Need to know
- The beginning of the financial year is a popular time for tax scams
- Many of these scams involve criminals impersonating the ATO in an attempt to get your money or information
- There are five forms these scams commonly take, each with their own red flags
Tax time is a prime season for scammers.
It's a period where we're expecting communication from government officials about debts or refunds owing to the tax office and it can also be one of financial anxiety, making us potentially more vulnerable to fraud.
The ATO is warning us to be on the lookout for increased fraud activity at this time of year, saying it received 20,000 reports of tax scams last financial year.
Most of these scams involve criminals posing as ATO representatives or financial experts in order to gain access to your money or personal information.
Here are five common types of scams to watch out for at tax time.
1. Requests for information
The ATO has recently been sounding the alarm on an increase in fake social media accounts impersonating the official government department.
Fake ATO accounts are targeting taxpayers on social media in attempt to get their personal information. Source: ATO
Authorities say these accounts, found on platforms like Instagram, Facebook and Twitter, are sending targets direct messages and offering to help with tax enquiries.
The scammers will then often attempt to get a victim's personal information including email addresses, phone numbers and bank details, which they can sell or use to gain access to savings accounts.
The tax office is also warning Australians about a phishing scam attempting to get the login details of Microsoft users. Scammers send emails with ATO branding which prompt recipients to log in to a fake Microsoft portal in order to 'finalise their tax lodgment.'
Clicking on these links and logging into these sites can give scammers access to your online accounts, which can in turn give them control of the services you use for online banking or shopping.
How to spot them
The ATO will never send you links over email, social media or SMS to log in to online services or ask you to provide any personal information through these channels.
Therefore, any communications that appear to come from the tax office asking you to do this should be treated with suspicion.
Tax authorities say you can also spot social media-based phishing attempts by taking a closer look at the accounts purporting to be the ATO.
The ATO's official accounts have hundreds of thousands of followers and have been active for around 10 years, so any ATO-affiliated account that doesn't have many followers or was created recently is a red flag.
2. Promising refunds
Scammers often deploy SMS messages promising a tax refund in order to steal money or personal information. Source: ATO
Many of us look forward to the prospect of a refund at tax time and scammers have been known to take advantage of this by reaching out and promising quick access to money.
The ATO says they often see SMS messages and emails from scammers posing as tax or government officials, asking targets to enter bank and credit card details and other personal information to process a tax refund. In other cases, you'll be asked to pay a fee with your credit card in order to get your refund processed.
How to spot them
If the ATO does require information about your tax affairs, they may use SMS or email to ask you to contact them, but they will never ask you to provide information directly through those channels or use them to send links to online forms.
The tax office will also never ask you to pay a fee in order to get a tax refund, so anyone requesting this is a criminal attempting to defraud you.
3. Demanding debts
Just as scammers exploit our appetite for a refund, they're also known to take advantage of the fact that the ATO will sometimes request payments to cover a tax debt.
Scammers impersonating tax officers may contact you by phone call or SMS, claiming you haven't paid enough tax and demanding you pay them immediately to cover the shortfall. To get you to act quickly, they might also claim that a warrant will be issued for your arrest unless you pay right away.
Scammers have also been known to claim that your Tax File Number (TFN) has been suspended or cancelled due to illegal activity and that you'll need to make a payment to avoid being arrested or to protect your TFN.
How to spot them
The ATO doesn't cancel TFNs and will never threaten you with immediate arrest or demand you stay on the line until a payment is made, so anyone employing these tactics is a criminal.
The ATO will also never make you pay with gift cards, vouchers or cryptocurrency or ask you to transfer money to a personal bank account to settle a tax debt.
4. Fees for free services
Con artists passing themselves off as tax officials may also offer services (for a fee) which are actually available from the ATO for free.
For example, scammers have been known to reach out to individuals over SMS, offering to help them get a TFN or Australian Business Number (ABN) and directing them to a website that's been built to steal money or personal information.
How to spot them
Applying for a TFN or ABN is free and can be done through the official ATO website. If you're applying for either of these through a tax agent, check that they're registered with the Tax Practitioners Board.
5. Money-making opportunities
The ATO has also seen examples of frauds where scammers pose as investment experts and encourage people to invest their super into what they claim is a high-performing self-managed super fund, but is actually a private bank account controlled by criminals.
Financial counsellors have also recently told CHOICE they've seen a number of people caught up in cases of GST refund fraud.
In these cases, individuals have allegedly been coached by criminals through the process of obtaining an illegal GST refund.
In several instances, the criminals orchestrating the operation are said to have used the target's myGov details to obtain an ABN for a fake business and submit false business activity paperwork.
Tax authorities and the police have recently been cracking down on this type of crime
These criminals then share some of the refund money they receive with the person who's details they've used to carry out the fraud.
Tax authorities and the police have recently been cracking down on this type of crime, leaving those whose name in which the fake business was created, in debt to the ATO.
How to spot them
Beware of anyone claiming to be a financial adviser or super expert who contacts you multiple times with the offer of a promising investment opportunity.
Check with ASIC's professional registers to make sure anyone you're discussing investment opportunities with is a licensed finance professional and isn't using stolen details.
Also steer clear of anyone who contacts you with the proposition of making money by applying for a GST refund. It's illegal to lodge business activity paperwork in order to get a GST refund if you don't operate a business.
How to report a tax scam
If you think you've encountered a tax scam, report it to the ATO by emailing screenshots of social media posts and accounts or SMS messages to ReportScams@ato.gov.au. You can also forward suspicious emails to the same address.
How CHOICE is fighting scams
CHOICE is committed to protecting Australians from scams by fighting for stronger protections for consumers. We want the government to require businesses to do more to stop scams.
To stay up to date with our work in this area, sign up to our email below.
Stock images: Getty, unless otherwise stated.