With the festive season fast approaching, scam activity is on the rise. Here are a few common ones doing the rounds and how you can keep yourself safe.
Hello? This is the ATO…
People are receiving calls from fraudsters claiming to be from the Australian Taxation Office, stating that they have not paid enough tax – or that they are behind in their tax payments – and that they will now be arrested for tax evasion.
If you fall for the initial part of the scam, you may then receive a telephone call that displays a cloned local police station number such as Fremantle Police 9430 1000, Cockburn Police 6174 9666, Perth Police 9422 7111, Midland Police 9250 0333, etc. The scammers will then state they are a Police Officer from that station and confirm that there is a warrant for your arrest and that you must comply with the ATO directions and make payment immediately. You may then receive a third telephone call from the scammer who now requests payment through the purchase of Bitcoin or gift cards such as Woolworths, Coles, iTunes, Google Play, etc.
Government Departments will never cold call you and make demands for payment, and especially NOT through the purchase of gift cards.
Do not become a gift card scam victim. Never give out your personal details to unsolicited callers, simply hang up the phone and block the number. Importantly, be sure to tell a person you trust about what has happened or contact us for advice. Scammers depend on people being too scared or embarrassed to speak about their experiences.
Since travel has been off the cards for many of us this year, more people have been investing in doing up their homes and gardens. Unfortunately, scammers have been paying attention.
ABC News recently published this article that goes in depth about the “man-in-the-middle” scam affecting tradespeople and how easily people can be conned. The crux of the issue centres on emails to customers from genuine suppliers being intercepted by third parties who then alter bank account details so that the customer transfers payment into the wrong account. The emails will demonstrate a knowledge of the work that has been performed and will look perfectly normal to the unsuspecting customer. It is only after payment has been made and some time passes that the supplier will not have received payment and the customer will be alerted to the fact that a crime has occurred. “To avoid falling victim to invoice hacking scams, consumers should call the supplier to confirm the correct account details before transferring large amounts of money, especially if they have received an email from the supplier saying their account details have changed,” AFCA lead ombudsman banking and finance, Evelyn Halls, said in a statement.
Be safe: ask questions and confirm details verbally before making electronic payments based on details provided to you via email, and especially where large sums of money are concerned. We also suggest paying by credit card where possible as credit providers have excellent fraud detection systems and recovery procedures in place.
Nigerian scams involve someone located overseas offering you a share in a large sum of money or some type of payment on the basis that you help them to transfer money out of their country. While these scams originated in Nigeria, they now come from all over the world.
The scammer will make contact with you via email, letter, text message or through social media, completely unsolicited. They will tell you an elaborate story about funds trapped in banks during events such as civil wars or coups, often in countries currently in the news. They may tell you that you’re a descendant of a relative who passed away without a direct beneficiary and that you are now set to receive a large inheritance that is unfortunately “difficult to access” due to government restrictions or taxes in their country. You will then be offered a significant amount of money to help facilitate a transfer of funds out of the country.
Sometimes, you may receive what looks like a credible request for a friend or associate via Facebook Messenger or similar, explaining that they’re trapped overseas without access to any money. Your “friend” will then request that you urgently wire them funds and may ask that you don’t tell anyone about the situation so as not to worry others.
Nigerian scams are often connected with “catfishing” or dating and romance scams, whereby fraudsters take advantage of people looking for romantic partners on dating websites, apps or social media by pretending to be prospective companions. They play on a person’s emotional triggers to get them to provide money, gifts or identity information.
We have had first-hand experience working with clients who have been the victim of Nigerian scams as a result of their earnest desire to find a life partner. The aftermath that follows is truly devastating for the persons concerned and oftentimes financially crippling. Once money is gone, it’s often unrecoverable! Again, we urge you to speak to someone you trust about what’s happening in your life and particularly if you have any inkling that a person you recently met may not be who they claim to be, or if the story they’re telling you doesn’t seem to quite add up. It is far better to be safe and possibly temporarily embarrassed, than sorry and significantly out of pocket.
A further extension on the topic of Nigerian scams includes phishing emails that look to be from PayPal, Western Union, Netflix or a bank, or messages through Gumtree or Facebook Marketplace, asking that you transfer money to help facilitate the sale of goods.
Be wary of clicking on links in emails that ask you to confirm your personal details, and don’t answer telephone calls from private numbers. If the call is legitimate, the person or organisation will leave you a voicemail message or follow up with you via letter, email or SMS.
You’ve just won $1 million!
Sorry, no. You haven’t.
ANZ Bank has put together some excellent information covering off competition scams, which you can read about here. There are a number of things to look at when you receive emails, including:
- The sender’s email address, URL and/or phone number;
- The font or design, particularly if the quality seems off;
- Spelling and/or grammar. Multiple basic errors are a sign that something is not right;
- The type of message you receive might not be the sort you are used to getting;
- They’re asking for information you don’t usually provide; and
- You don’t remember entering the competition or requesting communication from this person/supplier/entity.
