‘Gobsmacked’: How identity theft led to Protego fraud

afr.com:

The first time that Will realised he was caught up in the huge Protego GST crime wave came when he discovered his tax refund had disappeared – it went to pay out debt racked up by a fraudster in Sydney who hijacked his MyGov account for nearly $30,000.

The young Victorian IT professional’s account of how he was swept up in the $4.6 billion GST fraud promoted on social media platform TikTok gives the first inside view of how the scam that has shocked the Tax Office worked – and how difficult it is for those innocuously caught up in the fraud to clear their name.

Federal police and tax officers during an Operation Protego raid targeting GST fraud. There have been 100 arrests. 

“I was gobsmacked when I saw it,” says Will – who after the identity theft is reluctant to be named. He believes that banks caught on to the fraud well before the ATO took action.

The GST scam involves individuals requesting an Australian Business Number then claiming huge GST refunds on fictitious business expenses. It went viral from mid-2021, promoted by TikTok videos from social influencers who assured viewers that “everyone else got refunds, it’s OK, it’s just a temporary loan [from the government]” .

The ATO’s Operation Protego that launched in April last year has stopped $2.9 billion in false claims, but has minimal prospects of retrieving $1.6 billion that was paid out and another $300 million that it has charged as penalties and interest.

Will’s case is unusual because almost all of the 56,000-plus people involved in the fraud did it in their own names. His case of identity theft offers a unique window into how professional scammers game the system.

Will had filed his own tax return in July last year, when he saw a debt of $27,596 owing, but