A timeline of the $4.6 billion TikTok GST scam plaguing the ATO

The TikTok GST fraud that was exposed in 2022 seems to be worse than initially thought. The Australian Taxation Office (ATO) has admitted that it paid out over $1.6 billion to scammers as part of a $4.6 billion fraud promoted across TikTok and other social media platforms.

How the TikTok GST scam worked

While TikTok has been closely tied to the scam over the past couple of years, it’s worth noting that it didn’t originate there. However, the platform is responsible for it going viral due to the number of users promoting it there.

The scam itself involved people acquiring an Australian Business Number (ABN) for a sham business and utilising MyGov to submit falsified business activity statements to receive GST refunds.

A timeline of the scam

In late 2020 some Australian banks, including Westpac, noticed an unprecedented number of odd transactions where people received large business payments from the ATO. Some of these came in at over $100,000, which seemed particularly strange when a number of these alleged business owners were also receiving social benefits.

In mid-2021 the scam became more widely known due to its rising popularity across TikTok and other social media platforms, where users were pointing out the GST loophole.

In the meantime, as banks froze accounts and notified the ATO of the scam, it allegedly didn’t take any action. It has been reported that frustrated bank staff alerted the Reserve Bank of Australia (RBA), which raised concerns with the Treasury and the ATO in February of 2022.

While the ATO said it could not inform the banks of action it was taking behind the scenes due to taxpayer secrecy laws, the AFR has reported that there were actually disagreements within the ATO regarding which department would take on the case.

In early 2022 the ATO launched Operation Protego, where it worked alongside banks, the RBA, and law enforcement to investigate the scam and attempt to recover the wrongly-gained funds.

“We know who they are and we will be taking action,” ATO deputy commissioner, Will Day, said at the time.

“We are working with social media platforms to help remove content promoting this fraud, but if you see something that sounds too good to be true, it probably is.”

Since Protego went into effect the AFP led over 100 arrests and compliance action as taken against 56,000 people.

According to the ATO in May 2022, $850 million had been paid out in the scam. It was believed 40,000 people were involved and averaged around $20,000 in payout per person. However, according to some accountants in contact with the AFR, the average may be closer to $80,000.

Within a month of the ATO putting scammers on notice, it was revealed that the defrauded amount of cash involved in the scam had blown out to $1 billion.

As it turns out, it was much more than that.

Day recently commented that Operation Protego had stopped $2.7 billion in fake GST refunds as of June, 2023. He also claimed that $1.9 billion in liabilities, including penalties and interest had been raised.

However, the ATO also had to admit that it actually paid out over $1.6 billion to people who made fake GST claims. This is double what was initially reported and has made it the biggest example of tax fraud ever in Australia.