A GST influencer scam has enabled a eye-watering $1.6 billion in tax fraud and has triggered a Treasury review into the secrecy laws that bind the Tax Office.

The viral TikTok scam comprised of individuals obtaining an Australian business number via their MyGov account and submitting a bogus business activity statement, scammers would apply for a 10% GST refund from the tax office.

According to Assistant Treasurer Stephen Jones, the scam signifies the largest tax fraud in Australian history and is a massive financial loss two times higher than previously estimated.

As soon as the fraud was uncovered by banks, accounts were frozen, but Jones said that they will need to take a more extensive look at the tax secrecy laws.

“They’re important, but we want to ensure that they’re not being used as a shield against the Commonwealth tracking down and responding to fraud in a legitimate way like any organisation would want to protect itself.”

Originally posted in a TikTok video, a criminal influencer advocating the scam said the scam was legitimate and: “Everyone else got refunds, it’s OK, it’s just a temporary loan [from the government].”

The total of people estimated in the scam stands at around 56,000 with some of the more daring criminals getting back checks of GST refunds of over $100,000.

The Tax Office said they are working to retrieve another $1.6 billion in association with the scam and has charged $300 million in fines as well as interest on this debt.

To further support the ATO’s efforts, TikTok said that their trust and safety team is performing an extensive investigation.

“More than 40,000 trust and safety professionals and advanced machine learning tools continue to monitor for any content that violates our Community Guidelines. Frauds and scams are an evolving challenge globally and TikTok continues to play its part to combat these, including in partnership with government and law enforcement agencies,” a TikTok spokeswoman asserted.

Despite TikTok efforts. more GST fraud variants have emerged requesting smaller amounts to prevent triggering ATO surveillance alerts, according to the Financial Review.

Labor Senator Deborah O’Neill said, “This is a grave national security concern. GST collection and dispensation is crucial for states and territories to continue to fund hospitals, schools, and disaster responses and it is necessary that the ATO has control over this revenue stream.”

While from a anonymous senior tax professional’s opinion, he told the Financial Times this type of scam “is nothing new but it’s highly embarrassing for the ATO” because the scam “exposed the vulnerability in the systems.”

What’s worse, these types of scams will affect taxpayers.

“That’s $2 billion of wasted taxpayer money and an easy fix that would help accountants improve the integrity of the tax system. It was dead easy. You apply for an [Australian Business Number] and you effectively lodge a claim,” said Tony Greco, the Institute of Public Accountants general manager for technical policy.

In a perfect world, Greco suggests a two-speed method including applications being reviewed by tax consultants paired with a secure, quick response which would be ideal to catch fraudulent transactions.

Despite claims the Tax Office delayed response to the TikTok fraud, the ATO said the amount of claims now have reduced from the maximum and the threat is “contained” pointing the finger back at accountants.

“We also continue to monitor for any tax agents facilitating clients to participate in this fraud,” the ATO statement said. “We expect that any tax or BAS agent that becomes aware of a client that has participated in fraud to notify the ATO immediately.”

Multiple accountants interviewed by the Financial Times requested to stay anonymous for fear of retaliation but still fired back that they have notified the ATO on every potential fraudulent GST occurrence that crossed their desks which oftentimes, had not been detected by the Tax Office.