also involved in the scheme.
Jordan said it was extraordinary that so many people, most using their real names and addresses, had been involved in such a scam.
He said the Tax Office, which had stopped the fraud, had reflected on how it had happened and why so many people had become involved.
“Clearly, our system for identifying fraud at that scale was not fit for purpose. It was never, ever foreseen that within such a short period of time that 57,000 people using their own name, mostly, would attempt such a fraud,” he said.
“We’ve ... focused much more strongly [on] understanding the community’s appetite to commit fraud, post what was, we think, the stimulus package [with] the amount of money that was coming from government to individuals.”
“It appears [to be] an appetite to take money from government.”
More than 100 people have been arrested, with 16 convictions and $120 million in fines. The Tax Office estimates $2.7 billion in suspect GST refunds were stopped before payment.
People targeted by Operation Protego were suspected of fraudulently gaining GST refunds of between $38,900 and $2.4 million. Attempted fraudulent refunds ranged in size from $8100 to $32.3 million.
Jordan said while 150 people with links to the Tax Office had been caught up in the scam, just 12 were either current contractors or staff. Of this group, only three were department employees.
He said the overall issue had been a major problem.
“It is horrifyingly bad. It is very bad. This is terrible,” he said.
Jordan said the Tax Office had to get out GST refunds to businesses within 12 days, with a decision about whether to make a payment required within eight days. He said the Tax Office was seeking to change this.
“It’s just not enough [time], that’s why most GST fraud compliance actions happen after the money is paid,” he said.
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