Insider Tips

Taxing time: Wise up to end of financial year scammers

The only people who love this time of year are accountants - and scammers.

While you’re busy trying to get your finances for the end-of-financial year tax submission, scammers are also busy trying to persuade you to part with money.

You might get a phone call or a text message claiming to be from the Australian Taxation Office (ATO), or another official-sounding body, saying you owe the government money. They may even threaten legal action or jail if you do not act immediately.

This kind of behaviour is a sure sign that scammers are targeting you. The ATO will never threaten you.

So what are the most common scams this time of year, and how do you protect yourself from scammers?

What tax scams are going around?

The ATO has reported that in the 2022-23 year, they received nearly 20,000 tax-related scam reports. Though this is a slight decrease from the previous year, it's still a concerning number.

Here are the most common scams you need to be aware of:

Identity theft scams

One of the most prevalent scams involves identity theft. In this scheme, fraudsters manage to access your personal information and pose as you to lodge fake tax refunds with the ATO. This might sound like a plot from a Hollywood movie, but it happens more frequently in real life than you might think.

 

 

The real kicker to falling victim to this type of scam is that not only does it hit your wallet immediately - but the stolen information may be used for other criminal activities. For instance, scammers might open new bank accounts, apply for credit cards, or even commit crimes while pretending to be you. The impact of identity theft can be devastating, as one unfortunate individual, Jim, who lost $40,000 from his bank account and discovered that loans and credit cards had been taken out in his name.

ATO impersonation scams

Another common tactic used by scammers is ATO impersonation. These fraudsters will reach out to you, pretending to be representatives from the ATO. While this isn't a new trick in fact, we’ve written about this previously, scammers are getting more sophisticated in their approach. They study their targets, learning what makes people tick, and use that knowledge to deceive victims effectively.

These scammers often send emails claiming that you are owed a substantial tax refund or that you have a significant tax debt. To make their messages appear legitimate, they may include specific information about you, such as details about your business. These emails can look strikingly similar to official ATO communications, making it challenging to spot the deception.

Dodgy tax preparers

Be cautious of individuals posing as professional tax preparers, especially if they promise quick and substantial tax returns. These fraudsters know how to manipulate emotions, appealing to your desire for a fast and generous refund.

The catch here is that they may request access to your myGov account, personal information, and payment details. While it may seem harmless at first, granting them access to your sensitive data can have serious consequences, including identity theft and financial losses.

How do scammers typically reach out?

Scammers are cunning and use various tactics to reach out to potential victims. To protect yourself from falling into their traps, familiarise yourself with the common channels of communication they employ.

Let's take a look at how these tricksters typically operate:

Text messages (SMS)

One way scammers try to deceive you is through unsolicited text messages, pretending to be legitimate organisations like the ATO. They might claim that you're eligible for a tax refund or create a sense of urgency, urging you to take immediate action to avoid penalties. Remember, legitimate organisations like the ATO rarely initiate contact via text messages for tax-related matters. If you receive such messages, be cautious and verify their authenticity before responding.

Phone ​​calls

 

 

Scammers also use phone calls as a means to target individuals, often pretending to be ATO representatives. They employ various tactics to manipulate their targets, such as making threats of legal action, claiming outstanding tax debts, or promising hefty tax refunds. Their goal is to trick you into revealing personal information or making immediate payments. It's crucial to exercise caution and verify the authenticity of any unexpected phone call before sharing any sensitive information.

Emails

Email scams are quite prevalent, and scammers often send deceptive messages that appear to come from legitimate sources, including the ATO. They go to great lengths to mimic official communication, using logos, formatting, and language that closely resemble genuine correspondence. These emails may ask for personal details, prompt you to click on malicious links or contain fake attachments containing malware. To avoid falling victim to phishing attempts, carefully scrutinise emails, and be cautious about sharing personal information or clicking on links unless you're certain about the sender's legitimacy.

Social media

In this digital age, scammers have also embraced social media platforms to target individuals. They create fake profiles or pages that imitate trusted entities such as the ATO. Through direct messages or posts, they attempt to deceive users into sharing personal information or clicking on malicious links. Be extra cautious when dealing with social media accounts that claim to represent the ATO or offer tax-related services.

Common tactics used by scammers

Psychological manipulation

Scammers aren't just tech-savvy; they're also experts at psychological manipulation. They know how to exploit human emotions, leaving you vulnerable to their deceitful schemes. Here's what you need to be on the lookout for:

• • Tempting with big bonuses: These scammers know how to play with your emotions, enticing you with the promise of substantial tax refunds or bonuses. They prey on your excitement and anticipation of unexpected windfalls to lure you into their traps.
  • Urgency, fear and pressure: Scammers use high-pressure tactics, claiming immediate action is necessary to avoid severe consequences, such as legal threats. Their goal is to push you into making hasty decisions, preventing you from verifying the legitimacy of their claims.
  • Confusing instructions: To add to the confusion, scammers may demand payment for supposed tax debts through non-traditional methods, like cryptocurrency. This leaves you little chance of recovering your money. They might also provide unclear or contradictory information about your tax situation, relying on this uncertainty to deceive you into taking action.

