AUSTRALIA | IGTO says it’s vital to ensure bank account integrity to prevent and detect Tax Identity (TaxID) fraud

The Inspector-General of Taxation and Taxation Ombudsman (IGTO) commenced an own-motion investigation into Tax identification (TaxID) fraud on 15 December 2023.  This was in response to an increase in complaints and dispute investigations concerning TaxID fraud received by the IGTO.

The IGTO makes thirteen (13) recommendations for ATO improvement in this interim (Phase 1) report – The importance of bank account integrity.

Over 50% of stakeholder submissions to the IGTO identified instances of fraud where:

• There was an unauthorised change to the bank account details on the taxpayer’s ATO account in order to perpetrate the fraud;
• The ATO was unsuccessful in preventing the refund being issued to the fraudulent bank account;
• The estimated amount the fraud was more than $10,000;
• The fraud was identified by the taxpayer or their tax agent, rather than the ATO;
• The fraud involved unauthorised access to the taxpayer’s myGov account;

Bank fraud detection and response
A fundamental step in committing TaxID fraud is that a fraudster is able to remit money to a bank account that is controlled by that fraudster.  This means that the fraudster must establish access to a relevant bank account that is linked to a legitimate taxpayer’s ATO accounts.  This is necessary to ‘escape’ with the money.

Preventing, detecting and responding to TaxID fraud is important to maintain the integrity of the tax system and avoid proliferation, which impacts and erodes the Revenue.

ATO response
The ATO response, which is included in the report states:

The ATO is pleased that IGTO’s interim report recommendations align broadly with ATO-identified work in progress, and agree in principle with the majority of recommendations made. The ATO notes that some recommendations are dependent on matters for Government to consider. The ATO looks forward to IGTO’s final report with any remaining findings and recommendations from this investigation, and will provide an ATO response against each recommendation in both interim and final reports as a consolidated set at that time.

Karen Payne, IGT and Tax Ombudsman said: “The IGTO urges the ATO to consult and advocate for legislative authority to implement these critical IGTO recommendations where it believes it currently does not have the relevant authority.”

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Source: Inspector-General of Taxation and Taxation Ombudsman, Australia