Latest news with #GSTfraud
CNA
6 days ago
- Business
- CNA
Two men charged over GST fraud involving S$181 million in allegedly fake sales
SINGAPORE: Two men were charged in court on Tuesday (Aug 5) over their alleged involvement in Goods and Services Tax (GST) "missing trader fraud", involving about S$181 million (US$140 million) in fictitious sales. Missing trader fraud happens when a seller collects GST from sales but does not pay the tax to Inland Revenue Authority of Singapore (IRAS). The seller is known as the missing trader. Meanwhile, businesses further down the supply chain continue to claim refunds from IRAS for the GST paid on their purchases. Derrick Yeo Wei Kin, 40, and Yeo Kian Huat, 73, are believed to have set up four shell companies and used them to operate a fraudulent business between November 2017 and April 2018. It is not clear if the men are related. According to a police statement, the men allegedly sold goods from one company to the other companies at inflated prices amounting to about S$181 million. The sales and purchases among the companies are believed to be sham transactions created to allow the men to claim GST from IRAS. The younger Yeo allegedly submitted three fraudulent GST refund claims to IRAS in an attempt to cheat the authority into disbursing S$11.8 million. He also allegedly forged a supplier's invoice and submitted it to IRAS so that the authority would approve the GST registration application of one of the shell companies. He also purportedly made fraudulent GST refund claims under the electronic tourist refund scheme by deceiving IRAS into disbursing GST cash refunds of more than $140,000 when there were no such purchases under the scheme. The two Singaporeans received four charges each of fraudulent trading under the Companies Act. Asked for their position on the charges, the younger Yeo said: "I'm not guilty". The older Yeo said he would be "claiming trial". The men were unrepresented and the younger Yeo has several other charges already tendered against him before this development. The cases were adjourned for pre-trial conferences.
RNZ News
28-07-2025
- Business
- RNZ News
How Australia's tax office lost billions in a simple scam
Photo: 123rf By Angus Grigg , Neil Chenoweth and Kyle Taylor , ABC News It was a scam so simple it took just minutes on your phone, where you could tell the tax office how much money to pay you, and it came through within days. The ATO loophole was so vast that tens of thousands of Australians stole a total of A$2 billion (NZ$2.2b). It was Australia's largest GST fraud. But it did not need to be this way. New details uncovered by Four Corners show the ATO was warned its systems were badly lacking, but even when it eventually discovered the fraud, it continued to pay out hundreds of millions of dollars. The ATO maintains it cracked down hard on the scam, moving quickly to shut down the perpetrators and cut off the money. The case of Linden Phillips would suggest otherwise. It showcases in granular detail the ATO's failures and how, while some loopholes are closed, others are being exploited on a far larger scale. Linden Phillips was no criminal mastermind, but from his home in the Victorian river town of Mildura, he easily exploited giant flaws in the ATO's GST refund system. It was August 2021, and Phillips had just been released from jail. According to court filings, a week after his release, he "opened several bank accounts" in his own name and registered a previously created ABN for GST. That was step one. Next was proof of concept. This could have taken just two minutes and involved putting just three numbers into the ATO's systems. The ATO has only recovered A$96 million — just 5 per cent of the money stolen from the tax system. Photo: Four Corners/Sissy Reyes/ABC News Phillips did this by logging into his myGov account - available on your phone - and going to the ATO's GST page. Here, he said his fictitious earth-moving business had recorded minimal sales for the month. Phillips then said he was entitled to A$13,158 (NZ$14,364) as a GST refund. Amazingly, he did not have to specify why this was. At this stage, no one was required to check the veracity of his Business Activity Statement before paying. The ATO simply assumed he had invested in stock or capital equipment during the quarter. As the court noted, "the appellant [Phillips] did not engage in a business and had no income or outgoings for such a business". Within a week, the money was in his bank account. That was the trial run. Phillips was only just getting started. The next month, he lodged 46 separate GST refund claims seeking A$821,279 (NZ$896,000) from the ATO. The problem was that Phillips had been in jail for most of the time covered by these claims. Despite this, the ATO paid up promptly. Once again, the ATO had not made a single inquiry before paying the money. The algorithm in its system, rather than any human, approved the refund. To claim such a giant GST refund, Phillips would have needed to spend around A$9.7 million (NZ$10.6m) on his business over three years. All this while having minimal sales, yet enough cash flow to not bother claiming the GST refund each month. Somehow, this was not a red flag when the ATO was paying out the money. Just weeks after Phillips made his second claim, someone at the ATO twigged that his enterprise may not be legitimate. Finally, there