ATO issues warning about false invoicing arrangements

SFCT Alert: Beware of Illegal Financial Schemes

Businesses Warned Against False Invoicing Tactics to Evade Taxes and Super Obligations

The Serious Financial Crime Taskforce (‘SFCT’) is warning businesses about using illegal financial arrangements such as ‘false invoicing’ to cheat the tax and super systems.

False invoicing arrangements may consist of the following:

  • an entity (the ‘promoter’) issues invoices to a legitimate business but no goods or services are provided;
  • the business pays the invoices, by cheque or direct transfer, and the promoter returns most of the amount paid to the owners of the business as cash;
  • the promoter keeps a small amount as a commission;
  • the business then illegally claims deductions and GST input tax credits from the false invoice; and
  • the owners of the business use the cash they have received for private purposes or to pay cash wages to workers, and do not properly report the amounts in their tax returns.

The SFCT is warning businesses against using these types of arrangements, and that they “will get caught and face the full force of the law.”

Need help?

For assistance interpreting illegal financial arrangements and how they may affect your business, please contact the Omnis Group team in West Perth on 08 9380 3555.