ATO issues new false invoice warning to businesses scamming the tax system

The Australian Taxation Office (ATO) has dodgy invoicing in its crosshairs, warning businesses that the Serious Financial Crimes Taskforce is ready and able to take action.

On Friday, the ATO reminded entities big and small of its fight against false invoicing, a scam that minimises the tax paid by participating businesses.

It provided an example of a false invoicing scam, which can take the following form:

1. The scam “promoter” files an invoice to a legitimate business, but does not provide the goods or services listed
2. The business pays the invoice, but the promoter returns most of the invoice value to the owners as cash
3. The promoter holds on to their share as a “commission”
4. That business then claims illegal tax deductions and GST tax credits based on the false invoice
5. The business owners then use the cash to pay wages off the books, and deliberately under-report those amounts in their tax returns.

The Serious Financial Crimes Taskforce — a joint agency combining the ATO and the Australian Federal Police — is urging businesses not to participate in the scam.

“While most Australian businesses do the right thing, a small minority try to evade the tax system,” it said.

“This behaviour undermines the integrity of the tax and super system and disadvantages honest businesses who are doing the right thing.”

The taskforce has the data-matching, analytical power, and intelligence-sharing capabilities to “uncover even the most elaborate financial crime,” it said.

While flexing its powers against deliberate tax cheats in the business sector, the taskforce has “strongly” encouraged businesses involved in the scheme to make a voluntary disclosure before an ATO-led crackdown.

“We may be able to reduce your penalties,” it said.

The warning comes in the shadow of a multibillion-dollar GST fraud scheme popularised on TikTok, which saw Australians without legitimate businesses claim bogus GST refunds.