was a human in the loop. An ATO officer rang Phillips and was told the statements had been prepared by his accountant, for which he provided a name and number. "The number was in fact registered to a different person… not an accountant but a painter," according to the court documents. The ATO followed up with a letter to Phillips, which he ignored. As he did to further calls and emails from the ATO. Despite the suspicious behaviour, the ATO did nothing. In the meantime, Phillips bought himself a Porsche and his mother a house. The ATO would sit on its hands for the next four months, giving pause to its claim to have cracked down hard and quickly brought the scam under control. When Phillips was caught, it had nothing to do with the ATO. He was arrested in April 2022 by Mildura detective Vanessa Power, who was searching his home looking for drugs and guns. She checked Phillips's phone and "identified a series of fraudulent ATO claims", according to Victoria Police. That led police to a further 63 offenders in the Mildura area. It was around this time that the ATO began to take the threat seriously. Four months after it first identified a problem with Phillips's GST refunds, the ATO launched Operation Protego, led by its Serious Financial Crimes taskforce. By this time, the ATO estimates A$850 million (NZ$928m) had been stolen from the tax system. Phillips was able to exploit the flaws in the ATO's GST refund scheme from his home in Mildura. Photo: Four Corners/Sissy Reyes/ABC News While Protego was operating, then-federal assistant treasurer Stephen Jones said it was "pretty easy to work out whether" someone had lodged a "legitimate" GST claim. "There's lots of analytics that the ATO can do to work out whether this is a legitimate business or not," he said. That may have been true, but the ATO was not identifying many of these false claims until after the money had been paid. It would take the tax office 18 months to get the scam under control, and by this time, A$2 billion had been stolen from the tax system. The ATO said when it launched Operation Protego that it assigned 470 extra staff to verify GST claims, and that by May 2022, "almost all fraud attempts were being stopped". All up, the ATO estimated 57,000 people were involved in the scam. Of these, just 122 have been convicted, while the ATO has only recovered A$96 million (NZ$105m) - just 5 percent of the money stolen from the tax system. The banks have helped recover another $64 million (NZ$70m) by freezing accounts. In the years leading up to the scam, the ATO's analysis showed its fraud detection systems, which should have prevented the scam, were not up to scratch. A 2018 report unearthed by Four Corners outlined how the systems were lacking. The report's author, Ali Noroozi, spent 10 years as the inspector-general of taxation. Citing the ATO's internal data, he found that its so-called risk assessment systems were only marginally better than random selection. "They have certainly been on notice that their risk assessment tools could do better," Noroozi told Four Corners. Ali Noroozi was the inspector general of taxation for a decade. Photo: Four Corners/Sissy Reyes/ABC News The tax office was slow to heed this warning, and then it also downgraded its assessment of external fraud risks from "severe" to "low" two months before the scam took off in mid-2021. It said the likelihood of risk had gone from "almost certain" to "rare". The tax office said it began building and updating new fraud detection systems even before the critical 2018 inspector-general report. But the auditor general noted one of the ATO's new fraud detection systems ran a year late and was therefore not fully switched on until January 2022. At this point, it successfully detected the massive fraud, but it still took the tax office a further three months to launch Operation Protego. The auditor general found "the ATO did not have a procedure to respond to a large-scale external fraud event" like the GST scams. Tax experts said these processes need humans in the loop. "Before money goes out the door, particularly if there's been large changes in a taxpayer's details or accounts, that should be verified," said Karen Payne, who stepped down last year as inspector-general of taxation. "Once upon a time, there was a desk audit when you first lodged your GST return to make sure you are carrying on a business that you can verify and these amounts that you're claiming are legitimate." Karen Payne says there needs to be proper verification before "money goes out the door". Photo: Four Corners/Sissy Reyes/ABC News As the Abbott government swept to power in 2013, the ATO was moving away from this model of human verification to an automated system. That would eventually see about 1000 staff - or half the people in the division responsible for the GST - lose their jobs. "I'm not sure the ATO has ever recovered from that sort of drain of knowledge and drain of skill sets," said Stephen Hathway, a liquidator currently investigating a large-scale GST fraud. "The people [at the ATO] work really hard and diligently, but there just needs to be more of them. And there needs to be more regard to getting out there in the field and making those inquiries." While the ATO has claimed to have contained smaller-scale GST frauds as part of Operation Protego, it has struggled to stop loopholes being exploited by