GST registration to become “slower and potentially more difficult” after $2 billion fraud

Business owners can expect GST registration to become “slower and potentially more difficult”, outgoing Commissioner of Taxation Chris Jordan says, as the Australian Taxation Office (ATO) enacts new safeguards after a $2 billion fraud wave.

In his final National Press Club address before ending an 11-year tenure as Australia’s tax chief, Jordan on Wednesday said the recent GST exploitation epidemic — which saw people claim GST refunds for business expenses that never existed — will result in unfortunate consequences for legitimate businesses.

For years, ABN holders with a current or projected GST turnover above $75,000 have been allowed to register for GST online, by phone, or through a tax agent.

For online applicants, GST is active from the moment of registration.

This fast-tracked process benefits the ATO as well as businesses, as removing hurdles between legitimate traders and GST registration can result in improved tax compliance — in most cases.

The wave of fake ABN and GST registrations proved an exception to the rule, and showed how some ATO sign-up systems were vulnerable to massive and brazen fraud.

Some 57,000 people are now implicated in the GST fraud wave.

“Our systems were never designed for people to commit fraud at such scale in such a short period in their own names,” Jordan said in a Q&A session after his National Press Club address.

An official audit of the ATO’s response to the Operation Protego fraud wave also found external fraud risk reporting, which feeds into the tax office’s anti-fraud strategies, went incomplete in its small business wing between 2019 and 2023.

In the aftermath of that crisis, Jordan said the ATO will change its approach to ABN and GST signups, to the detriment of small businesses trying to do the right thing.

“We really try to make things as easy as possible for small businesses, and that includes registering for an ABN and registering for GST,” he said.

“Unfortunately, this has resulted in more grittiness having to be put in the system.

“It will be slower and potentially more difficult for people to get GST registration in particular. We were swamped. It was terrible.”

Jordan did not detail what changes will be made, or have already come into effect.

However, he used his speech to broadly defend the ATO’s changing tactics.

“Increasing safeguards and resetting our debt collection approach are not always popular decisions, however I am unapologetic about our focus,” he said.

“We have a job to do.”

SmartCompany has contacted the ATO for comment.

The outgoing commissioner also expanded on the ATO’s post-Operation Protego response, including the audit report revelation that 150 ATO officials were investigated for personal involvement.

Ultimately, the ATO identified nine current contractors and three current employees as participants in the fraud.

“It is totally unacceptable to have even three,” Jordan said.

“Clearly, they’re terminated and compliance action has been taken.”

The audit report confirmed compliance action included criminal proceedings against some of the ATO officials implicated in the scheme.