A GST fraud wave costing Treasury at least $4.6 billion has been perpetrated by thousands of greedy people falsely asserting they own & trade as a business

 

Financial Review, 14 August 2023:

An explosive wave of fraud that has shaken the Tax Office’s GST system had been building for months before accountants began to notice early last year. By then it was everywhere and no one wanted to talk about it.

“I started seeing it through the office about March of 2022, a few people came in with business files with the ATO – these really large credits going out, big, big credits, unusual credits,” a western Sydney accountant told The Australian Financial Review.

“It didn’t prick my attention. Then I saw a few more, and a few more, and a few more. It kept growing. Tax time came [from July 2022] and it was rampant, absolutely rampant.”

By then, accountants around Australia were realising that the country was in the thick of a multibillion-dollar explosion of GST fraud that had gone viral. It’s the crime wave the Tax Office didn’t see coming.

How big a crime wave? “The inside word among tax officers is $4.6 billion – that is insane,” says the accountant, who like others spoke to the Financial Review on condition of anonymity. “Everyone’s too scared to go up against the ATO.”

The Tax Office has confirmed the $4.6 billion figure, which seems likely to be an underestimate.

It was “the biggest tax revenue fraud against the community in the history of the ATO”, deputy commissioner John Ford said in a speech in May.

The fraud is a simple one that involves individuals using their MyGov account to claim refunds on GST payments that were never made.

While the fraud may be simple, piecing together this invisible crime wave raises questions about why the Tax Office took so long to catch on.

And now it’s tax time again. While the Tax Office insists it has the fraud under control, accountants in western Sydney are painting a darker picture.

“They keep changing [the scam],” an accountant says. “I saw more clients today that [the ATO] didn’t pick up. One guy got $50,000, then another $35,000, then another $25,000.

“He hasn’t had to pay it back. He got this at the end of 2022. This isn’t being picked up as fraudulent activity.

“I’ve seen two more already this morning. One has a debt of $18,000. He tried to get more but was stopped eventually by the ATO.”

A client received $130,000 from fraudulent claims in July 2022 and was not picked up until December. Another client was paid $60,000 last September. How did it get to this?

Banks had been warning the Tax Office about a rising pattern of GST fraud – and freezing suspect accounts – from late 2020. They became increasingly frustrated by the apparent lack of action by the ATO, as they were faced with the decision of what to do with the frozen accounts…..

By mid-2021 the fraud was exploding as social media – in particular TikTok – was full of explainers how to get a “loan” from the government.

In one example cited to the Financial Review a man claimed a $50,000 GST refund in August 2021, then raised another $50,000 several months later. It was only when he tried it again last May that the Tax Office caught up with him.

Read the full article here.

Another time bomb left behind by a politically & fiscally incompetent current member of the World Wide Speakers Group and sometime Liberal MP for Cook, Scott John Morrison

 

Then Prime Minster Scott Morrison & Treasurer Josh Frydenberg - political mates and housemates before the Liberal-Nationals Coalition sank the ship of state. IMAGE: The Australian, 26 August 2020

 

On 5 July 2018 then Australian Treasurer & Liberal MP for Cook Scott Morrison unveiled his plan to overhaul the Goods & Services Tax (GST) state distribution scheme.

This involved changes which ‘would protect all taxpayers, update the grants commission process and deliver certainty to States and Territories. “This problem has been kicked down the road for too long and it is time we now got on and fixed it,” he said. “A fair and sustainable transition to a new equalisation standard will be ensured, through an additional, direct, and permanent Commonwealth boost to the pool of funds to be distributed among the States."

By 12 November 2018 the Australian Coalition Government now lead by Prime Minister Morrison introduced Treasury Laws Amendment (Making Sure Every State and Territory Gets Their Fair Share of GST) Bill 2018 which was duly passed by Parliament and became law on 29 November 2018.

On 25 February 2019 Treasurer John Frydenberg put his signature to this contentious document.

Thus a political and fiscal time bomb with a relatively long fuse was activated…...

The Age, 14 November 2022, p.3:

A deal put in place to placate Western Australia when its share of GST revenue was tumbling is on track to cost the nation's taxpayers 10 times more than forecast, helping drive up federal government debt and interest payments to record levels.

Originally pulled together by then-treasurer Scott Morrison in 2018 before being put through parliament by his successor, Josh Frydenberg, the deal that expected to cost $2.3 billion is now on track to cost more than $24 billion. [my yellow highlighting]

WA, which delivered four seats to Labor at the May election on the back of a 10.6 per cent swing, is vowing to fight to keep the arrangement, due to expire in 2026-27.

