Reducing the risk of refund fraud

July 8, 2014

123rf - refund fraudRefund fraud occurs when people deliberately falsify tax returns, activity statements and other documents to claim refunds, rebates or offsets from the ATO that they are not entitled to.

These fraudulent claims can be lodged by individuals on their own account or third parties on behalf of others. Often, this can also involve identity crime, where taxpayer identities are used by third parties to make fraudulent claims for personal gain.

Some examples of refund fraud are:

• deliberately over-claiming deductions, offsets, or expenses by providing false or misleading information
• understating income and/or providing fictitious payment summary details
• providing false information in a business activity statement
• making claims through fraudulent registrations or using false or stolen identities

The ATO have a range of controls and systems in place to detect potential refund fraud, these include:

• models to analyse information on income tax returns, business activity statements and other tax forms lodged
• sharing data and intelligence with their partner agencies
• obtaining information about suspected fraud from the community and other government agencies

Businesses can reduce the risk of refund fraud via a third party by ensuring that their private records and internal systems are kept safe and secure. Businesses should also ensure that they have appropriate procedures and security controls in place and that all employees are aware of their responsibilities.

As a minimum, it is recommended that businesses regularly change all passwords, remove user access, encrypt computer files where possible and change shared passwords immediately when an employee leaves.

Computers should also have up-to-date security software. This should include antivirus, anti-spyware, anti-spam and firewall security which will protect the computer from malicious programs.

Businesses should also protect the security of their premises, this can involve:

• installing appropriate physical barriers such as door and window locks, alarm systems and lockable storage
• removing documents from printers and turning off fax machines at close of business
• securing files when they are not in use
• restricting employee access to areas where files are stored.

Our accountants are at hand to deal with any questions you may have regarding this article.
Call (02) 4926 2300 or email us.


Refund fraud is a serious matter. If you would like to discuss reducing the risk of refund fraud further then call Leenane Templeton TODAY!

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