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Reducing the risk of refund fraud

Posted on 13 July '16 by , under General News.

Refund fraud occurs where tax returns, activity statements and other documents are deliberately falsified in order to claim a tax refund a taxpayer is not entitled to.

Fraudulent claims can be lodged by individuals on their own account or third parties on behalf of others. Often, this can involve identity crime, where taxpayer identities are used by third parties to make fraudulent claims for personal gain.

Some examples of refund fraud are deliberately over-claiming deductions, offsets, or expenses by providing false or misleading information, understating income and/or providing fictitious payment summary details, providing false information in a business activity statement and making claims through fraudulent registrations or using false or stolen identities.

The ATO have a range of controls and systems in place to detect potential refund fraud, these include:

  • analytical models that use behaviour and statistical algorithms to analyse information on income tax returns, business activity statements and other tax forms lodged

  • sharing data and intelligence with their partner agencies

  • obtaining information about suspected fraud from the community and other government agencies