Morrison struck the deal at a time when WA's share of the tax pool had fallen to an all-time low of 30 cents for every dollar of GST raised within the state. Its iron ore royalties were effectively being redistributed among the other states and territories based on a Commonwealth Grants Commission formula that takes into account each state's revenue sources and expenses.

Under Morrison's deal, from 2022-23 WA must receive a minimum of 70 cents in the dollar before increasing to 75 cents in 2024-25. When the policy was put in place, it was expected iron ore prices would fall and WA's share of the GST pool would therefore rise. Instead, prices have soared.

The Morrison government ensured other states and territories wouldn't be worse off, which requires the top-up funding for the deal to come from outside the $82.5 billion GST pool.

It was originally forecast to cost federal taxpayers $2.3 billion over three years, including just $293 million in 2021-22, but the surge in iron ore prices has meant more top-ups and for longer.

The October budget revealed that last year, the deal cost $2.1 billion and is forecast to jump to $4.2 billion this financial year. By 2025-26, the cost of the entire deal is on track to reach $22.5 billion, with another $2-3 billion likely the year after that.

Throughout the entire period, the budget is expected to be in deficit, forcing the extra cash to be borrowed. In percentage terms, the blowout in cost is larger than the NDIS, aged care, health or defence.

Independent economist Chris Richardson said the deal had been ill-conceived from the beginning with the cost to be borne by future taxpayers.

He said all significant spending programs needed to be properly assessed, including the GST deal.

"Yes, the politics of it are difficult. But we have a whole host of other issues, like the NDIS, and the economics of them have to be dealt with," he said…….

The extra borrowing for the GST deal has contributed to the lift in gross debt, which on Friday reached a record $909.4 billion.

Treasurer Jim Chalmers said the cost of servicing the debt was getting more expensive and was the budget's fastest-growing expense. [my yellow highlighting]

When Labor senators play petty politics and women literally pay the price

On 19 June 2017 The Greens Senator Larissa Waters moved an amendment to the Treasury Laws Amendment (GST Low Value Goods) Bill 2017.

This amendment sought to remove the Goods and Services Tax (GST) from sanitary products used by the vast majority of Australian women and girls during their reproductive years.

The Australian Parliament Senate Hansard recorded the fate of this proposed amendment of 19 June 2017 at Page 17:

The TEMPORARY CHAIR (Senator Leyonhjelm): The question is that amendments (1) to (4) on sheet 8153 be agreed to.

Question agreed to.

Senator WATERS (Queensland—Co-Deputy Leader of the Australian Greens) (11:52): I move amendment (1) on sheet 8156:

(1) Page 27 (after line 16), at the end of the Bill, add:

Schedule 2—Exemptions

A New Tax System (Goods and Services Tax) Act 1999 1 At the end of Subdivision 38-B

Add:

38-65 Sanitary products

A supply of *sanitary products is GST-free.

2 Section 195-1

Insert: sanitary products means tampons, sanitary pads, panty liners and similar items.

3 Application

The amendments made to the A New Tax System (Goods and Services Tax) Act 1999 by this Schedule apply in relation to supplies made on or after 1 July 2017

…………..

The CHAIR: The question is that amendment (1) on sheet 8156 as moved by Senator Waters be agreed to. The committee divided. [12:07] (The Chair—Senator Lines)

Ayes ......................15

Noes ......................33

Majority...................18

AYES

Di Natale, R

Gichuhi, LM

Griff, S

Hanson-Young, SC

Hinch, D

Kakoschke-Moore, S

Leyonhjelm, DE

Ludlam, S

McKim, NJ

Rhiannon, L

Rice, J

Siewert, R (teller)

Waters, LJ

Whish-Wilson, PS

Xenophon, N

NOES

Bernardi, C

Burston, B

Bushby, DC

Chisholm, A

Cormann, M

Dodson, P

Duniam, J

Farrell, D

Fawcett, DJ

Fierravanti-Wells, C

Gallagher, KR

Georgiou, P

Hanson, P

Hume, J

Ketter, CR

Kitching, K

Lines, S

McAllister, J (teller)

McCarthy, M

McGrath, J

McKenzie, B

Moore, CM

Nash, F

Payne, MA

Pratt, LC

Reynolds, L

Roberts, M

Ryan, SM

Sinodinos, A

Smith, D

Sterle, G

Watt, M

Williams, JR

Question negatived.

Bill, as amended, agreed to.

Bill reported with amendments; report adopted.

Noticeably absent for this particular vote were all 26 Labor senators.

The House of Representatives passed the Treasury Laws Amendment (GST Low Value Goods) Bill 2017 (with the four other Senate amendments agreed to) on 21 June 2017.