larger-scale scams. Stephen Hathway has seen this up close. Stephen Hathway is a liquidator who currently investigates large-scale GST fraud. Photo: Four Corners/Sissy Reyes/ABC News He is currently chasing Nahi Gazal, who claims to be a wealthy Sydney property developer, but has been accused of masterminding a giant GST fraud. Gazal and his associates managed to squeeze more than $21 million (NZ$23m) out of the tax office in GST refunds. They allegedly used fake invoices to claim GST refunds for building projects that either did not exist or had been completed by other developers. Once again, the ATO did not bother to do even the most basic of checks. "It never had any legitimacy," Hathway said. "There's nothing in it that ever demonstrates any act of commerce or enterprise. The whole set of transactions were completely and utterly made up, fraudulent, had no basis." By September 2023, the ATO had issued Gazal with a $44 million (NZ$48m) tax bill, including penalty interest. Four Corners can reveal that while the ATO was chasing Gazal for that money, it failed to detect that he was using a new string of companies to continue scamming the tax office. Hathway has been funded by the ATO to pursue Gazal over this latest scheme, and has connected him to an additional 22 companies, which Hathway said had fraudulently claimed another $25 million (NZ$28.3) in GST refunds. Once again, Gazal claimed to be a property developer. "Not one bag of nails was bought from Bunnings," Hathway said. But once again, the ATO did not check before paying out the GST refunds to Gazal's companies. Hathway said the ATO never asked basic questions, like the address of the properties being developed, whether a development application had been approved, or to even look at a building contract. "I'm the liquidator after the event. And then when we're looking into the file, we find nothing," Hathway said. Hathway was not hopeful the ATO would be able to recover much of the money, and said there was nothing to stop someone else doing the same thing. Karen Payne said the tax office needed to do better, as these frauds resulted in less money for essential services. "We should all care because it raises revenues that allow the government… to fund the services that we all benefit from… health, defence, security, infrastructure… it's a pretty key part of our democracy." - ABC News
ABC News
27-07-2025
- Business
- ABC News
The ATO learned it was being scammed, then paid out millions more to fraudsters
It was a scam so simple it took just minutes on your phone, where you could tell the tax office how much money to pay you, and it came through within days. The ATO loophole was so vast, tens of thousands of Australians stole a total of $2 billion. It was Australia's largest GST fraud. But it did not need to be this way. New details uncovered by Four Corners show the ATO was warned its systems were badly lacking, but even when it eventually discovered the fraud, it continued to pay out hundreds of millions of dollars. The ATO maintains it cracked down hard on the scam, moving quickly to shut down the perpetrators and cut off the money. The case of Linden Phillips would suggest otherwise. It showcases in granular detail the ATO's failures and how, while some loopholes are closed, others are being exploited on a far larger scale. Linden Phillips was no criminal mastermind, but from his home in the Victorian river town of Mildura, he easily exploited giant flaws in the ATO's GST refund system. It was August 2021, and Phillips had just been released from jail. According to court filings, a week after his release, he "opened several bank accounts" in his own name and registered a previously created ABN for GST. That was step one. Next was proof of concept. This could have taken just two minutes and involved putting just three numbers into the ATO's systems. Phillips did this by logging into his myGov account — available on your phone — and going to the ATO's GST page. Here, he said his fictitious earth-moving business had recorded minimal sales for the month. Phillips then said he was entitled to $13,158 as a GST refund. Amazingly, he did not have to specify why this was. At this stage, no one was required to check the veracity of his Business Activity Statement before paying. The ATO simply assumed he had invested in stock or capital equipment during the quarter. As the court noted, "the appellant [Phillips] did not engage in a business and had no income or outgoings for such a business". Within a week, the money was in his bank account. That was the trial run. Phillips was only just getting started. The next month, he lodged 46 separate GST refund claims seeking $821,279 from the ATO. The problem was that Phillips had been in jail for most of the time covered by these claims. Despite this, the ATO paid up promptly. Once again, the ATO had not made a single inquiry before paying the money. The algorithm in its system, rather than any human, approved the refund. To claim such a giant GST refund, Phillips would have needed to spend around $9.7 million on his business over three years. All this while having minimal sales, yet enough cash flow to not bother claiming the GST refund each month. Somehow, this was not a red flag when the ATO was paying out the money. Just weeks after Phillips made his second claim, someone at the ATO twigged that his enterprise may not