Interview with Tom Connell, Newsday, Sky News
Distressed taxpayers owe the government $45b
Australians owe the Tax Office $45 billion after a nearly 70 per cent blowout in unpaid taxes during the COVID-19 crisis.
Uncollected, undisputed tax debt rose from $26.5 billion in mid-2019 to $44.8 billion on June 30 this year, after widespread economic disruption from the pandemic and leniency for struggling taxpayers from the ATO.
Commissioner of Taxation Chris Jordan and Assistant Treasurer Stephen Jones on Monday Alex Ellinghausen
The latest figures come as the ATO and the Albanese government ramp up efforts to catch taxpayers claiming dodgy work-related tax deductions and accountants breaking the rules.
Commissioner of Taxation Chris Jordan met with Assistant Treasurer Stephen Jones on Monday, announcing an estimated $33.4 billion tax gap in 2020. The “gap” is the amount of money owed but not being paid.
About 7 per cent of all revenue which should be collected by the ATO, the tax gap is on par with the $31.3 billion spent on Medicare every year.
The total exceeds federal government spending on aged care ($27.1 billion), support for state government hospitals ($26.6 billion) and the Pharmaceutical Benefits Scheme ($18.1 billion).
Mr Jordan said small business taxpayers and work-related expenses were the biggest contributors to the gap.
“The biggest effect of COVID-19 is in our collectable debt increasing,” he said.
“Most of that is small business, self-declared debt. It’s not tax on profits... it’s unpaid superannuation guarantee, it’s the GST that’s been collected and never remitted.
“It’s the withholding from wages pay as you go that has never been remitted.”
Last week’s federal budget included plans to raise $5.7 billion from an extension of the ATO’s tax avoidance and black economy taskforces, as well as the personal income tax compliance program.
Accountants and tax agents considered “high risk” due to past dodgy behaviour will also face additional scrutiny as the Tax Practitioners Board is tasked with additional compliance activities. Poor quality or unlawful advice will be targeted.
The ATO’s annual report shows the organisation collected gross tax of $648.5 billion in the 2021-22 financial year, paying refunds of $132.9 billion to taxpayers.
Net tax collections topped $515.6 billion, up by $64.2 billion or 14.2 per cent, from 2020 to 2021.
An additional $15.5 billion was added to the budget bottom line from audits and other compliance measures. About $1.7 billion in suspected fraudulent refunds were stopped as part of Operation Protego, the investigation
into the largest GST fraud ever recorded.
The fraud involved offenders inventing fake businesses and Australian Business Number (ABN) applications, many in their own names, then submitting fictitious Business Activity Statements in an attempt to gain a false GST refund.
An estimated 40,000 individuals were suspected of being involved in the major GST fraud.
Mr Jordan said the building and construction sector was one section of the economy where tax avoidance is present.
BDO tax partner Mark Molesworth said the substantial increase in collectable debt would influence the ATO’s behaviour.
“We expect to see further collection action from the ATO, including by direct action taken against non-paying taxpayers, and use of their director penalty notice powers where the debts are owed by a company and relate to GST, pay as you go withholding or superannuation guarantee.
“Early indications are that the ATO is having some success with its ramped up collection activities, so we expect this will continue.
“Any taxpayer with a tax debt should be considering how to pay it, including by negotiating a payment plan with the ATO. It is better to talk to the ATO, before they start to talk to you.”
Mr Molesworth said large corporate groups had the lowest tax gap assessment at 4.2 per cent.
“While making ‘large companies and multinationals’ pay their ‘fair share’ makes for a good headline, by comparison to other taxpayer groups, they already are,” he said.
GST scam: How SA crime groups are making millions
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Sunday Mail (SA) Online
October 30, 2022 Sunday
By Nigel Hunt, Exclusive
Organised criminals in South Australia are stealing millions of dollars by claiming fraudulent GST refunds, a major investigation into the scam has revealed.
The Sunday Mail can reveal an Australian Taxation Office inquiry and several unrelated SA police operations have discovered organised criminal groups are heavily involved in the illegal activity.
The ATO, which has launched an operation dubbed Protego to investigate the scheme, has confirmed it has raided six properties in Adelaide in connection with the scam, which has cost taxpayers up to $1 billion nationally.
It can also be revealed Operation Protego investigators have referred detailed files on 1,500 individuals in SA involved in the scheme to the Australian Criminal Intelligence Commission for further investigation.
The ACIC and Operation Protego investigators have "completed an in-depth analysis'' of the individuals and are preparing to take further investigative action.
Sources have told the Sunday Mail they believe many of those involved are using the cash obtained through the scam to directly fund methamphetamine imports into Adelaide themselves, while others are using the cash to fund drug purchases from the other organised crime groups importing the contraband.
Others are simply using the cash - in some instances hundreds of thousands of dollars - to fund their lifestyles and supplement their legitimate business activities.
The fraud involves individuals creating a fake business, applying for an Australian Business Number and then submitting false business activity statements so they can claim GST refunds.
The ATO believes as many as 40,000 individuals Australia-wide have been involved in the illegal activity with up to $1 billion in fraudulent GST refunds made. It has been widely promoted on social media platforms.
Since the ATO launched Operation Protego in April $850 million in fraudulent claims have been stopped.
"This is a clear warning to individuals considering participating - you will not be successful, you are not anonymous, and you will face the consequences of your attempts,'' ATO Deputy Commissioner and Serious Financial Crime Task Force chief Will Day said.
"For those that have already committed this fraud, we know who you are, and you will need to repay the fake refunds you have obtained. You could face severe consequences, including jail if you do not speak to us before we knock on your door. Come forward now or face potentially tougher penalties.
"Most Australians play by the rules and expect the ATO to take action to protect Australia's tax and super systems, and collect the revenue necessary to support the Australian community.''
ATO assistant commissioner Michael Morton last month said the "size, scale and rate of proliferation'' of the scam was unprecedented.
"Some of the participants involved are actually involved in other more serious crimes,'' he said on a CPA Australia podcast.
"You often find that tax evasion is the tip of the iceberg. We've already commenced criminal investigations into many participants and there is a real potential that these people will get some time in jail or face some serious financial penalties.''
In SA, investigators had uncovered multiple individuals within the several organised groups of criminals - who are under active investigation for other serious crimes - who had obtained an ABN, either in their own name or using false identification, and then claimed multiple fictitious GST refunds which were then paid into a bank account and withdrawn.
The individuals have falsely claimed up to $100,000 in GST refunds before closing that ABN and repeating the process after sourcing more identification.
Those involved in the scam were often stealing identification from Australia Post boxes, letterboxes and during break-ins on homes.