Females of all ages who still have their menses will continue to pay GST on the sanitary items necessary for their general health and wellbeing.

I'll remember to 'thank' those missing Labor senators at the ballot box, along with those senators who voted Senator Waters' amendment down.

In my case that means not voting for NSW senators Sam Dastyari, Jenny McAllistar, Deborah O'Neill and Doug Cameron (all Labor), along with Brian Burston (One Nation), Concetta Fierravanti-Wells, Fiona Nash, Marise Payne  and Arthur Sinodinos (Liberal) & John Williams (Nationals).

Australian Treasurer Joe Hockey needs to come up with a better argument concerning the federal Goods and Services Tax

David Pope in the Canberra Times, 30 March 2015

Brisbane Times 30 March 2015:

Treasurer Joe Hockey says Australian consumers have changed their behaviour so much in recent years, through online shopping and choosing more GST-exempt goods, that they are putting pressure on the GST as a revenue-raiser.

Apparently Joe Hockey is upset that this consumption tax raised $47.4 billion in 2012-13, $50.7 billion in 2013-14 and, is expected to raise $53.7 billion this financial year, $57 billion in 2015-16, $60.4 billion in 2016-17 and another $63.8 in $2017-18.

That’s not good enough for our millionaire Liberal treasurer.

It appears he is rather perturbed that people are still buying GST-exempt basic fresh food, simple dairy products and unprocessed cooking ingredients in their local shops or purchasing online second-hand, handmade or other goods worth less than $1,000.

This is the rather weak excuse he is offering for encouraging the states to believe there should be more in the federal Goods & Services Tax kitty.

The GST is a regressive tax when applied to low income households and no amount of vague talk in the mainstream media about possible ‘compensation’ for pensioners will change that.

Is this the road Tony Abbott is taking to make the poor pay more for food and other essentials?

The Drum 11 January 2015:

It appears Tony Abbott will try to expand the GST by replicating the campaign blueprint used by John Howard to introduce the tax in the first place. But what worked then might not work now, writes Paula Matthewson.

More than a decade after the Howard Government introduced a goods and services tax, political pundits remain divided over whether the accompanying GST campaign was effective.

Some point to Howard's re-election after proposing the new tax as proof of the campaign's success, while others claim Howard almost lost because of it.

Despite the lack of consensus it appears the Abbott Government is using the same campaign blueprint, this time in an attempt to create public acceptance for increasing or broadening the GST.

Back then, Howard was saddled with an earlier promise to "never, ever" introduce a GST but was being pressured to introduce one. According to one account, senior members of the business community were openly questioning Howard's economic reform credentials, while the press gallery were asking why he wouldn't lead (or at least follow).

So the then PM created a situation where journalists and economists, business and welfare organisations and even voters called for him to "reverse" the never-ever promise for the good of the nation. Howard did this by focusing the numerous fragmented commentaries into one national discussion: one that centred on Australia's "broken" tax system and how it could be "fixed" by scrapping a bunch of inefficient taxes and replacing them with just one.

The mechanism Howard used to focus the conversation was a taxation taskforce (incidentally chaired by Treasury official and former Keating adviser, Ken Henry). It was established to prepare options for tax reform, and recommended that a consumption tax be part of the mix.

A year later, following much public discussion, the Howard government presented voters not only with a proposed GST but an entire package of tax reforms. The package included personal income tax cuts, increases in the tax-free threshold and pensions, and the scrapping of wholesale sales tax. Nine other taxes imposed at the state and territory level were also slated for elimination. Most importantly, all the money raised by the GST was to be provided to the states and territories, supposedly ending their dependence on the federal government's largesse.

Howard then blitzed voters with a controversial advertising campaign before immediately plunging the nation into a moderately early federal election, which he either cleverly won, or foolishly almost lost, depending on whose analysis one finds more convincing.

PM Abbott is clearly banking on the campaign having been a success for Howard, because his "increase the GST" campaign looks eerily familiar.

A bevy of Treasury boffins is currently developing a tax reform paper, while the general public's awareness is slowly being raised through discussion in the media about the need to broaden or increase the GST.

Comments such as those made last week by government backbenchers and ministers serve to kick along the public discussion while keeping the PM's hands clean of the debate until the Treasury report is released later this year…..

Is Abbott using the Australian Tax Office as an excuse to extend the range of the Goods & Services Tax?

@AleighMP

Excerpts from the House of Representatives Hansard on 5 December 2013:

Mrs ELLIOT (Richmond) (14:04): My question is to the Prime Minister. Given that the Prime Minister said,

'There will be no change to the GST, full stop, end of story', why is the government now considering applying the GST to relocatable home parks—the complete opposite of what the Prime Minister promised?