be legitimate. Finally, there was a human in the loop. An ATO officer rang Phillips and was told the statements had been prepared by his accountant, for which he provided a name and number. "The number was in fact registered to a different person … not an accountant but a painter," according to the court documents. The ATO followed up with a letter to Phillips, which he ignored. As he did to further calls and emails from the ATO. Despite the suspicious behaviour, the ATO did nothing. In the meantime, Phillips bought himself a Porsche and his mother a house. The ATO would sit on its hands for the next four months, giving pause to its claim to have cracked down hard and quickly brought the scam under control. When Phillips was caught, it had nothing to do with the ATO. He was arrested in April 2022 by Mildura detective Vanessa Power, who was searching his home looking for drugs and guns. She checked Phillips's phone and "identified a series of fraudulent ATO claims," according to Victoria Police. That led police to a further 63 other offenders in the Mildura area. It was around this time that the ATO began to take the threat seriously. Four months after it first identified a problem with Phillips's GST refunds, the ATO launched Operation Protego, led by its Serious Financial Crimes taskforce. By this time, the ATO estimates $850 million had been stolen from the tax system. While Protego was operating, then-federal assistant treasurer Stephen Jones said it was "pretty easy to work out whether" some had lodged a "legitimate" GST claim or not. "There's lots of analytics that the ATO can do to work out whether this is a legitimate business or not," he said. That may have been true, but the ATO was not identifying many of these false claims until after the money had been paid. It would take the tax office 18 months to get the scam under control, and by this time, $2 billion had been stolen from the tax system. The ATO said when it launched Operation Protego that it assigned 470 extra staff to verify GST claims, and that by May 2022, "almost all fraud attempts were being stopped". All up, the ATO estimated 57,000 people were involved in the scam. Of these, just 122 have been convicted, while the ATO has only recovered $96 million — just 5 per cent of the money stolen from the tax system. The banks have helped recover another $64 million by freezing accounts. In the years leading up to the scam, the ATO's analysis showed its fraud detection systems, which should have prevented the scam, were not up to scratch. A 2018 report unearthed by Four Corners outlined how the systems were lacking. The report's author, Ali Noroozi, spent 10 years as the inspector general of taxation. Citing the ATO's internal data, he found that its so-called risk assessment systems were only marginally better than random selection. "They have certainly been on notice that their risk assessment tools could do better," Mr Noroozi told Four Corners. The tax office was slow to heed this warning, and then it also downgraded its assessment of external fraud risks from "severe" to "low" two months before the scam took off in mid-2021. It said the likelihood of risk had gone from "almost certain" to "rare". The tax office said it began building and updating new fraud detection systems even before the critical 2018 inspector general report. But the auditor general noted one of the ATO's new fraud detection systems ran a year late and was therefore not fully switched on until January 2022. At this point, it successfully detected the massive fraud, but it still took the tax office a further three months to launch Operation Protego. The auditor general found "the ATO did not have a procedure to respond to a large-scale external fraud event" like the GST scams. Watch as Four Corners investigates one of the most powerful and secretive institutions in the country, tonight on ABC TV and ABC iview. Tax experts said these processes need humans in the loop. "Before money goes out the door, particularly if there's been large changes in a taxpayer's details or accounts, that should be verified," said Karen Payne, who stepped down last year as inspector general of taxation. "Once upon a time, there was a desk audit when you first lodged your GST return to make sure you are carrying on a business that you can verify and these amounts that you're claiming are legitimate." As the Abbott government swept to power in 2013, the ATO was moving away from this model of human verification to an automated system. That would eventually see around 1,000 staff — or half the people in the division responsible for the GST — lose their jobs. "I'm not sure the ATO has ever recovered from that sort of drain of knowledge and drain of skill sets," said Stephen Hathway, a liquidator currently investigating a large-scale GST fraud. "The people [at the ATO] work really hard and diligently, but there just needs to be more of them. And there needs to be more regard to getting out there in the field and making those inquiries." While the ATO has claimed to have contained smaller-scale GST frauds as part of Operation Protego, it has struggled to stop loopholes being exploited by larger-scale scams. Stephen Hathway has seen this up close. He is currently chasing Nahi Gazal, who claims to be a wealthy Sydney property developer, but has been accused of masterminding a giant GST fraud. Gazal and his