Beware of tax scams: urgent warning as EOFY approaches

As the end of the financial year (EOFY) approaches, Australians are being warned about a significant surge in tax scams.

Fraudsters are increasingly taking advantage of this busy period to prey on unsuspecting individuals, exploiting the anxiety and urgency that many people associate with tax time.

In fact, according to new research from Commonwealth Bank, one in four Australians (24 per cent) have experienced a scam related to EOFY or tax matters.

Only 5% of people experienced EOFY/tax-related scams at tax time, meaning that people are being targeted in the lead-up with fake ads and schemes designed to strip them of their cash.

Types of tax scams

Tax scams can take many forms, but they typically involve fraudsters pretending to be from the Australian Taxation Office (ATO) or other official institutions.

The common goal of these scams is to trick people into handing over money or sensitive personal information.

Here are some of the most common types of tax scams:

1. Phone Scams: Fraudsters may call victims, claiming to be from the ATO, alleging that the victim owes a tax debt and must pay immediately or face severe penalties. These calls can seem very authentic, with the scammer often providing a fake name and identification number.
2. Email Phishing Scams: These scams involve sending emails that appear to be from the ATO. The emails often contain links to fake ATO websites or forms where the victim is tricked into providing personal information or credit card details.
3. SMS Scams: These scams involve sending text messages that claim to be from the ATO. The messages often contain links that direct the recipient to a fake ATO website where they are tricked into entering their personal information.
4. Refund Scams: In these scams, fraudsters will contact the victim claiming that they are eligible for a tax refund. The scammer will then ask for personal information to 'process' the refund, but instead, they use this information for fraudulent purposes.

How to protect yourself from tax scams

With the increasing sophistication of tax scams, it is essential to remain vigilant and take steps to protect yourself:

1. Verify contact: The ATO will never threaten you with immediate arrest, demand payment through unusual methods, or request personal information via email or SMS. If you receive a suspicious call, hang up and contact the ATO directly to verify the information.
2. Don't click on links: Avoid clicking on links in emails or text messages claiming to be from the ATO. Instead, log into your official MyGov account or contact the ATO directly.
3. Protect personal information: Never provide personal information, such as your Tax File Number (TFN) or credit card details, to an unsolicited caller or in response to unsolicited emails or texts.
4. Consult a professional: If you're unsure about any tax-related communications you receive, consult a tax professional or the ATO directly.

Remember, staying informed and vigilant is the best defence against tax scams. If you suspect that you've been the target of a scam, report it to the ATO and Scamwatch to help protect others in the community.

The bottom line

Tax scams are a persistent and evolving threat, especially during the EOFY period.

By understanding the types of scams that exist and taking proactive steps to protect your information, you can significantly reduce your risk of falling victim to these malicious schemes.

Always remember that when it comes to your personal information, it's better to be safe than sorry.

About Ken Raiss Ken is director of Metropole Wealth Advisory and gives strategic expert advice to property investors, professionals and business owners. He is in a unique position to blend his skills of accounting, wealth advisory, property investing, financial planning and small business. View his articles