“Brazen fraud”: Melbourne businessman sentenced to four years jail over $1 million in GST refunds to ATO


A Melbourne man has been sentenced to four years in jail by the County Court of Victoria after being found guilty of committing more than $1 million in tax fraud through false GST refund claims.

The small business owner was alleged to have lodged 74 business activity statements between 2009 and 2015 that fraudulently claimed $1.084 million in GST refunds.

The Australian Taxation Office (ATO) said the company, Hey Man Transport, appeared to have no commercial business activity, despite claiming refunds that would have required it to have spent at least $11.9 million on goods and services.

Hey Man Transport was placed into liquidation in 2016.

The ATO audited the business in 2015, finding the business owner’s GST claims grew to $19,000 a month at their highest point in that year. The court found these claims to be fraudulent.

Deputy Commissioner Will Day characterised the case as “brazen fraud” against the tax system.

“This wasn’t an honest mistake by a small business owner trying to do the right thing — it was a calculated and deliberate attempt to commit fraud and steal money from taxpayers,” Day said in a statement.

“We welcome the jail sentence handed down and the warning it sends to others considering engaging in similar behaviour If you break the law we will hold you accountable, even if it means pursuing you in the courts.”

ATO will follow the law “to the letter”

Speaking to SmartCompany, Lisa Greig, founder of tax and business advice service Perigee Advisers, said while the ATO was pursuing what it believes was deliberate fraud, businesses that accidentally break the rules can also land themselves in hot water.

“The ATO are a lot more aggressive, or a lot more to the letter of the law, with GST than with income tax,” Greig says.

“With GST, its the government’s money, we’re just tax collecting.”

Greig believes most small business owners try to do the right thing, but accounting for GST properly can be confusing, particularly when legislation changes, such as a recent move to remove sales tax on sanitary products.

As a result, she says there are a lot of business owners not properly reporting GST who are liable to be penalised by the ATO.

“People will keep doing it until there’s some sort of corrective action has taken place.

“People say: ‘I’ve always done it this way so that’s how I do it’, [and] that’s where the mistakes will be,” Greig says.

The ATO has an online guide for small businesses looking to pay GST, which can be accessed here.

NOW READ: Hundreds of ATO agents raid tax agents in Victoria over alleged phoenix activity

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