The ATO Almost Got Scammed For Millions Of Dollars, And Now They’re Trying To Get The Money Back

"It's sort of hilarious to think that our federal tax office has been handing out massive sums of money to some of the poorest and most disadvantaged people"

ATO scam

Put the words ‘the government’ and ‘fraud’ in the same sentence and no doubt plenty of things will spring to mind. It’s been a rough few years.

But this time taxpayers are happy to be on the receiving end — and they’ve received plenty.

A scam cooked up by residents from the Kimberley region of Western Australia saw the government tricked into paying tens of thousands of dollars to some of Australia’s most disadvantaged people, because apparently that’s the only way to get it done.

More than 700 people from the area lodged fraudulent tax returns this year, claiming an insane $20 million. Money was paid to 42 people before the ATO cottoned on, and now the tax office wants the cash back.

While they haven’t confirmed how much money was handed out, some people are understood to have received as much as $80,000.

And while yes, these people have essentially stolen taxpayer money by scamming the system, considering they’re from one of the most disadvantaged regions in Australia a lot of people … are kind of ok with it?

The ATO is now struggling to recover the debt, with many of the people involved living in isolated communities.

Even if they do track down those involved, there are doubts as to whether those on extremely low incomes or welfare would have the ability to repay the money.

Broome-based financial counsellor Alan Gray is pushing for the government to waive the debts.

He told the ABC most of the incorrectly paid money had already been spent on things like holidays and new cars.

“On one level it’s a very serious matter, but on another level it’s sort of hilarious to think that our federal tax office has been handing out massive sums of money to some of the poorest and most disadvantaged people on the continent,” he said.



The town of Derby, where the scam originated, is one of the most disadvantaged places in Australia.

The Kimberley region was also one of the areas where the Cashless Debit Card was rolled out in 2016, which restricted what cardholders could spend their welfare payments on.

People involved in the scam apparently realised they could get a larger payout by increasing the figure withheld by an employer on their tax return. At least one person with a very entrepreneurial spirit started charging money to show other people how to commit fraud.

However, the ATO also acknowledge that some people involved might not understand that what they were doing was incorrect, due to poor financial literacy.

The ATO is now attempting to recover the debt, but Alan said the tax office should take responsibility for allowing it to occur.

“What sort of system just hands out an $80,000 tax refund to someone who’s only ever got $15,000 a year on Centrelink payments?” he asked.

“My view is that … (the ATO) has been negligent, and they need to step-up and take responsibility for having a MyGov system that you can drive a truck through.”