A TikTok scam has tried to hit the Australian government for almost $5billion after  users latched onto a way of milking taxpayers out of millions via a GST fraud.

Bikies, youth crime gangs and social media users all piled onto the fake company racket after details went viral on TikTok.

They fleeced more than $1.6billion out of government coffers before the alert was sounded and the Australian Tax Office clamped down.

Some tried to rip off more than $100,000 in a single fake GST claim, with the average offender total rising from an initial $20,000 to its current level of $80,000.

More than 100 people have now been charged and another 56,000 issued with compliance notices under Operation Protego which launched in April last year. 

‘This was an unprecedented threat proliferated via social media,’ the ATO admitted to Daily Mail Australia. 

A TikTok scam has tried to hit the Australian government for almost $5billion after users latched onto a way of milking taxpayers out of millions via a GST fraud

A TikTok scam has tried to hit the Australian government for almost $5billion after users latched onto a way of milking taxpayers out of millions via a GST fraud

A TikTok scam has tried to hit the Australian government for almost $5billion after users latched onto a way of milking taxpayers out of millions via a GST fraud

Bikies gangsters, youth crime gangs and social media users all piled onto the fake company racket after details went viral on TikTok (pictured, armed police stand guard after an ATO raid)

Bikies gangsters, youth crime gangs and social media users all piled onto the fake company racket after details went viral on TikTok (pictured, armed police stand guard after an ATO raid)

Bikies gangsters, youth crime gangs and social media users all piled onto the fake company racket after details went viral on TikTok (pictured, armed police stand guard after an ATO raid)

The Australian Tax Office said the cost to taxpayers has soared since the probe began and they are now chasing $1.9billion to be repaid to the government, including penalties and interest.

Investigators managed to block another $2.7billion of additional fake claims, but the ATO is braced for even more to try to sneak through further false invoices.

The rort is remarkably simple to stage but has serious consequences for those caught defrauding the system, with several already jailed for their fake claims.

It spread quickly on TikTok as a viral ‘government loan’ free-money hack and involved applying for an Australian business number and registering for GST.

The crooks would then simply falsely claim they had spent huge sums on equipment and supplies for their business, and then claim 10 per cent of the total back as GST.

The tax office would then pay out the GST ‘expense’ to company, expecting to recoup the cash from the GST on the turnover of the business making the claim.

But many of those making the fake claims were unemployed or didn’t actually run any kind of business, meaning the ATO never got its cash back.

The government website warns users applying for an ABN: ‘Not everyone is entitled to an ABN. 

‘You may face prosecution or criminal charges if you apply for an ABN, register for GST and claim GST refunds when you’re not entitled.’

The warning didn’t stop thousands from trying, mainly in Sydney’s west after the con went viral in 2021 when the hack spread on TikTok and among bikie gang members.

One TikTok user, Jitsycat, (pictured) warned others of the dangers of trying the GST scam

One TikTok user, Jitsycat, (pictured) warned others of the dangers of trying the GST scam

One TikTok user, Jitsycat, (pictured) warned others of the dangers of trying the GST scam

Other TikTok users have now recorded videos warning people not to get involved in the scam, with one cautioning: ‘I thought this was fairly self-explanatory…

‘But GST fraud is illegal, regardless of what people say on TikTok. This is not a money hack, this is tax fraud. You cannot do that.

‘I’m really confused about how this whole thing has come about but I guess we will see more. 

‘There are actually ATO raids which is a pretty big deal. The ATO actually has a lot of powers which a lot of people don’t know. 

‘GST fraud? No, no – you can’t do that. You’ll go to jail.’ 

Banks say they warned the ATO in 2020, according to the AFR,  but the concerns were ignored and thousands of fake claims flooded in, with $1.6billion paid out.

The crooks are also being chased for another $300million in additional penalties and interest on the unpaid tax, say the ATO.

The banks say they tried to take their own action and froze the accounts of customers suspected of making the false claims.

They told the AFR they took action after seeing customers on welfare suddenly being paid huge sums by the tax office – but allegedly got no reaction from the ATO when they tried to alert them.

‘We notified the ATO, and they didn’t want anything to do with it,’ a bank executive told an adviser, reported the AFR.

The ATO hit back at the claims on Monday, telling Daily Mail Australia: ‘We took immediate action. 

Crooks fleeced more than $1.6billion out of government coffers before the alert was sounded and the Australian Tax Office clamped down in a series of raids and arrests (pictured)

Crooks fleeced more than $1.6billion out of government coffers before the alert was sounded and the Australian Tax Office clamped down in a series of raids and arrests (pictured)

Crooks fleeced more than $1.6billion out of government coffers before the alert was sounded and the Australian Tax Office clamped down in a series of raids and arrests (pictured)

More than 100 people have now been charged and another 56,000 issued with compliance notices under Operation Protego which launched in April last year

More than 100 people have now been charged and another 56,000 issued with compliance notices under Operation Protego which launched in April last year

More than 100 people have now been charged and another 56,000 issued with compliance notices under Operation Protego which launched in April last year

Investigators managed to block another $2.7billion of additional fake claims, but the ATO is braced for even more to try to sneak through further false invoices

Investigators managed to block another $2.7billion of additional fake claims, but the ATO is braced for even more to try to sneak through further false invoices

Investigators managed to block another $2.7billion of additional fake claims, but the ATO is braced for even more to try to sneak through further false invoices

‘We became aware of an increase in referrals from banks in late 2021 which escalated in early 2022. 

‘As a result, we have prioritised and taken compliance action against more than 56,000 perpetrators,’ said an ATO spokesman.

‘Working with Serious Financial Crime Taskforce and law enforcement agencies, more than 100 suspected perpetrators have been arrested, including members of outlaw motorcycle gangs, organised criminal organisations, and youth crime gangs.

‘More than 10 people have already been convicted for their involvement in this activity. We continue to address this fraud with the full force of the ATO.’

The spokesman added: ‘We have stopped $2.7 billion being paid to fraudsters. 

‘We continue to pursue those who have committed this fraud and collect debts which attract penalties and interest.

‘We also continue to monitor for any tax agents facilitating clients to participate in this fraud. 

‘We expect that any tax or Business Activity Statement agent that becomes aware of a client that has participated in fraud to notify the ATO immediately.’

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