In today’s digital age, tax scams have become a prevalent issue around the world, and Australia is no exception. Deceptive practices by fraudsters can lead to financial losses and security breaches, making it crucial for Australians to be aware of tax scams and exercise financial vigilance.
This blog aims to shed light on the nature of tax scams in Australia, provide recent examples, and offer guidance on how potential victims can avoid falling prey to scammers.
Understanding Tax Scams in Australia
Tax scams in Australia come in various forms, but they all share a common goal: to exploit individuals and businesses for financial gain. These scams often impersonate legitimate organisations, such as the Australian Taxation Office (ATO), to deceive victims into providing sensitive information or making payments. Let’s delve into some common tactics used by tax scammers:
Fake Tax Refunds
Scammers send out emails or messages claiming that the recipient is entitled to a tax refund. They typically ask for personal and financial information to process the refund. Once obtained, scammers use this data for identity theft or to steal money from the victim’s bank account.
Threatening Phone Calls
Some scammers resort to intimidation tactics by making unsolicited phone calls. They may impersonate ATO officials and threaten legal action or arrest if the victim doesn’t make an immediate payment to resolve a supposed tax debt. The ATO reported that threats usually come before the end of a fiscal year.
Phishing Emails and Websites:
Phishing emails and fake websites are designed to look like official ATO communications. They ask recipients to click on links and provide personal information or financial details, which are then used for fraudulent activities.
Malware and Ransomware Attacks
Scammers may also send malicious software through email attachments or links. Once the malware is installed on the victim’s computer, it can steal sensitive information or lock the device until a ransom is paid.
Big Aussie Tax Scams
To underscore the importance of staying vigilant against tax scams, here are some recent examples that have affected Australians:
TikTok and the GST
In August 2023, the Australian Financial Review’s Neil Chenoweth revealed that a $4.6-billion tax fraud using a certain financial scheme promoted by influencers on video-share app TikTok had been brewing for years. That amount included $1.9 billion in fake GST claims. The scheme involved scammers setting up an ABN and then using their myGov accounts to seek GST refunds on large expenses they supposedly incurred in setting up their new business. Several Australian banks already noticed large amounts of loans and tried to warn the ATO about them, but the agency was allegedly inept in stopping things on their end. Some of these suspects were found to have accessed five-figure GST claims even when they were already on welfare.
When asked for comment, ATO deputy commissioner Will Day said the agency had been quietly accounting for all the information with help from the RBA and the Fintel Alliance, but due to bank secrecy laws, did not inform the banks of any action. The ATO went ahead with Operation PROTEGO in April 2022: a massive crackdown with over 100 arrests and compliance actions against 56,000 people. Day said that as of 30 June 2023, the ATO was able to cut $2.7 billion in fake claims. The ATO revealed in October 2023 that the effort led to 177 prosecutions, with 174 convictions, 11 custodial sentences, and at least $2.1m collected in fines.
Plutus Payroll
In June 2023, ABC show Four Corners ran a deep dive into the Plutus Payroll tax evasion scam. The report focused on over 70 hours of audio recordings and 28,000 pages of documents detailing how Adam Cranston and five other men established Plutus out of a strip club in 2014. The scam involved setting up satellite firms with dummy directors to process wages of client companies but Plutus itself will keep the tax remittances, which was tallied to be $105m. The money was used to finance the group’s lavish lifestyle.
However, things got awry in 2016 as a motorcycle gang assaulted two of Cranston’s accomplices under the guise of extortion and a third was killed in a Los Angeles carpark. Things spiral out of control when the bikie gang raids the Plutus offices in 2017, the ATO issues garnishing orders against Plutus totalling $45m, and Cranston tries to come clean with his father – then-deputy ATO commissioner Michael Cranston.
The younger Cranston was sentenced to 15 years’ jail in late August 2023 – another principal, his sister Lauren, will serve eight years. Their father resigned from the agency in May 2017 after a 40-year run, but was cleared of misconduct charges in 2019. Veteran crime reporter Stephen Barrett was also implicated in the scandal for allegedly being part of a plan to blackmail the Plutus principals, but the charges were withdrawn in 2022. He maintains receiving only $2,000 from the team supposedly carrying out the blackmail, but insists he did not know of the plan and wanted to research more of the story as a part of his reporting – and now is seeking the NSW Supreme Court for reimbursement of $500k in legal fees.
Protecting Yourself from Tax Scams
Being informed and cautious is the first step in safeguarding your financial security. Here are some tips on how to avoid falling victim to tax scams in Australia.
Verify Communication
If you receive a communication claiming to be from the ATO, take a moment to verify its authenticity. Check for official logos, correct grammar, and spelling. Always be cautious of unsolicited messages or phone calls.
Do Not Share Personal Information
Never share personal or financial information via email, text, or phone unless you are certain of the recipient’s identity. The ATO will not request sensitive information through these channels.
Avoid Clicking Suspicious Links
Be cautious of email links or attachments, especially if the email appears unexpected or contains unusual content. Many browsers allow for hovering your mouse over a link and it will show a preview of the page, only then you can decide to steer clear.
Hang Up on Threatening Calls
If you receive a threatening phone call from someone claiming to be from the ATO, hang up. The ATO does not engage in such tactics. Instead, call the ATO directly on 1800 008 540 to verify your tax status.
Use Strong Security Measures
Regularly update your computer’s operating system and applications to patch security vulnerabilities. As such, it is vital you have the official version downloaded from the OS’ website, which can offer the latest patches.
Report Suspected Scams
If you suspect that you’ve encountered a tax scam or have become a victim, report it immediately to the ATO or the Australian Cyber Security Centre (ACSC). Reporting helps authorities track and combat scams effectively.
Professional Advice
A tax professional or financial advisor will guide you if you are unsure about a tax-related matter, and how a scam can affect your tax standing.
Conclusion
Tax scams are a significant threat to financial security in Australia, but with awareness and vigilance, you can protect yourself from falling victim to these deceptive practices. Stay informed, verify the authenticity of communications, and never share sensitive information with unknown sources.
By following these precautions and reporting suspicious activities, you can contribute to a safer financial environment for yourself and others. Remember, when it comes to tax scams, it’s better to be safe than sorry.
DISCLAIMER: This article serves solely for informational purposes and does not constitute official taxation advice. 2 Ezi has no relationships with any tax agent or companies/government offices mentioned.