associates managed to squeeze more than $21 million out of the tax office in GST refunds. They allegedly used fake invoices to claim GST refunds for building projects that either did not exist or had been completed by other developers. Once again, the ATO did not bother to do even the most basic of checks. "It never had any legitimacy," Mr Hathway said. "There's nothing in it that ever demonstrates any act of commerce or enterprise. The whole set of transactions were completely and utterly made up, fraudulent, had no basis." By September 2023, the ATO had issued Gazal with a $44 million tax bill, including penalty interest. Four Corners can reveal that while the ATO was chasing Gazal for that money, it failed to detect that he was using a new string of companies to continue scamming the tax office. Mr Hathway has been funded by the ATO to pursue Gazal over this latest scheme, and has connected him to an additional 22 companies, which Mr Hathway said have fraudulently claimed another $25 million in GST refunds. Once again, Gazal claimed to be a property developer. "Not one bag of nails was bought from Bunnings," Mr Hathway said. But once again, the ATO did not check before paying out the GST refunds to Gazal's companies. Mr Hathway said the ATO never asked basic questions, like the address of the properties being developed, whether a development application had been approved, or to even look at a building contract. "I'm the liquidator after the event. And then when we're looking into the file, we find nothing," Mr Hathway said. Mr Hathway was not hopeful the ATO would be able to recover much of the money, and said there was nothing to stop someone else from doing the same thing. Karen Payne said the tax office needed to do better, as these frauds resulted in less money for essential services. "We should all care because it raises revenues that allow the government … to fund the services that we all benefit from … health, defence, security, infrastructure … it's pretty key part of our democracy." Watch Four Corners' full investigation into the tax system, No Return, tonight from 8:30pm on ABC TV and ABC iview.
News.com.au
27-05-2025
- Business
- News.com.au
‘Stealing funds': ATO warning as three people jailed over tax fraud
With Aussies looking forward to that end-of-financial-year rebate, the Australian Taxation Office (ATO) has issued a stern warning about GST fraud. In a timely reminder about the consequences of committing fraud, three people from Queensland have been jailed in May. Tiarn Payten Nutley was sentenced to nine months in jail for using an existing Australian business number (ABN) to claim GST refunds for a fake beauty and salon business. Nutley shared her myGov log in with two of her friends who lodged six false business activity statements (BAS) in her name. She was sentenced for one offence of dishonestly obtaining a gain of nearly $50,000 and further trying to obtain $25,000. Nutley was released on a recognisance release order of $2000 but is required to be of good behaviour for 12 months. Her friend Skye Anne Hoek gained more than $25,000 after registering her ABN for GST and lodging two BAS that contained false information. She was sentenced to three months' jail without a recognisance release order. Gregory Pimm ran an even more elaborate fraud system – a fake road freight transport business that he claimed to run from his home. He fraudulently obtained more $265,000 in GST refunds and further tried to obtain $300,000. Pimm lodged 37 BAS for his fake business and falsely reported total sales, GST collected, GST on purchases made for the business, and GST credits the ATO owed him. He was sentenced to two years and six months in jail for obtaining and attempting to obtain a financial advantage by deception. Pimm is to be released on recognisance of $500 after six months' imprisonment. He is also to be required to be of good behaviour for three years and subject to the supervision of a probation officer for two years. All three were arrested under Operation Protego, which has taken compliance action against more than 57,000 alleged offenders – 105 convicted. Acting ATO Deputy Commissioner and Serious Financial Crime Taskforce chief Kath Anderson said these prosecutions sent a strong reminder that the ATO would bring those who commit fraud to account. 'Deliberate noncompliance has consequences. The ATO will actively pursue debts obtained through fraudulent GST funds, using all the tools at our disposal to recoup those funds. Those who seek to defraud the tax and super systems will get caught and face the full force of the law,' she said. 'We are equipped with resources, sophisticated data matching, analytics capability and intelligence sharing relationships. If you think you won't be caught, think again. 'These individuals face long-term consequences. Not only do they need to repay the money, but they will have a criminal record, which may affect their ability to secure employment, obtain finance or insurance and travel overseas. 'Engaging in GST fraud rips off your own community by stealing funds that would go to essential services, like health and education. 'Under the ATO's Counter Fraud Program, we will continue to grow the capability and tools we need to respond to fraud in an agile and sophisticated way, collecting data and information to prevent, detect and address fraud in close to real time.'
