Lessons for business from the $165 million ATO tax fraud


The recent investigation by the Australian Federal Police of a syndicate accused of defrauding the Australian Taxation Office, and thus the Australia taxpayer, of hundreds of millions of dollars has raised a number of warning signs for businesses.


If seems too good to be true, it probably is

This is as old as the hills, but still organisations and individuals keep falling for offers that appear remarkable.  The offers by Plutus Payroll that they would not charge any fees for providing a payroll processing service ensnared many organisations including Government Departments and Agencies.  It will be interesting to see what due diligence was undertaken on the company by the organisations that engaged them.  Questions such as how long were they in business?  What is the background of the Directors?  What testimonies were given by clients on their behalf?  What evidence if any was there on social media platforms that indicated problems with the business operations?  These questions should have raised a range of red flags for prospective customers.


Those that commit fraud often can’t help displaying their wealth

Many fraudsters are either arrogant or not real bright when they use their ill-gotten gains in extravagant fashion.  It often leads to their fraud being discovered.  The phrase ‘where did they get the money for that?’ still rings true.

The advent of Facebook and other social media has been a boon for financial investigators who often stumble across a treasure trove of evidence of the proceeds of crime.

This is clearly evident with the luxury cars and motor bikes that were flaunted on social media sites and sponsorship of race teams.


Recovering the proceeds of crime can be difficult

Proceeds from crime are often spent on servicing a lavish lifestyle such as partying, fast cars, prostitutes and travel.  When recovering the assets such as luxury vehicles, watches and jewelry that have been purchased, very often they realise only a fraction of their purchase price.  Even real estate, often bought at inflated prices as impulse buys, do not fully return their purchase price.

Transfers of money to overseas locations bank accounts can also take time, money and depending on the jurisdiction, be difficult to recover.

Only time will tell what percentage recovery the AFP can realise from the unremitted taxation deductions once restraining orders have been put in place.


Further information

Should you require assistance with preventing this type of fraud impacting your business, or help with investigating concerns over suppliers, contractors or employees, contact Warfield & Associates for further information.