COVID-19 fraud: What's on ATO's radar

The Tax Office has set out what sort of behaviour it will be targeting as it moves to zero in on wrongdoers. 

ATO deputy commissioner Will Day said that with so many Australians impacted by COVID-19, the ATO’s priority is to ensure payments get to those who need them.

“We know the overwhelming majority of Australians are honest, and we’ve worked hard help to those people who are impacted by COVID-19 as quickly as possible,” said Mr Day. 

“We also have an important role to ensure the integrity of the stimulus measures and when we uncover fraud or people seeking to exploit them, we’ll take action, as we know the community would expect us to do.”

He explained that the ATO will use a range of data sources to assess the risk of inappropriate behaviour, including single touch payroll, income tax returns, and information reported by super funds, as well as data from various third-party sources.

“We’ve established a confidential tip-off line and we take all information referred to us seriously. If members of the community are concerned that someone is doing the wrong thing, they should tell us about it by completing a tip-off form online at ato.gov.au/tipoff or by calling 1800 060 062,” Mr Day said.

The ATO has also made it clear it will not tolerate illegal behaviour or development of schemes that are designed to deliberately exploit government measures, seek to avoid tax, or prey on vulnerable Australians. The agency has already seen some examples of fraud and fraudulent attempts or people developing schemes to try to steal money from the community.

“We’ve received intelligence about a number of dodgy schemes, including the withdrawal of money from superannuation and re-contributing it to get a tax deduction,” Mr Day said.

"Not only is this not in the spirit of the measure (which is designed to assist those experiencing hardship), severe penalties can be applied to tax avoidance schemes or those found to be breaking the law. If someone recommends something like this that seems too good to be true, well, it probably is.”

Penalties for fraud can include financial penalties, prosecution, and imprisonment for the most serious cases.

“It’s important to carefully check eligibility requirements before applying for any of the measures. Eligibility requirements for each of the measures are outlined on the ATO’s website. If you’re not sure, the best thing to do is check with the ATO or your tax professional,” Mr Day said.

“Our tax system works on a self-assessment model. We will generally operate on the basis Australians are honest, meaning we will accept the information we are provided with as true and correct and make payments. However, we will be conducting checks later, so if you've received a benefit as part of the COVID-19 stimulus measures and we discover you are ineligible, you can expect to hear from us. If you think this may apply to you, you should contact us or speak to your tax professional.

“It is much better to come forward to make a voluntary disclosure than waiting to be audited.”

What’s on the ATO’s radar

JobKeeper

• entities meet the eligibility requirements in relation to business income;
• entities are claiming for eligible employees;
• eligible business participants are correctly making claims; and
• entities are not manipulating their turnover in order to satisfy the decline in turnover test.

The ATO has also published advice warning of the types of JobKeeper schemes that it regards as high-risk and are likely to attract its attention: Practical Compliance Guideline PCG 2020/4: Schemes in relation to the JobKeeper payment.

Early release of superannuation

Behaviours that attract the ATO’s attention in relation to the early release of superannuation measure include:

• applying when there is no change to your regular salary, wage, or employment information;
• artificially arranging your affairs to meet the eligibility criteria;
• making false statements or fraudulent attempts to meet the eligibility criteria; and
• withdrawing and re-contributing super for a tax advantage – this could not only trigger anti-avoidance rules but also result in additional taxes and impact your eligibility for a super co-contribution.

• artificially restructure businesses to gain access to the cash flow boost;
• artificially changing the character of payments to salary or wages to maximise the cash flow boost;
• inflating reported withholding amounts to maximise the cash flow boost;
• resurrecting dormant entities or phoenixing; and
• making false statements or fraudulent attempts to create an entitlement.

Serious Financial Crime Taskforce (SFCT)

Serious financial crime affecting the ATO-administered measures of the Commonwealth Coronavirus Economic Response Package has been made a priority for the ATO-led joint-agency Serious Financial Crime Taskforce (SFCT). The SFCT brings together the knowledge, resources and experience of multiple agencies to identify and address the most serious and complex financial crimes.