Mr ABBOTT (Warringah—Prime Minister) (14:05): Our commitments will be kept; but obviously, in the administration of tax law, various things happen, including draft tax office rulings.

Ms RYAN (Lalor—Opposition Whip) (13:45): I am extremely concerned about the Australian tax office's draft ruling to increase the GST on mobile home parks. I am advised that my electorate of Lalor has approximately 620 mobile or demountable homes, with almost 950 permanent residents who will be adversely affected by this ruling.

Earlier this week, I spoke about tenancy eviction and homelessness in my electorate. This draft ruling is another housing pressure that our community cannot afford.

My office has been inundated by local residents from various retirement villages who are concerned about the burden of having to find between $700 and $1,200 extra per year to pay the GST if it is applied and passed on.

One constituent in particular, Bob from Ison village in Wyndham, is very worried about the impact this draft ruling could have on him and others like him, not only financially but also the undue stress it will cause.

I am aware that residents in three Lalor retirement villages are currently preparing petitions to the House on this matter. Mr Abbott promised during the election campaign that there would be no change to the GST, but now he is in government it feels like another promise is going to be broken.

I stand in the House today to oppose the increase in GST on moveable homes and implore the government to keep its promise and remove the worry this draft ruling is currently causing to the people in my electorate of Lalor.

The Australian Tax Office position:

ATO welcomes feedback on draft ruling

Media Release 22 November 2013

There has been some public misinformation about the Australian Taxation Office’s draft ruling on GST for moveable home estates.

Commissioner Chris Jordan today said the ruling was only draft, that no final decision had yet been made and the public was encouraged to set out any concerns in submissions.

“We have not made a final decision about charging GST on moveable home estates,” Mr Jordan said. “We have issued a draft ruling so the community and stakeholders can comment and raise any concerns.

“There has been a bit of public misunderstanding and I just want to make clear that the draft ruling does not apply to caravan parks and won’t come into play retrospectively.

“Submissions close on 20 December and I encourage people to set out any concerns they have.”

Draft ruling Goods and services tax: supplies made by an operator of a 'moveable home estate' (GSTR 2013/D2) was released for consultation on 30 October 2013.

The preliminary view in the draft ruling is that a moveable home estate does not fall within the definition of commercial residential premises. This is because it is not sufficiently similar to a caravan park.

Consequently, under the draft ruling, operators would no longer be able to apply the concessionary treatment in Division 87 of the GST Act to their supplies of long-term accommodation to residents.

Taxpayers do not need to change current approaches until a final ruling is published.

We are continuing to consult with industry stakeholders on this issue and expect a final ruling to issue in mid 2014.

“I am pleased and encouraged that the community knows they can engage with us on these issues,” said Mr Jordan. “We will consider all feedback.”

Feedback can be submitted before 20 December 2013 on (07) 3213 8417 or via email at steven.iselin@ato.gov.au.

Text of Draft Goods & Services Tax Ruling here.

Federal Nationals Member for Cowper, Luke Hartsuyker, alleges that he had made a submission to the Australian Tax Office asking it to withdraw its draft ruling. His fellow National Party MP for Page, Kevin Hogan, does not appear to have anything to say on the subject to date.

UPDATE

The Australian Taxation Office 20 December 2013:

Goods and Services Tax Ruling GSTR 2013/D2 is withdrawn with effect from today.....

The draft Ruling is being withdrawn following consideration of comments received over the course of the consultation period, which contend that moveable home estates are sufficiently similar to caravan parks for the purposes of paragraph (f) of the definition of commercial residential premises in section 195-1 of the GST Act. These comments support the alternative view set out at paragraph 72 of the draft ruling. Similarities to caravan parks include, amongst other things, the leasing of a site separately from a building and shared facilities....

Beer prices SLASHED in Yamba

How do they do it?

A Yamba hotel advertised that it was having a cheap grog night last night, Friday night, between 8.30pm and 10.00pm. Beer was going to be extra cheap because drinkers wouldn't have to pay GST on their beverages. However, that's only part of the story because drinkers at the hotel last night also didn't have to pay the carbon tax, the mining tax or the luxury tax.

North Coast Voices contacted the hotel yesterday and sought details about the "special offer". The hotel said that a schooner of beer which usually goes for about $4.50 would be discounted by 40%, resulting in a price of $2.50 ... (we won't discuss their mathematical skills here, that might be a subject for another day).
Hmmmm, wonder which authority will investigate operations at the hotel? Do we start with federal government authorities, state government authorities on local government authorities?