The cost of the chasm of public sector distrust between key public-facing agencies wrought by the feral and illegal robodebt scheme is once again on full public display after the Australian Taxation Office confirmed so-called “Tik-Tok” GST refund fraud hits made on it have piled up to $4.6 billion. Influencers take a bow.

Revealed by the Australian Financial Review’s most respected investigative journalist, Neil Chenoweth, it is, in the words of Tax’s acting deputy commissioner John Ford in May 2023, “the biggest tax revenue fraud against the community in the history of the ATO.”

To be clear, actual declared losses (or money paid out so far) appears to be in the vicinity of $1.9 billion, against which Tax can raise a liability to instigate repayment, or, alternatively, mount a prosecution at a much greater cost.

The figure of $4.6 billion is what was claimed from the ATO as opposed to what was paid out. On Monday, the ATO issued a brittle “correcting the record” statement on Operation Protego, the crackdown on GST fraud launched to staunch the rate of tax rorts largely originated through myGov.

(We’ll get to how myGov fits in at the end, because, well, it’s complicated.)

Pass the cellophane

As far as institutional fig leaves go, the supposed correction was a very large piece of faux ficus foliage made of lightly-tinted cellophane that the ATO trotted out to separate the $1.9 billion in GST fraud lost from the $2.7 billion in GST fraud it stopped.

The argument almost works until you ask whether a prosecutor would mount a case on what the crook got away with versus what the state can prove they tried to steal. The latter is $4.6 billion. ..

Nothing left to lose

The speech made by ATO acting deputy commissioner John Ford in May 2023 lays bare the modus operandi of the current wave of GST-refund scams, namely the confluence of digital enablement and lack of deterrence and situational awareness by authorities.

Ford’s speech was made at the Financial Crime Summit and is both public and published, even if the forum tends to eschew the media limelight.

“There is increasing concern that the benefits of increased digitalisation are also offering opportunities to fraudsters to attack the same services at scale. In effect, the question many of us face is ‘have we got the balance between client service and system integrity right’,” Ford told fellow fraud busters.

“I hope you agree though that these two poles cannot and should not be mutually exclusive; they are both important. In fact, they are both very much grounded in how organisations like the ATO access and use data and partners with others in its use.”

Flip your wig

Flip that and ask what damage robodebt did to the intergovernmental relationships needed to nip such issues in the bud, including data sharing.

Importantly, Ford shot down potential arguments that digital identity is potentially at risk through such sharing. Ford argued that the modality has now shifted.

“The partnering with others to use data is an important point for us to consider in regard to how we respond to fraud. This is because partnering means that to support a seamless client experience, we must, at times, connect our systems with trusted access rights,” Ford said.

“Whilst identity crime is an important risk that the ATO is paying great attention to, what we are also seeing are fraud attacks which have the hallmarks of identity crime but are in fact not.”

The downward spiral

And it’s all downhill from there.

“Rather, these are what we refer to as first-person fraud or frauds being committed by the actual person who owns the digital identity used in the attack,” Ford said.

“These first-person fraud attacks on the revenue system are proving to be significant, prolonged and are agile at scale. Operation Protego has now become the biggest tax revenue fraud against the community in the history of the ATO .”

Ford said the ATO had taken compliance action “on around 53,000 clients, stopping around $2.5 billion in fraudulent GST refunds from being paid to individuals seeking to exploit the tax system.”

And $1.9 billion has leached out.

At between $20,000 and $100,000, the recovery of the individual GST rorts is essentially uneconomical to pursue by way of criminal or even civil prosecution.

This shows that when the government throws basic civil values in its safety net away, the people caught in the safety net respond in kind.

If the government can just make up debts for welfare recipients, welfare recipients can just make up debts for the government.

So, here we are.


Raids conducted as ATO continues its GST fraud crackdown