The list goes on…
Unfortunately, there are more types of scams out there and we could go on, but we’ll leave it here for now. We highly recommend that you visit the Australian Competition & Consumer Commission’s (ACCC) Scamwatch website for more information, and share this information with your loved ones. You never know who might find it helpful.
We also recommend that you access a free copy of your credit report each year, as some scammers take identity information you share online and use it to accrue debts and obligations in your name. The Australian Government’s moneysmart website lists a number of reputable credit report providers, and details what to do if you find errors or anomalies in your report.
Have you been scammed?
If you think you have provided your account details, passport, tax file number, licence, Medicare or other personal identification details to a scammer, please contact your bank, financial institution, or other relevant agencies and providers immediately.
You can also contact iDcare, which is a free government-funded service that will work with you to develop a specific response plan to your situation and support you through the process. Visit the iDcare website or call 1300 IDCARE (432273), or use their free Cyber First Aid Kit.
Please also help to keep people safe by reporting scams to the ACCC via the report a scam page.
ASKED AND ANSWERED
Granny Flats and Tax
Question: We carry on a business using a trust structure and have some temporary workers staying in our granny flat. We pay contract cleaners to clean the granny flat once a fortnight. Can our business claim the cleaning expenses without any Fringe Benefits Tax (FBT) implications? Is the GST paid on the cleaning invoices claimable?
Answer: The trust should be able to claim a deduction for the cleaning expenses if it relates to workers who are engaged in the trust’s business activities. The provision of cleaning services is likely to be classified as a fringe benefit, however, if the workers are employees of the trust (as opposed to genuine independent contractors) and the cleaning occurs while the workers are still living in the granny flat.
It may be possible to apply the minor benefit exemption if the cleaning services are valued at less than $300 per employee and are provided on an infrequent and irregular basis, however, as the cleaning is occurring fortnightly, the exemption would not apply in this case.
If the cleaning is carried out after the workers have vacated the granny flat, it is unlikely to trigger FBT.
It’s important to note that the provision of accommodation to the workers can also trigger an FBT liability, even if the property is owned by an entity other than the trust. If the workers are merely travelling in the course of their employment, it may be possible to apply the otherwise deductible rule to reduce the taxable value of the benefit. If the workers are living away from home then it will only be possible to reduce the taxable value of the benefit provided if the conditions for living away from home allowances are satisfied (ie, the workers are maintaining a normal home in Australia which they are required to live away from).
As far as the GST goes, if your trust is registered for GST, then GST can be claimed on the cleaning costs if the cleaners themselves were GST registered and provide you with a valid tax invoice.
Question: I have a granny flat on the same block as my main residence that my father occupied for many years. When my father moved out, I decided to use the granny flat as the office for my plumbing business.
What expenses can I claim? What is the CGT impact?
Answer: While your father uses the granny flat it could potentially be considered part of the main residence under section 118-115 if your family use both buildings as if they were a single dwelling (refer to TD 1999/69).
Once the granny flat starts to be used for a separate purpose as a place of business, the occupancy and running costs in relation to the granny flat should be deductible.
If the whole property is disposed of in the future, then the portion of the property which had been used as a place of business would not generally qualify for the main residence exemption.
It would be necessary to consider whether section 118-192 would apply to reset the cost base of the property and whether the CGT discount and small business CGT concessions can apply.
Question: I am thinking of renting out my granny flat via Airbnb. What should I know in terms of the tax consequences?
Answer: When a taxpayer rents out all or part of their main residence – or in this situation, a granny flat that may or may not be considered part of the one dwelling – either directly through a real estate agent or a website or app like Airbnb or Stayz, then they would have to recognise the gross income and related expenses resulting from the activity. The platform that the taxpayer uses to rent out the property doesn’t really change the tax treatment. Rather, it is the impact of the rental arrangement that would trigger the tax obligations, not the scale or source of tenants.
Assuming that the arrangement constitutes a rental situation rather than payments simply being made for board and lodging, then the rent is assessable to the owner regardless of the platform used to find the tenants. Deductions can accordingly be claimed for expenses incurred in deriving the income with full deductions generally available if the rental arrangement is “arm’s length” in nature.
If a taxpayer is only renting out part of their home then a deduction can only be claimed for the expenses relating to that portion of the home. A reasonable apportionment needs to be undertaken for expenses that relate to the property as a whole. The ATO’s guidance in this area states that you generally need to apportion expenses based on the floor area solely occupied by the renter and then add that to a reasonable amount based on the renter’s access to common areas.
As always, regardless of if or how you choose to proceed, we recommend seeking professional advice tailored to your unique circumstances, and keeping good records to substantiate your income and expenses.