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ATO blitz on $1 billion gold GST scammers

The Australian Taxation Office believes it has effectively shut down a gold-GST swindle that was costing taxpayers up to $1 billion and hurting honest gold brokers.

After an inspector-general of taxation report, the tax office said it had “got on top” of the swindle in which players sought to grab a share of GST as it is sold and bought “scrap” gold.

The scam relied on how GST is not charged on pure bullion.

Fraudsters worked out that gold bars and coins could be bought, smashed into fragments and sold on, with the GST paid by the buyer but not passed on to the tax office.

Scrap buyers then worked out they could claim a GST tax credit when buying the scrap.

The fraud cost the Government at least $860 million in forgone GST, prompting it to close the loophole via legislation last year. The tax office now believes it will recoup $1 billion in unpaid GST plus fines.

Deputy commissioner Jeremy Geale revealed yesterday that since the new laws and a ramp up in activity by the tax office there had been a major change in GST-related refunds.

Through the full 2016-17 about $225 million in refunds from the precious metal sector had been made. Through 2017-18 the tax office had raised $1 million.

“I think we’ve got on top of that particular problem,” he said.

While some businesses continue to fight for GST refunds related to their gold trading, of 20 completed cases so far none have been granted a refund.

Four are yet to be processed.

The tax office has also not been beaten in any court action taken by those upset at its stance on tax refunds linked to the precious metals sector.

The inspector-general, however, urged the tax office to move more quickly to pay refunds for those outside the precious metal sector amid claims some businesses are being pushed to the wall because of delays.

The inspector-general found delays in refunds not only hurt the finances of some business operators but also affected their physical and mental health.

The tax office has increased training to staff to ensure they take into account issues such as the economic impact of a GST refund to a business.

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