We are preventing goods and services tax (GST) refund fraud with a sophisticated process that identifies potential fraudulent entities at the registration stage.
The proactive approach ensures businesses are correctly registered, and that incorrect or fraudulent registrations are swiftly dealt with. It also reduces the need for more costly compliance activities on subsequent activity statement lodgments.
Greg Williams, ATO Deputy Commissioner, Serious Non-compliance said 'We are committed to preventing revenue escaping our tax system, and we are focused on building the strength of our system controls.'
When certain risk indicators are present, we will review GST registration applications to ensure that new registrants are legitimately in the system and are aware of their responsibilities. Where necessary, we call businesses to verify the nature of their enterprise and to ensure they are who they claim to be.
In 2011-12, our high-risk registration process examined approximately 35,000 entities. The new approach has seen a dramatic increase in registrations cancelled, with one in four registrations examined cancelled.
Our high-risk registration models are constantly improving. Special expert business rules have identified attempts by organised and sophisticated groups to falsely register for GST and make false activity statement refund claims.
In addition to our registration checks, in 2012-13 we will continue to examine GST refund claims where we see anomalies, discrepancies or unusual behaviour or changes in patterns.
'The simple fact is people who choose to deliberately cheat the tax system are, to use a very Australian term, bludging on society. They cost the government revenue and shift the burden to honest taxpayers. We will continue our efforts to protect Australia's revenue and provide funding for essential community services,' said Mr Williams.
In 2011-12, 21 people were prosecuted for activity statement refund fraud with custodial sentences ranging from two months to five and a half years. There are 98 matters going through the courts or under assessment by the Commonwealth Director of Public Prosecutions for possible criminal prosecutions.
If you know of someone involved in suspect activities contact the Tax Evasion Reporting Centre.