How Australia’s tax authorities lost more than $1.6 billion thanks to a devious TikTok scam

A TikTok scam has attempted to hit the Australian government for nearly $5 billion after users found a way to milk taxpayers out of millions through a GST fraud.

Cyclists, juvenile delinquency gangs and social media users all piled on the bogus corporate racket after details went viral on TikTok.

They looted more than $1.6 billion from the state’s coffers before the alarm went off and the Australian tax authorities raised their heads.

Some attempted to extort more than $100,000 in a single false GST claim, with the average offender total rising from $20,000 initially to the current level of $80,000.

More than 100 people have now been charged and another 56,000 have issued a statement of compliance under Operation Protego, which started in April last year.

“This was an unprecedented threat spread through social media,” the ATO admitted to Daily Mail Australia.

The Australian Revenue Service said the cost to taxpayers has skyrocketed since the investigation began and they are now chasing $1.9 billion to pay back to the government, including penalties and interest.

Investigators managed to block another $2.7 billion in additional false claims, but the ATO is bracing for even more to try and sneak through even more false bills.

The crime is remarkably easy to stage but has dire consequences for those caught defrauding the system, with several already jailed for their false claims.

It quickly spread on TikTok as a viral ‘government loan’ free money hack and involved applying for an Australian company number and registering for GST.

The crooks would simply falsely claim that they had spent huge amounts of money on equipment and supplies for their business, then claim back 10 percent of the total as GST.

The tax office would then pay the “cost” of the GST to the company, expecting to recoup the money from the GST on the revenue of the claiming company.

But many of those who made the false claims were unemployed or actually had no business, meaning the ATO never got its money back.

The government website warns users who apply for an ABN: ‘Not everyone is entitled to an ABN.

“You could be prosecuted or criminally charged if you apply for an ABN, register for GST and claim GST refunds when you are not entitled to them.”

The warning didn’t stop thousands from trying, mainly in western Sydney after the scam went viral in 2021 as the hack spread on TikTok and among biker gang members.

Other TikTok users have now recorded videos warning people not to get involved in the scam, with one caveat: “I thought this was pretty obvious…

“But GST fraud is illegal no matter what people say on TikTok. This is not a money hack, this is tax fraud. You can not do that.

“I’m really confused about how this all came about, but I think we’ll see more.

“There are actually ATO raids, which is kind of a big deal. The ATO actually has many powers that many people are unaware of.

GST fraud? No, no – you can’t do that. You’re going to prison.’

Banks say they warned the ATO in 2020, the AFRbut the concerns were ignored and thousands of bogus claims poured in, paying out $1.6 billion.

The crooks are also being pursued for an additional $300 million in additional fines and interest on the unpaid tax, the ATO says.

The banks say they tried to take their own action and freeze the accounts of customers suspected of making false claims.

They told the AFR they took action after seeing welfare recipients suddenly paid huge sums by the IRS – but reportedly got no response from the ATO when they tried to warn them.

“We notified the ATO and they wanted nothing to do with it,” a bank manager told an adviser, the AFR reported.

The ATO responded to the allegations on Monday, telling Daily Mail Australia: ‘We have taken immediate action.

“We became aware of an increase in bank referrals in late 2021, which escalated in early 2022.

“As a result, we have prioritized and taken compliance action against more than 56,000 perpetrators,” said an ATO spokesman.

“Working with the Serious Financial Crime Taskforce and law enforcement agencies, more than 100 suspected perpetrators have been arrested, including members of outlaw biker gangs, organized crime groups and juvenile delinquency gangs.

“More than 10 people have already been convicted for their involvement in this activity. We will continue to deal with this fraud with the full force of the ATO.”

The spokesperson added: “We have stopped paying out $2.7 billion to fraudsters.

“We will continue to pursue those who committed this fraud and collect debts that incur fines and interest.

“We also continue to monitor whether tax agents are facilitating clients to participate in this fraud.

“We expect that any tax or business activity statement agent who becomes aware of a customer who has participated in fraud will notify the ATO immediately.”