Wednesday, July 30, 2025

ATO commissioner reassures staff after Four Corners exposé

 The tax office traded people for programs and is still grappling with the consequences

After Four Corners’ GST fraud reveal, the ATO’s Rob Heferen tells staff to welcome scrutiny (just not all of it) as parliament circles.
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Rob Heferen. (AAP Image/Mick Tsikas)
Commissioner of Taxation Rob Heferen has personally written to all of the Australian Taxation Office’s 20,000 employees to reassure them their hard work and dedication underpin public policy and community interests, but cautioned that while the revenue agency should “welcome scrutiny no matter its source … but not all criticism of us is warranted.”

The reassurance to ATO staff by internal email, obtained by The Mandarin and marked “All employees”, was issued at 6.20pm on Tuesday.

Heferen’s supportive missive followed Monday night’s ABC Four Corners investigation into revenue leakage confronting the ATO, ranging from more than $2 billion of losses from identifiable first-person GST fraud fuelled by TikTok and other social media, to a range of other scams hitting Tax.

“You may have seen last night’s ABC Four Corners story,” Heferen told ATO staff.

The Four Corners exposé was compiled by respected financial investigations journalists Neil Chenoweth and Angus Grigg. It highlighted a range of serious systemic deficiencies and exposures stemming from current revenue collection, operational, and policy settings

The Four Corners investigation included input from the present Inspector General of Taxation Karen Payne and her predecessor, Ali Noroozi.

“As a large government agency with extensive powers, we are appropriately subject to scrutiny. I’ve talked about this before, but I’ll reiterate — we should welcome that scrutiny no matter its source, and always seek out the opportunities that scrutiny unearths for improvement,” Heferen said in the ATO allstaff.

“We’ve highlighted our focus on our core role of collecting tax and the work we have undertaken to address the GST fraud that gave rise to Operation Protego. And we also note the ongoing challenges of dealing with fraud generally, but also specifically regarding the GST.”

The statement argued that the tax office was legally compelled to hand out claimed GST refunds within two weeks, without cross-referencing where the money had allegedly been spent.

“Operation Protego was our response in April 2022 to a rapid proliferation of GST fraud. We worked hard to contain the fraud, stopping $2.7 billion in false refunds and raising nearly $2 billion in liabilities, and we are now in the process of collecting amounts owed,” the ATO said.
Or, to put it another way, the ATO lost $2 billion by way of scammed fake refunds, a figure that will certainly be queried and tested before the parliamentary committee process, including Senate estimates.

“At the time of the GST fraud that gave rise to Operation Protego, the ATO was obliged by law to pay out GST refunds within 14 days. In the Multiflex litigation in 2011, the Federal Court ruled that the commissioner of taxation must pay GST refunds within a reasonable time, defined as the time required for administrative processing only — not for extended verification or audits,” the ATO response said.

“This meant the ATO couldn’t delay refunds simply because it needed more time to investigate. Recently, the law has changed to extend this period to 30 days.”

Perhaps the most important policy observation from the Four Corners investigation comes from Tax itself, and goes directly to the ability to reconcile refund claims against demonstrated outlays, which is problematic because, currently, statutorily, refunds must be paid before refund claims are justified.

“The nature of Australia’s GST system is designed on a self-assessment model that allows buyers to claim refunds of input tax credits without waiting for the seller to remit the GST to the government,” Tax said.

“This, unfortunately, means it is vulnerable to fraudsters. Internationally, reducing this vulnerability is a key priority for tax administrators with a value-added tax.”

There’s the hint.