GST refund fraud has emerged as one of the most costly tax issues in recent years, with the ATO issuing Taxpayer Alert TA 2025/2 to warn against schemes involving inflated or fake GST refund claims.
These schemes often involve false invoicing between related parties, fictitious purchases, or applying for GST credits on transactions that never occurred. In some cases, fake ABNs and dummy businesses have been used to lodge fraudulent BAS statements, all to secure illegitimate refunds.
One of the most high-profile examples was Operation Protego, which uncovered a scam circulating on social media that encouraged individuals to apply for an ABN and claim thousands in GST refunds without running a genuine business.
The result? Over $2 billion in fraudulent claims and more than 57,000 people involved. Although some funds were recovered, many perpetrators have already been prosecuted, with sentences of up to seven years in jail.
The ATO is cracking down on these arrangements. Businesses claiming large refunds involving related parties or high-value assets are under increased scrutiny.
From 1 July 2025, the ATO will have the power to delay suspicious GST refunds by up to 30 days to investigate.
Importantly, the ATO’s message is clear: even if you’re not the mastermind, if you’re involved — as a participant or adviser — you can be held accountable. The promoter penalty laws may also apply to those encouraging others to engage in these schemes.
What should you do?
- Only claim GST on actual business expenses.
- Maintain proper documentation, including invoices and proof of payment.
- Be cautious of any arrangement that seems too good to be true.
- If you’ve made a mistake or suspect you’ve been caught up in something dodgy, consider making a voluntary disclosure.
Even if a scheme is presented as “low risk” or “everyone’s doing it,” the consequences can be severe.
If you’re ever uncertain about a GST claim, arrangement, or refund that doesn’t feel quite right, please speak with us first. A quick chat now can save you from audits, penalties, or even prosecution later. It’s just not worth the risk.
Contact Curve Accountants https://curveaccountants.com.au/contact-us/
