ATO issues new false invoice warning to businesses scamming the tax system

The Australian Taxation Office (ATO) has dodgy invoicing in its crosshairs, warning businesses that the Serious Financial Crimes Taskforce is ready and able to take action.

On Friday, the ATO reminded entities big and small of its fight against false invoicing, a scam that minimises the tax paid by participating businesses.

It provided an example of a false invoicing scam, which can take the following form:

1. The scam “promoter” files an invoice to a legitimate business, but does not provide the goods or services listed
2. The business pays the invoice, but the promoter returns most of the invoice value to the owners as cash
3. The promoter holds on to their share as a “commission”
4. That business then claims illegal tax deductions and GST tax credits based on the false invoice
5. The business owners then use the cash to pay wages off the books, and deliberately under-report those amounts in their tax returns.