Shocking $40M GST Fraud Exposed: How One Business Scammed the System


GST fraud has become a heated topic of discussion within the accounting community. Recently, I stumbled upon an intriguing story that shed light on a rather simple yet cunning scheme. This particular business was involved in the purchase of gold bullion, which they would then scrap and sell. However, a twist to their operation ultimately led to their downfall.

The Pitfall of Input Tax Supply

In this case, the business was purchasing gold bullion, which falls under the category of an input tax supply. What this means is that there are no GST credits available on the expenses incurred. This might seem like a disadvantage, but the business had a clever plan up their sleeve.

The Deceptive Game

After acquiring the gold, the business would proceed to scrap it and then sell the resulting scrap gold. Here’s where the trouble began. The sale of scrap gold attracts GST, meaning that the business should have paid a significant amount to the Australian Tax Office (ATO) in GST.

Fraudulent Business Activity Statements

However, what unfolded was a fraudulent scheme that involved the business preparing their business activity statements in a deceitful manner. They falsely claimed tax credits amounting to a staggering forty million dollars over several years. As a result, they managed to pay the ATO forty million dollars less than they should have.

The ATO’s Vigilance

Fortunately, the ATO has a dedicated task force responsible for detecting fraud within the gold industry. Thanks to their investigations, two individuals involved in this fraudulent activity were apprehended and have since been sentenced to eight years in prison each. This incident serves as a stark reminder that the ATO takes GST fraud very seriously.

The Consequences

It is crucial for business owners to be mindful when preparing their own business activity statements. Even if you engage in what may seem like a minor GST fraud, the repercussions can be severe. Apart from facing penalties and interest, your reputation may suffer irreparable damage. The consequences can be long-lasting and detrimental to your business.

Distinguishing Errors from Fraud

It’s important to note that GST errors are treated differently from GST fraud. In the event that an error is detected, there are mechanisms in place to rectify the problem without causing significant drama. Rectifying an error is much simpler and less damaging than dealing with the consequences of fraudulent activities.

Seeking Assistance

If you find yourself in need of guidance with your GST or have any questions related to your business’s financial affairs, don’t hesitate to reach out to us. We are here to help you navigate your current situation and ensure you stay on the right side of the law.


The $40M GST fraud case serves as a cautionary tale for business owners. It highlights the importance of maintaining integrity in your financial practices and the severe consequences that can arise from fraudulent activities. Stay vigilant, seek professional advice when needed, and protect your business’s reputation and future.

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