Gold scam costing taxpayers

The Australian Taxation Office is trying to stamp out criminal syndicates defrauding GST in a gold scam reportedly costing taxpayers at least $610 million in lost revenue.

The so-called "carousel" scam involves a criminal buying GST-free pure gold from a bullion house with the intention of breaking it up and selling it on to a gold refiner, The Australian reported on Tuesday.

Because pure gold is treated as currency it cannot be sold with the addition of GST.

The scammer takes the gold bullion and breaks it down into another form, such as jewellery or scrap.

Given the gold is no longer considered bullion, the refiner must pay GST to the criminal, meaning the gold now attracts a 10 per cent premium.

After selling to the refiner, the criminal pockets the GST payment rather than remitting it to the ATO as required.

The ATO has told The Australian it had recovered $55 million of the $610 million in GST fraud identified since 2013, with another $318 million currently in litigation.

The Australian said tax officials had referred one brief of evidence to commonwealth prosecutors, who are considering criminal charges, while another case is being investigated by the Serious Financial Crime Taskforce.

The tax office is withholding $18.6 million in GST refunds to gold refiners, which critics say unfairly penalises legitimate operators.