Spotlight on ATO scams and crackdowns
This month, we explore two recent issues impacting more and more of our clients and share some advice on how you can protect yourself.
First, we reveal a sneaky ATO cybersecurity scam that has already duped Australians out of half a billion dollars. We also bring you up to speed on how the ATO is tightening up their scrutiny of tax rules for investment properties. And lastly, we explore the changes to classical computing as a new frontier emerges – quantum computing.
ATO scams rising: How to keep your data safe
If you, like many Australians, are getting spam texts or emails claiming to be from the ATO, you are not alone – and they work. The ATO pays out millions of dollars each year to increasingly sophisticated cybercriminals. Here’s what to look for.
The ATO is receiving an increasing number of reports about impersonation email and SMS scams using phrases such as ‘You are due to receive an ATO Direct refund’, ‘You need to update your details to allow your Tax return to be processed’ and ‘ATO Refund failed due to incorrect BSB/Account number’.
The government is taking steps to crack down on this fraudulent activity, and there are steps you can take to help protect yourself, too. Cyber scams are getting smarter and harder to spot, so keeping one step ahead of the hackers takes work.
According to an investigation published on the ABC, between July 2021 and February 2023, the ATO paid out more than half a billion dollars to cyber criminals who were taking advantage of a security gap in the ATO’s identity-checking system, allowing them to redirect other taxpayer’s refunds into their own bank accounts.
How does the ATO cyber scam work?
This scam involves using personal data obtained through underhand methods – such as recent high-profile security breaches at Optus, Latitude and Medibank – to alter details in someone else’s myGov account or to create a new myGov account and then linking this account to the ATO services of an existing taxpayer. This can be done because the ATO allows multiple myGov accounts to link to a single ATO taxpayer (known as ‘overlinking’).
By exploiting this weakness, cyber criminals redirect other people’s tax refunds into their bank accounts. Because most of the payments are for relatively small amounts (less than $5,000), they are not immediately detected by the ATO’s monitoring systems. Once the refund is paid, the scammer will quickly clean out the bank account so the money can’t be frozen.
What can you do to protect yourself from an attack?
Here are some steps you can take to protect yourself:
- Do NOT click on any links in emails or text messages claiming to be from the ‘ATO’, ‘Aus Gov’ or ‘Services Australia’. Although the ATO may contact you via these means, they won’t send you a link to click on. ATO’s online services should always be accessed by typing the web address (e.g. ato.gov.au) directly into your browser.
- If you receive a notification from the ATO (or similar) about changes in details, contact the ATO or Financial Decisions to determine if it is genuine. The ATO may use email or SMS to ask you to contact them, but they will never ask you to return personal information to them via these channels.
- Regularly check your details in myGov to ensure they are correct – like checking your bank account and credit cards for fraudulent transactions.
If you are unsure whether a message from the ATO is legitimate, you can call the ATO on 1800 008 540, head to Verify or report a scam on the ATO website or contact Financial Decisions, and we’d be happy to help.
What should you do if you think you have been hacked?
If you think your data has been compromised or you have clicked on a suspicious link, it is vital to act quickly. Here are some steps you should take as soon as possible:
- Contact Financial Decisions as we can contact and identify providers that need to be notified.
- Get in touch with the ATO so they can lock your account and investigate the fraud.
- Notify your bank/s and superannuation fund/s about the issue so they can apply additional protections.
- You may also be asked to notify your local police for reporting purposes.
- Check your credit report for any unknown attempts to obtain credit under your name. You can get a free credit report here: https://www.idcare.org/fact-sheets/credit-reports-australia
- Visit https://www.idcare.org/ and review their free services. ID Care is an Australia and NZ not-for-profit organisation focussed on helping those who have had their identity compromised and providing cyber support services.
Are you a landlord? The ATO is watching
If you are lucky enough to own an investment property, it could be time to double-check your tax liabilities. ATO’s current key focus areas include rental property income and deductions, so it is essential to understand what you can and can’t claim.
If you get it right the first time, not only will you receive the tax refund you are entitled to, but you’ll avoid having the ATO on your back.
The tax rules around rental properties are complex, and calculating tax deductions can be tricky. According to the ATO, 90% of tax returns that reported rental income and deductions contained at least one error.
“We often see rental income being left out, or mistakes being made with property-related deductions – like overclaiming expenses or claiming for improvements to private properties,” explains ATO Assistant Commissioner Tim Loh.
Whether it’s income from short-term rental arrangements, renting part of a home or other rental-related income like insurance payouts and rental bond money retained, you need to ensure all your rental income is included when preparing your tax return and that you are not double dipping on your deductions.
The ATO also focuses on ensuring rental property owners understand how to apportion loan interest expenses correctly when part of the loan was used for private purposes. According to Mr Loh, around 80% of taxpayers with rental income claimed a deduction for interest on their loan, and this is where they see the most significant mistakes.