Communication warning signs

Besides exploiting your emotions, tax scammers also use the following communication red flags:

• • Excessive unsolicited communications: If you're bombarded with emails, calls or text messages from unknown sources, especially if they claim to be from the ATO or MyGov, be cautious. Legitimate entities won't overwhelm you with constant and unsolicited messages.
  • Poor grammar or spelling errors: Official communications from reputable entities are well-written and proofread. If you notice poor grammar, spelling mistakes, or awkward phrasing, it's likely a sign of a scam.
  • Requests for personal or financial information: Be wary of any requests for sensitive information like your tax file number, bank details, or credit card information. Legitimate entities won't ask for such data over unsecured communication lines.
  • Spoofing official entities: Scammers often try to make their communications appear more legitimate by pretending to be official entities such as the ATO. They may use similar email addresses, logos or website designs. However, there may be subtle differences, some of which we’ve outlined below.

Website/email red flags

• • Dodgy-looking websites: Scammers' websites often lack the professional appearance of official government sites. Look out for poor design, low-quality images, or missing essential information.
  • URLs that differ from official government sites: Check the website URL carefully. Scammers may use URLs that resemble official government sites but have slight differences or use a different domain, like .com instead of .gov.au.
  • Absence of secure connections: Legitimate websites that handle sensitive information use secure connections. Look for "https://" at the beginning of the URL and a padlock symbol in the address bar.
  • Misspellings or domain variations: Scammers use misspellings or slight variations of official domain names to trick you. For example, they might use mygovv instead of mygov. Similarly, be cautious of email addresses with slight variations that you might miss at first glance.

How to protect yourself from tax scams

Staying safe from tax scams requires vigilance, awareness and proactive measures.

Stay one step ahead of scammers by following these essential steps:

Stay informed

Keep yourself updated about the latest scam techniques. Scammers are always evolving, so it's important to stay ahead. Share any new information with your friends, family, and colleagues to help them stay safe, too.

Verify the legitimacy of all communication - always

Whether it's an email, text message, phone call, or even a letter, always take a moment to confirm its authenticity before responding or taking any action – no matter who it’s from.

If a communication claims to be from a government body such as the ATO or MyGov, or your bank or other service providers, don't rely on the contact details provided in the message, especially if they’re asking for personal details. Instead, look up the official contact details independently and use them to verify the communication.

 

 

For emails, check the sender's address carefully, not just the sender's name. Look for subtle differences that might indicate it's a scam, such as additional letters or numbers or a different domain.

For phone calls, don't trust the caller ID, as scammers can easily spoof this. If you're unsure about a call, hang up and call back using the official contact number.

Secure your personal information

Be cautious about sharing your personal information and question why someone may need it. Avoid sharing sensitive details on social media platforms, as scammers often use these platforms to harvest personal data. Check your privacy settings to ensure you're sharing information only with trusted individuals.

Secure storage

Safeguard your physical documents like tax returns and bank statements by keeping them in a secure place. Shred these documents before disposing of them when you no longer need them. For digital copies, use trustworthy cloud storage with strong, unique passwords and enable two-factor authentication (2FA) where possible for added security. This adds an extra layer of security to your accounts.

Wipe data from stolen devices

In the unfortunate event that your device gets stolen, it's crucial to protect your personal information.

Here's what you can do to safeguard your information:

• • Use remote wipe features: Most modern devices have a feature that allows you to remotely erase all data if the device is lost or stolen. For example, Apple devices have Find My iPhone, Android devices have Find My Device, and Windows laptops have Find My service. These services must be set up in advance, so make sure you enable them on all your devices.
  • Change your passwords: As soon as you realise your device is missing, change the passwords for all accounts that you accessed from the device. This includes email accounts, social media, online banking and any other services that contain personal information.
  • Alert your bank and other service providers: If your device contains information about your bank accounts or other sensitive services, let these providers know that your device has been stolen. They can monitor your accounts for suspicious activity and take additional security measures if necessary.
  • Monitor your accounts: Keep a close eye on your bank accounts, credit card statements and any other financial accounts for signs of fraudulent activity. If you see anything suspicious, report it to the provider immediately.

Where to report tax scams

ATO

If you receive a scam communication claiming to be from the ATO, or if you fall victim to a tax scam, report it to the ATO. You can do this by calling them on 1800 008 540 or by emailing [email protected].

Scamwatch and other relevant organisations

Scamwatch, run by the Australian Competition and Consumer Commission (ACCC), provides information to consumers and small businesses about how to recognise, avoid, and report scams. You can report a scam to Scamwatch through their website.

Australian Cyber Security Centre (ACSC)

If you've been the victim of a cybercrime, such as an online scam or hacking incident, you can report it to the ACSC via their ReportCyber tool.

When you receive threatening calls or texts, it's natural for your heart rate to rise, but it's crucial not to act impulsively. Scammers thrive on pushing you into quick decisions. Instead, take a deep breath and give yourself time to calm down. Then, call the proper authorities to verify the information you received. More often than not, it's likely to be false. The next step is to report the scam to the relevant authorities. And, of course, if you need assistance, contact us and we will help you handle it.