Fending off GST audits

The ATO states that the fraud was first detected in early 2022 and involved offenders inventing fake businesses and ABN applications, then submitting fictitious Business Activity Statements in an attempt to gain a false GST refund. In response, the ATO's Serious Financial Crimes Taskforce set up "Operation Protego" in partnership with the Australian Federal Police. Warrants were executed in three States against 10 individuals suspected of promoting the fraud (which included the use of social media).

Some of the numbers involved are simply staggering in terms of the perpetrators' audacity:

• The ATO has taken compliance action on more than 53,000 "clients".
• It has stopped approximately $2.5 billion in fraudulent GST refunds from being paid (as at 31 December 2022).
• Two individuals have been sentenced to jail following their arrest in 2022.
• There have been some 87 arrests across the country, "with many more to come".
• The ATO has commenced writing to more than 20,000 individuals involved in the fraud.

The purpose of our informing clients of this operation goes to GST audits conducted by the ATO and what they will be looking for should you or your business be selected. As a starting point, generally, the ATO will apply at least some level of scrutiny to Activity Statements where there is a refund of $5,000 or more or where the refund is uncharacteristically large for the taxpayer involved.

The key to staving off a GST audit is the obtaining and retaining of tax invoices. As your tax agent, there is no requirement for us to view each and every tax invoice you hold before we make a claim for GST credits on your behalf on your Activity Statement. However, no claim can be made without you being in possession of a tax invoice.