Sarah Feinberg’s complaint about the company’s billing practices led to a $377 million settlement with the Justice Department
Rear Window
ATO seeks gong for bungled TikTok fraud response
Myriam RobinColumnistSpeaking as he regularly does at parliamentary committees and other similar forums, outgoing Australian Tax Office chief Chris Jordanevokes the well-honed impression of a fortress.
In reality, and as TikTok will tell you, the ATO has lately resembled nothing so much as a sieve. It’s a creditor owed unrecoverable billions, much demanded from those with no realistic means of repayment.
Chris Jordan’s ATO is no fortress. Alex Ellinghausen
As detailed by this masthead, the desire of governments to quickly pay out small businesses owed GST refunds via the ATO has recently created a honeypot for fraudulent actors. They needed only an Australian Business Number and a myGov account to individually bleed tens of thousands from the public purse.
For eventually stopping these outflows, the tax office is now seeking a medal.
Truly: it’s a finalist in the Institute of Public Administration Australia Spirit of Service Awards. Its citation in the EY-sponsored prize mentions how Operation Protego leveraged relationships with government agencies, banks and social media platforms to stop the fraud.
This gives the impression it was the ATO knocking on the doors of Australia’s financial institutions to halt the scams. Many of the nations bankers and accountants remember it rather differently.
As reported, it was the banks that from late 2020 were noticing a flood of customers on social security benefits receiving massive business payments from the ATO.
They froze the accounts and begged the ATO for guidance. The ATO demurred, citing taxpayer secrecy, amidst a brewing turf war over which part of the organisation should assume responsibility for enforcement.
Meanwhile, the scheme only grew. So frustrated were some institutions that they reached out to the Reserve Bank of Australia to do something about it. It wasn’t until May 2022 however that the ATO finally set up Operation Protego, which eventually stopped $2.7 billion in payments, much secured from accounts already frozen by the big four banks.
Another $1.6 billion (at least) is long gone, having been quickly spent by the short-sighted, the criminal, or the merely desperate, on the ATO’s watch. And for all this less-than-optimal performance, it’s hoping for a gong!
This is only the latest trebuchet to unleash on fortress ATO as Jordan’s decade-long and oft-lauded tenure draws to a close.
On the other side of the ledger, tax debts owed but not collected have swelled from $20.9 billion in 2017 to an estimated $50 billion, off a near-tripling of GST debt to more than $30 billion over the same period, much held by barely solvent operators unlikely to easily repay.
Parliamentary inquiries have confirmed how the ATO tried to curtail and contain the Tax Practitioners Board’s investigation into the PwC scandal, fearing it would work to undermine the non-disclosure agreements it had reached with major taxpayers in the past.
Last week Adam Cranston, the son of a former deputy ATO commissioner Michael Cranston, was sentenced to 15 years in prison for tax fraud. Michael Cranston had no knowledge of his son’s activities, but they ended his ATO career nonetheless.
Finally, on Monday, the government scrappedthe Morrison-era, ATO-administered Modernising Business Registers scheme, after an independent review found it was running five years late and as much as $2.3 billion over budget. A tragedy, considering how its delivery could have earned someone a public service medal ...
