Numbers just out from the Australian Taxation Office (ATO) may help to demonstrate the prevalence of identity theft attempts in Australia, and show the valuable commodity that personal information has become. Personal information in the wrong hands can be used to steal your tax refund, rob your bank accounts, leave you in debt, and threaten the next 5 years of your life through bad credit history.

By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and

The ATO has confirmed 23,300 Australians had their tax file number compromised in the 2012 financial year.

This is up from 22,000 the previous year.

CPA Australia head of taxation Paul Drum has said the delay in many tax refunds has been due to manual checking of the validity of the refund – and he revealed it is “quite often showing up as identity fraud.”

The ATO told the Herald Sun it was working hard to combat identity theft, including information matching tools, data mining techniques and fraud models to detect potential fraud and limit the potential benefits of identity takeover.

This type of personal information is being sought out by criminals often via online methods as a less risky route to stealing money than more traditional face-to-face methods. Theft of personal information can lead to tax fraud, and it can also lead to credit fraud, as reported in the Herald Sun:

“A stolen tax file number can be used to lodge fraudulent tax returns or take out credit cards and loans, with the resulting credit rating damage sometimes taking years to fix,” it was reported.

CPA’S Mr Drum offers an explanation as to the cause of the rise in numbers:

“The fact that it’s so prevalent, it would seem to be more internet-based than something that’s physically done by going door to door, getting people’s private records from their mailboxes or from business offices or that type of thing,” Mr Drum said.

“We think a lot of it is by computer hacking over the internet – that people are tricked into providing them when they didn’t have to provide them.”

Recently we published a post warning readers about the threat of tax fraud ‘Is Your Tax Refund Safe? Identity Theft Warning for Taxpayers’. We addressed this issue, and featured some expert opinion as to who was getting this information and how. The ATO warned that a prevalent scam designed to catch personal information was via fake job ads.

The fake employer requires the applicant to lodge their tax file number either during the initial application or once an offer of employment is made –that is later withdrawn. The scam is cleverly designed to pilfer the personal information of applicants, including the applicant’s tax file number for purposes of fraud.

They also say sometimes rogue tax agents are involved in tax fraud.

But Brett Warfield, a forensic accountant and fraud specialist at Warfield & Associates, said the biggest threat comes from organised crime groups lifting wholesale identity and salary information on employees from private firms or government bodies, either by hacking into company databases or convincing insiders to leak it.

He told Ninemsn they then use this pilfered data to lodge hundreds of forged submissions with the ATO.

“They tend to submit the tax returns fairly quickly after the end of June to beat the real taxpayer,” said Mr Warfield.

He added that crime gangs still have to outsmart the ATO’s sophisticated fraud risk filters, which cross-check claims against data such as previous entries on income and expenses, mailing addresses and bank account details for wiring refunds.

Ninemsn attempted to use freedom-of-information laws to find out how many such fraudulent returns the ATO fails to intercept, but it admitted it does not measure or even estimate its losses.

In the meantime, it is our understanding that this type of crime is on the rise. In this digital age access to our own information (and to others in the process) becomes easier, and interaction with companies which hold our information and/or use it, become less personal. In this digital age it is how we appear on paper (or rather ‘online’) through our credit ‘score’ or ‘rating’ that means doors either open or close for us in financial circles. Business is not done on a hand shake any more. Seldom does anyone give their ‘word’ and that is enough. So we are vehement with educating people about how their personal information can be compromised, and impact their credit rating. This is a big threat to our credit health – and important to understand and prevent.

If yourself, or someone you know has been a victim of tax fraud, or any other type of scam or fraud, it is important that you manage the risk to your credit file:

What can I do if I suspect I am a victim of identity theft?

1. Notify Police immediately. Many people do nothing due to embarrassment, or because they don’t believe the fraud was significant enough. But is only through this crime getting reported that statistics get collated, and we start to have any chance of catching the criminals.

2. Notify creditors. You may need to cancel credit accounts.

3. Obtain a credit report. This report is free once per year for every Australian who holds a credit file. It will indicate to you whether any of your contact details have changed, or whether there have been credit enquiries on your account. If you act quickly enough, you may be able to stop your credit rating from being affected by black marks which would come from fraudsters obtaining credit in your name.

4. Notify credit reporting agencies of the possible fraud. This may help to prevent any attempts to misuse your good credit rating.

5. Police may assist you in obtaining a Victims of Commonwealth Identity Crime Certificate, if they believe you are eligible. You can apply to a magistrate in your State for this certificate, which may help in recovering your credit rating or credit accounts. Victims need to have had a Commonwealth Indictable Offence committed against them. For more information, visit the Attorney-General’s website

For help in recovering your credit rating following identity theft, contact a Credit Repair Advisor on 1300 667 218 or visit the MyCRA Credit Rating Repairs main site

Image: Grant Cochrane/