Millions of taxpayer dollars are at risk from criminal gangs accessing private tax details due to a serious Australian Taxation Office security bungle.

Last Thursday the Commissioner of Taxation Michael D’Ascenzo issued a press release saying the tax office has written to 3,122 trustees of self managed super funds offering them a new tax file number (TFN) for their funds. Their details have gone missing due to a major security bungle involving a contracted courier.

Mr D’Ascenzo said, “While there is no evidence the information has fallen into the wrong hands or been misused, I am taking the matter seriously.”

So he should. According to a recently resigned senior officer from the ATO’s crack Serious Non Compliance Squad, millions of dollars are at risk if the information falls into the hands of criminal gangs.

“I can tell you it has happened previously, it is happening now and will continue to happen until the tax office tighten up their security arrangements”, he said.

In March the ATO warned taxpayers that idenity crime is a major issue for the organisation. Deputy Commissioner Michael Cranston said identity crime is a genuine threat and TFNs can be used by perpetrators to commit fraud, not only against the Tax Office but also against other organisations and individuals.

“Identity crime is serious and can have a big impact on people caught up in it. In some instances this can take years to resolve,” Mr Cranston said. The former tax gumshoe told Crikey the clear steps a criminal would take to rake millions of dollars out of the revenue.

Assuming fraudsters obtain the information, this is what could happen:

  • They apply on line for an ABN using the Super Fund’s TFN and name of the trustee as a reference point, providing different address details (i.e. a PO Box leased using false ID) and a different false street address;
  • At the same time register the ABN for GST reporting monthly;
  • Provide a bank account BSB and Account number taken out using the false identity;
  • Submit a Business Activity Statement on a monthly basis showing figures and refund due, say between $5,000 & $10,000.
  • They could register say 20 ABNs, but they would have the information to register over 3,000 of them. 20 ABNs returning at a minimum $5,000 each = $100,000 per month stolen from the revenue.
  • Once these ABNs go sour for whatever reason, they just move on to the next 20 and so on.

Over to you Mr Commissioner.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey