A massive $4.6 billion-dollar TikTok tax fraud has been exposed leaving the Australian Tax Office reeling.

The fraud was made possible by the introduction of the MyGov app, resulting in individuals’ taxpayers able to make the false refund claims.

According to the Australian Financial Review the Tax Office has admitted paying out more than $1.6 billion in fake GST claims as part of the $4.6 billion fraud based on a simple scheme promoted on social media platform TikTok – a total that is twice previous reports and the biggest tax fraud in Australian history.

Ironically, the tax office failed to pick up on the fraud, and when they did after being tipped off by accountants, they were slow to respond.
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“It’s the crime wave the Tax Office didn’t see coming” claims the AFR.

How big a crime wave? “The inside word among tax officers is $4.6 billion – that is insane,” says the accountant who tipped off the AFR 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 being described as a simple one that hundreds of individuals in the know tried to exploit.

Now questions about why the Tax Office took so long to catch on to the fraud are being raised.

One guy got $50,000, then another $35,000, then another $25,000.

The accountant said “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?

Questions are also being raised as to what safeguards the ATO has in place to stop fraud.

It’s also been revealed that banks were also warning the tax office about the fraud, but they failed to take action.

Westpac Bank identified a rising pattern of GST fraud – and started 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.

“We notified the ATO, and they didn’t want anything to do with it,” a bank executive told an adviser.

Westpac identified over 1,000 accounts after they made the critical decision to look for other similar deposits from Tax Office payments this led to them freezing the accounts.

The Tax Office’s position is that it couldn’t share what it was doing because of taxpayer secrecy, but within the agency there appears to have been disagreement over which section should handle the investigation.