ATO’s approach to fraud and corruption

Preventing, detecting and responding to fraud and corruption is a critical part of the work of the Australian Taxation Organisation (ATO).

In its Fraud and Corruption Control Plan (the Plan), the ATO outlines its “zero tolerance” approach to these crimes, stating that it will prosecute offenders, recover debts and take criminal actions as appropriate.

 

Relevant legislation

The Plan provides an overview of how fraud and corruption risks will be managed and ensures compliance with the requirements of:

  • Section 10 of the Public Governance, Performance and Accountability Rule 2014, and
  • The Commonwealth Fraud Control Framework 2017.

 

What is fraud?

The Commonwealth Fraud Control Framework 2017 defines fraud as “dishonestly obtaining a benefit or causing a loss by deception or other means”. Examples include:

  • Failing to declare income.
  • Providing a false payment summary.
  • Claiming a deduction to which you are not entitled.
  • Lodging a false business activity statement.
  • Identity crime enabled fraud.
  • Failing to remit PAYGW and/or superannuation guarantee.

This type of fraud is classified as external fraud, as it is committed by taxpayers and other third parties.

The Plan also targets internal fraud committed by employees or contractors of the ATO, such as accessing and disclosing taxpayer information without authorisation, and using ATO assets for personal benefit.

 

What is corruption?

The ATO defines corruption as “the dishonest or biased exercise of Commonwealth public official functions”.

In the context of potential corruption within the ATO, this could include biased tax-related decision making by ATO officials that leads to personal gain or facilitates fraud.

 

Key ATO responsibilities

The ATO appoints key positions and organisational bodies to play specific roles in combating fraud and corruption. These include:

  • Commissioner of Taxation – the accountable authority responsible for taking all reasonable measures to prevent, detect and deal with fraud relating to the ATO.
  • Audit and Risk Committee – oversees the development and implementation of the Plan and provides independent advice to the Commissioner of Taxation.
  • Enterprise Risk Management Committee – considers emerging risks relating to fraud and corruption.
  • Deputy Commissioner Integrated Compliance – supports the combating of external fraud and corruption, cyber enabled identity crime, illegal phoenix activity and offshore tax evasion.
  • Integrated Compliance – responds to serious tax evasion and crime and provides the ATO’s investigative and prosecutorial capability.

A number of key positions and strategy groups are also dedicated to fighting serious financial crime, and internal fraud and corruption.

 

Key risks and threats

 

Insider threat

A trusted insider can intentionally or unknowingly facilitate parties conducting malicious acts against the ATO. This presents a significant risk factor in both internal and external fraud and corruption.

 

Internal

A number of issues such as an increasingly mobile workforce and cross-government data integration pose internal fraud risks.

 

External

External risks range from individuals overclaiming on expenses to international organised crime groups committing multi-million dollar frauds.

Read more about the ATO’s approach to tax crime.

 

Fraud and corruption control framework

The ATO fraud and corruption control framework consists of the stages of prevention, detection and response.

 

Prevention

Prevention strategies are the first line of defence and include proactive measures designed to help reduce the risk of fraud and corruption occurring. These strategies include:

  • Development and implementation of the Fraud and Corruption Control Plan.
  • Education and training.
  • Risk assessments.

 

Detection

The ATO’s fraud and corruption detection activity is based on:

  • System monitoring and scanning.
  • Internal and external audits.
  • Confidential reporting systems.
  • Support of whistleblowers.
  • Analysis of referrals to identify possible trends.
  • Intelligence sharing across law enforcement agencies and international jurisdictions.

 

Response

The ATO’s response activity includes:

  • Assessment of reports and allegations.
  • Pursuing disciplinary, administrative, civil or criminal actions.
  • Pursuing the recovery of fraudulently or criminally obtained benefits.
  • Undertaking investigations.
  • Joint investigations with other law enforcement agencies and referral to the AFP where necessary.

 

Conclusion

The ATO’s responsibilities include preventing, detecting and responding to fraud and corruption. Its Fraud and Corruption Control Plan outlines key responsibilities within the ATO for combating both internal and external fraud and corruption, and the tough response measures that can be drawn on including taking criminal actions against offenders.

Nyman Gibson Miralis provides expert advice and representation in cases involving fraud, corruption and tax crime.

Contact us if you require assistance.