The latest ATO scam — What you should know

The ATO believes that the fraudulent scheme may have started online, promoted under the guise of being a ‘tax loophole’. It is working with social media companies to have material taken down.

The ATO is also working with financial institutions including AUSTRAC-led Fintel Alliance and the Reserve Bank of Australia in order to identify, investigate and prosecute alleged offenders.

I’ve written before about the dangers of Fin-Inluencers (Financial Influencers) and the irresistible  lure of “get rich quick schemes.”

I’ve had a good look around YouTube and Facebook and Instagram and some of the material is incredibly slick – polished, well presented, appearing credible and trustworthy. And the thing is, the digital revolution is actually making it much easier for scammers. I read an article about Scott Pape, the ‘Barefoot Investor’ himself getting scammed recently. It can happen to anyone.

To be fair, not all financial content on social media is dodgy. Some of it is quite informative, but it most definitely pays to do your own research before getting involved. If something seems too good to be true, then frankly, it probably is.

There are a few issues here. People have done it tough over the past few years as a result of natural disasters and the pandemic – and some are desperate enough to try to make super quick money.

If you find yourself in dispute with the ATO, then you need to be able to prove you made a genuine error, or otherwise. Not knowing the rules is usually not considered an adequate defence for breaking them.

This is why it’s also important to have a reputable accountant or registered tax agent you can rely upon, and whom you trust. A ‘go between’ who has specialist tax knowledge can take some of the stress out of the process of dealing with the ATO.

Yes, there are ways to legally minimise both personal and business tax obligations, but setting up fake companies to generate false GST refunds is definitely not one of them. unfortunately,  there are a lot of naive people out there who might not know that. This is why I advocate for professional advice, always, in every circumstance to do with your finances, whether it’s tax, accounting or financial planning.

The people involved in this scam face some pretty harsh penalties when they are caught – and they will be. In recent years the Federal Government has invested heavily in the ATO – in terms of both manpower and resources. The ATO can also access a great deal of personal and financial information including bank accounts, financial records, as well as data from government agencies such as Centrelink.

It’s also increasingly important for all businesses to have audit insurance. We can help you to set up audit insurance, although it is not included in our standard set fees.

Audit Insurance is affordable, and good value. It is designed to pay for any professionals you might need if the ATO wants to investigate your accounting procedures and processes. Again, if you’re a business, this takes the pressure off you and your team, and it also means that you can continue to focus on your business during the process. It also means that you can afford to engage professionals – including forensic accountants or IT experts – if need be.

Tax audits are on the rise. It’s a common misconception that you have to have done something ‘wrong’ to be audited. This is not the case at all. In fact, I expect that many businesses who have accessed government financial handouts during the critical period of Covid-19 in 2020 and 2021 will be under scrutiny in the coming months. So heed this warning – make sure you’re prepared with clean, up-to-date, financial records.

The ATO has also confirmed that it will be scrutinising people’s second incomes and sideline business this year too.