Internet fraud in action

Current as of February 2015

We had the unusual occurrence with one of our clients in the last 6 months where someone had somehow accessed some of their private details and was able to make some changes to their details with the Australian Taxation Office (ATO) and the My Gov online system. This then lead the fraudster to be able to get access to tax refunds that the client was expecting and even lodge fictitious tax returns that would give rise to dodgy refunds. This is the first time that we have heard of something like this with any of our clients so it is a good lesson to be vigilant with private information as there are people out there who make a living out of this type of fraud.

This is how we believe it happened. The fraudster somehow accessed some personal information about our client and was able to set up a fake MyGov online account (an account that is not run by the ATO but some of the contact details and bank account information can be integrated into the ATO records, especially for the part of the tax return that advises the bank account that the refund is to be banked into). This access to the myGov account (albeit a fake one) allowed them to, in the first place, lodge a fake tax return via e-tax (a form of lodgement that we, as tax agents, have no control over) with the refund going to their designated bank account and the Notice of Assessment sent to a PO Box. After the dust settled on this fraud and after we had advised both the ATO and myGov of the fake tax return we were assured that it could not be done again. Not so!

The real tax return was then lodged by us with the correct bank account details. The fraudster, who obviously still somehow had access to the myGov account changed the bank account details to their own again after the return was lodged, changed the address to a new PO Box so that the Notice of Assessment could be received, and the refund disappeared into their account. The ATO and myGov had a major embarrassment in trying to explain how the same fraud had been committed twice.

We were able to rectify the situation, after a delay of a few weeks (and a few letters and phone calls to the ATO complaints section), and the client received their refund. The Government however, would have been out of pocket to the tune of around $5,000.

Our office is not able to monitor fraudulent tax returns being lodged, by this point it is too late. We noticed that this fraudulent tax return was lodged when we began to prepare the real tax return. A fraudulent tax return could be lodged in July, with the fraudster receiving the refund then. However if your work is not scheduled until months later, we may potentially not know about the fraud until as late as May the next year when we receive your information and start your tax return.

The myGov account is a link between you and the government. It links to all Government agencies, and does not require much information to set up so fake accounts can be created with relative ease. As a suggestion, we recommend our clients set up their own myGov account, as this will help prevent fictitious accounts being created in your name.

The moral to the story, do not let anyone know any of your personal information. They may try to access it any way they can, whether it is by stealing mail or trying to extract information from you over the phone. Government agencies don’t work like this so do not give any information to anyone over the phone or to anyone unless you are sure of their relevance. The above example, one which we have never seen before in over 40 years of practice, shows that they are out there and trying to gain access to your cash.

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This newsletter has been produced by Stanley & Williamson as a service to its clients and associates. The information contained in the newsletter is of general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this newsletter, it is imperative you seek specific advice relating to your particular circumstances. Liability limited by a scheme approved under Professional Standards legislation.