False Invoicing is big and the ATO is onto to it.

A recent media release says the ATO leads a serious financial taskforce with the AFP in combatting a false invoicing scheme involving 1200 businesses.

Businesses are claiming a tax deduction and GST credits for a cheque payment made to the promoter who return cash less a small fee.

According to the ATO a false invoicing arrangement is a scheme where one entity issues another with an invoice, but provides no goods or services.

For example:

• An entity (the promoter) issues invoices to a legitimate business without providing any goods or services.
• The business pays the invoices by cheque or direct transfer. The promoter then pays back most of this money as cash, less an amount they keep as a commission.
• The business claims deductions and GST credits from the false invoice.
• The business uses the cash they receive, either for private purposes or to pay cash wages to workers, without reporting the amounts in their tax returns.

The ATO has identified participants and will eventually catch up with all businesses that issued false invoices by auditing these participants.

The ATO will deny all tax deductions and GST credits for taxpayers using false invoicing arrangements The ATO may also tax cash received as dividents.

The will impose large penalties and criminal prosecutions may result.

These issues need to be carefully navigated.

The best way to lessen penalties and chances of a criminal prosecution is to make an urgent voluntary disclosure.

We are currently helping clients who have been caught up in this scheme by working with the ATO to resolve any issues.  We have considerable experience in this area and excellent relations with the ATO.

If you have participated in a false GST invoicing scheme, contact us now so that we can help you.  The sooner we reach out to the ATO on your behalf the the better the result or you.