ATO Warning: GST Refund Scams Targeting Small Businesses

The ATO has issued a new taxpayer alert warning businesses to be cautious of schemes designed to exploit the GST system. These scams often involve false invoices or inflated purchase claims that are used to generate illegitimate GST refunds.

At first glance, such arrangements may appear attractive, but the consequences are severe. The ATO is clear: there is no entitlement to a GST credit if a genuine taxable supply has not occurred or payment has not been made. Businesses involved in these schemes can face large tax debts, penalties, and even criminal charges.

Key warning signs include:

- Being encouraged to overstate the value of purchases

- Receiving invoices for goods or services that were never provided

- Promises of guaranteed GST refunds without legitimate business activity

For SMEs, the lesson is simple: if something looks too good to be true, it almost certainly is. Always verify invoices, ensure purchases are genuine, and work only with trusted suppliers.

The ATO is actively pursuing these schemes and will refer promoters to regulators. Protecting your business from involvement is critical to avoid financial and reputational damage.

At Lockwood & Ward, we help SMEs stay compliant and identify risks in GST reporting.

Contact Lockwood & Ward on (02) 9299 7044 or stop by Level 9, 50 Clarence Street, Sydney NSW 2000.