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Media reports of an alleged ‘false mining operation’ involving large claims for GST and R&D Tax Offset reviews

One of the major national newspapers has this week posted an article about a private group alleged to have operated a ‘false mining operation’ that led to the generation of substantial refunds for GST and Refundable R&D Tax Offset credits.

Swanson Reed does not know specifics of this case other than what has been reported in the media and in the Federal Court’s published freezing and ancillary orders.

The Federal Court order notes:

• “The Companies collectively claimed and received GST refunds and R&D offsets totalling about $76 million between 2018 and 2022.
•  The Companies retained and used some of the amounts they received, and transferred the remainder to the first respondent (about $22 million); the third respondent (about $3 million); the fourth respondent (about $18 million); and the fifth respondent (about $2 million)
• After conducting an audit, the Commissioner, determined that:
  • (a)    there was no evidence to support the claims that the Companies were carrying on any businesses of the nature claimed, or that they made the acquisitions claimed;
  • (b)    the Companies were not carrying on any enterprise in the period for which they had claimed the tax credits; and
  • (c)    the Companies were not entitled to be registered for GST or to claim the input tax credits claimed.
•  The Commissioner issued amended notices of assessment to each of the Companies and imposed administrative penalties. The Commissioner alleges that the Companies collectively owe a debt of approximately $172 million under the amended notices of assessment. The Commissioner alleges that the second respondent owes a debt of approximately $37 million under director penalty notices issued to him.
• I am satisfied that the Commissioner’s evidence demonstrates a good arguable case for final relief against each of the respondents.
• That evidence includes the Commissioner’s assessment that the Companies made false claims in respect of GST refunds and R&D offsets.”

Swanson Reed supports and appreciates the work undertaken by the ATO in seeking to uphold the integrity of the R&D Tax Incentive.

Parties involved in making knowingly false or fraudulent R&D Claims should be subject to the full force of law in denying or recovering R&D Tax offsets and associated penalties.