ATO reveals key targets for new GST crackdown

The ATO says it will target businesses that have fallen behind in their business activity statements, property transactions and refund fraud as part of a $445 million, four-year crackdown on GST compliance.

The ATO has been charged with recovering $3.2 billion in lost GST revenue over the next four years, after receiving $445 million in extra funding from the Government in the 2010 Federal Budget.

The GST chase will kick off in earnest this year, according to a new guide released this week by the ATO.

While the focus isn’t a surprise – the ATO says it wants to ensure the timely lodgement of business activity statements, verifying GST refunds, crack down on those avoiding GST and get old GST paid back – the proposed methods indicate SMEs will face a much higher level of scrutiny.

The ATO says is will be:

• Hitting businesses with SMS letter lodgements before their GST debts are due.
• Contacting taxpayers that have one or two activity statements overdue.
• Chasing taxpayers with multiple activity statement debts outstanding with potential prosecution.
• Matching sales and high value transactions (particularly property deals) with data from state revenue offices, land titles offices and share registries.
• Verifying refund claims by contacting third parties to substantiate claims.
• Using industry benchmarks to detect businesses that underreport obligations.
• Using new risk filters and risk models to detect fraudulent refund claims on activity statement credits.

While any business that gets behind in their GST obligations can expect some sort of contact from the taxman, the property sector is in for special treatment.

“We are growing our capability to match data from a variety of sources and will be looking closely at the property industry to identify developers that sell property, but do not lodge their activity statements,” the ATO says in the guide.

The focus on property is hardly surprising – property deals would be among the biggest GST-related transactions the ATO tracks, and would therefore present opportunities to recover large amounts of unpaid GST.

Deepti Paton, Tax Counsel at the Taxation Institute of Australia, says recent changes in the regulatory framework around property may have also boosted their focus on the issue.

“The ATO’s increased focus on GST compliance in the property sector highlights the continuing difficulties in this area caused by active consultation on proposed amendments to the margin scheme rules, ongoing litigation and delays in issuing ATO guidance.”

Another area clearly worrying the ATO is GST refund fraud, where individuals and businesses attempt to claim GST credits they are not entitled to, particularly with the growing problem of identity theft.

“Identity crime is a community-wide issue and we are working in close partnership with many government agencies to address it. It’s also a big focus for us as it often facilitates GST fraud. We will be increasing efforts to detect those using false, manipulated or stolen (or assumed false or stolen) identities to obtain GST refunds,” the ATO says.