iscoverFollowing concerns raised in the ABC’s Four Corners GST investigation, the Tax Office has said it will aim to improve its systems and processes where necessary.
ATO responds to $2bn GST fraud scandal
31 July 2025
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11 minute read
The ATO has revealed it acknowledges the concerns raised about GST refund fraud in the recent Four Corners segment and will take matters seriously to uphold “integrity, fairness and accountability”.
The segment ‘No Return: Australia’s Missing Billions’ on the ABC’s Four Corners, which aired on 28 July, dove into an ATO loophole which allowed tens of thousands of Australians to commit GST fraud, stealing a total of $2 billion.
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According to the ABC and the investigation, the ATO was warned its systems were “badly lacking” and failed to act effectively when the fraud was eventually discovered.
In response to the investigation and criticism, the ATO released a statement noting it would continue its role to ensure all taxpayers paid the correct amount of tax, regardless of their size or profile.
“The public rightfully expects the highest standards of integrity, fairness and accountability from us, and we take matters raised in the segment seriously,” the statement said.
“Where concerns are raised, we aim to respond through appropriate channels, including internal review, independent oversight, and, where necessary, improvements to our systems and processes.”
The ATO acknowledged that collectable debt was at a “record high” and pledged that reducing unpaid tax owed to the government was a key priority.
“We are focussing our firmest debt collection activities on the 22,000 taxpayers that are responsible for $11 billion of the collectable tax debt owed to the government. In context, that’s about one per cent of the total debtors responsible for what's owed,” the ATO said.
In response to the ATO’s statement, Tony Greco, IPA senior tax advisor, told Accountants Daily the Four Corners program covered many crucial aspects that needed to be addressed, including the fact that there was a lack of oversight of the ATO.
“Many organisations, including IPA, have been calling on the government to put in place an independent board for many years now. It’s too big an agency that impacts on the lives of all in the community not to have more independent oversight,” Greco said.
“In regard to GST fraud, the ATO has acknowledged that their risk assessment models could not cope with a fraud of this scale. There are many red flags that should have triggered further investigation during the lodgement process before refunds were issued.”
“Tighter controls are now in place to make it harder to perpetuate this type of fraud, but you cannot make it foolproof without hurting genuine businesses so be careful what you ask for. The IPA has been calling on the government to tighten the law around ABN applications to help the ATO combat fraud.”
This sentiment was echoed by Joe Kaleb, chartered accountant and business owner, who said that when watching the Four Corners program, he was shocked by how widespread and easily the GST fraud had been carried out.
“While it may not be happening on the same scale now, we can’t say with much confidence that similar fraud isn’t still occurring today,” he said.
“The ATO should strengthen its controls over GST refunds, particularly for new businesses and in cases where amended BASs involve a simultaneous change in bank account details. These are key areas where much of the GST fraud is taking place. To help reduce GST fraud, I suggest limiting ABN applications to registered tax agents and BAS agents only.”
In its statement, the ATO also addressed the concerns raised in the investigation towards general interest charge (GIC) remission and said, “requests for remission are considered by staff who take time to assess the individual circumstances that are presented before making a decision”.
“In deciding whether to remit GIC, we consider the circumstances that caused the delay payment resulting in GIC, how these circumstances prevented the taxpayer from paying by the due date and what steps they have taken to reduce the delay,” the Tax Office said.
According to Greco, it seemed odd that the ATO, based on what had surfaced in the public domain on GIC remission, made their call, stuck by it, issued a statutory demand and then unravelled this within their statement.
Forgetting to pay your tax wouldn’t be a strong case for remission of the GIC, Greco noted.
“It would be a little unusual, but we don’t know what exactly happened…all we can say is generally those circumstances don’t normally lend themselves to a remission on the face of it. More information needs to be provided to see whether the ATO acted with its discretion,” he said.
Factors beyond the control of the taxpayer generally fell within the use of the discretion, which also allowed for special circumstances, and it would be fair for the ATO to exercise its discretion based on the taxpayers’ circumstances.
If an unfair advantage was being sought over taxpayers who organised their affairs to ensure they could pay on time, then this is what the ATO needed to ensure, based on the nature of the specific event.
“Remissions are discretionary and the ATO is currently reviewing that discretion because they’ve been getting inconsistent outcomes and the Tax Ombudsman is doing a review …,” he said.
“Anything discretionary has an element of variability, and you’re never going to nail it all the time, as we are human beings that interpret circumstances differently.”
“The ATO needs to treat all taxpayers fairly when it comes to GIC remissions and a right to have their tax affairs protected from public disclosure.”
As reported by the ABC, a 2018 report authored by the former inspector-general of taxation, Ali Noroozi, found the Tax Office’s “so-called” risk assessment systems were only “marginally better than random selection”.
However, in response to the ATO’s statement, Noroozi told Accountants Daily that he was satisfied with its pledges and promise to “do better”.
“I am pleased with the ATO’s response that acknowledges the issues and respects public expectations,” he said.
“It then continues to explain the relevant facts and what they have done and are continuing to do to address the issues. In this way it is fostering trust and confidence in the tax system, which is the linchpin of a self-assessment system.”
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