“You can only claim interest on a loan used to purchase a rental property to earn rental income. If you’ve used any part of your original or refinanced investment property loan to cover private expenses, like buying a new car or renovating the home you live in, you can only claim an interest deduction for the portion relating to producing your rental income,” said Mr Loh.
Top 10 tips to avoid mistakes
To help you avoid making other common errors, the ATO has published a list of the top 10 tips to help rental property owners avoid common tax mistakes that covers the following topics.
- Getting initial repairs and capital improvements right
- Claiming interest on your loan
- Claiming borrowing expenses
- Claiming purchase costs
- Getting construction costs right
- Claiming body corporate fees and charges
- Apportioning expenses and income for co-owned properties
- Apportioning deductions for private use of your property
- Keeping the right records
- Getting your capital gains right when selling
The complete fact sheet can be downloaded as a PDF document here.
Intelligent data tools are spotting errors
The ATO has sophisticated data-matching capabilities for rental properties.
“This new data provides us with crucial intelligence to paint a picture of what’s true and accurate in tax returns, and we continue to expand our data-matching capability to ensure income and deductions are correctly reported,” Mr Loh said.
If you need further information, the ATO has released a range of helpful resources about record keeping, declaring income and claiming expenses for residential rental property owners.
Unleashing the Power of Quantum Mechanics in the Digital Age
Over the last century, computing has evolved exponentially, transforming the world with its ever-increasing computational power. From the advent of vacuum tube computers in the 1940s to the integrated circuits in the 1960s, and the rapid progression of classical computing technologies, we have witnessed remarkable strides in computational capability. However, as we approach the limits of classical computing, a new frontier emerges – quantum computing. Harnessing the bizarre properties of quantum mechanics, quantum computing holds the promise of unlocking unprecedented computational power, revolutionizing various industries and addressing complex problems that were previously deemed intractable.
The Evolution of Classical Computing
The journey of computing began in the early 20th century with the pioneering work of mathematician and logician Alan Turing, who laid the theoretical foundation for modern computation. The development of electronic computers during World War II accelerated computing research. The introduction of vacuum tube computers, such as the ENIAC (Electronic Numerical Integrator and Computer), marked a turning point, enabling faster and more efficient calculations. The subsequent invention of the transistor in the late 1940s and the integrated circuit in the 1950s further enhanced computing capabilities, leading to the emergence of miniaturized computers in the 1960s.
The 1970s and 1980s saw the rise of personal computing, with machines like the Apple II and IBM PC becoming accessible to the masses. The 1990s brought the internet era, connecting computers worldwide and heralding the age of information exchange. In the early 21st century, Moore’s Law, which stated that the number of transistors on integrated circuits would double approximately every two years, underpinned the rapid advancement of classical computing. This law drove the development of increasingly powerful processors and higher computing speeds.
The Limits of Classical Computing
Despite the extraordinary progress in classical computing, it faces inherent limitations. As the size of transistors approaches atomic scales, quantum mechanical effects begin to interfere with their performance. Heat dissipation, energy consumption, and physical constraints have emerged as significant barriers to continued exponential growth in computational power. The quest for even faster, smaller, and more energy-efficient classical processors has become increasingly challenging and expensive.
Moreover, classical computers are fundamentally based on binary bits (0s and 1s) to process and store information. This binary nature restricts their ability to handle certain complex problems efficiently, such as simulating quantum systems, optimizing complex logistics, and breaking advanced cryptographic codes.
Enter Quantum Computing
Quantum computing takes a radically different approach by leveraging the principles of quantum mechanics, a branch of physics that governs the behaviour of particles at the atomic and subatomic level. At the heart of quantum computing lies the qubit (quantum bit), a quantum-mechanical analogue of the classical bit. Unlike classical bits, which can only represent either 0 or 1, qubits can exist in a superposition of both states simultaneously, thanks to the phenomenon of quantum superposition.
The power of quantum computing arises from another fundamental quantum property called entanglement. When qubits become entangled, the state of one qubit instantly influences the state of another, no matter the distance between them. This phenomenon enables quantum computers to perform certain calculations exponentially faster than classical computers.
Current State of Quantum Computing
Quantum computing is still in its early stages, but significant progress has been made. Research and development efforts by leading companies like IBM, Google, Microsoft have accelerated quantum technology advancements. Quantum computers with a small number of qubits have been successfully built and operated, and various quantum algorithms have been demonstrated, showing the potential for quantum advantage over classical methods.
However, building and maintaining quantum computers remains a substantial challenge. Quantum systems are extremely delicate and susceptible to environmental interference. Quantum error correction techniques are being explored to mitigate these errors and make quantum computers more reliable and scalable. Another challenge is the issue of “quantum decoherence,” where quantum states lose their coherence due to interactions with the environment, leading to the loss of quantum advantage.
Potential Applications of Quantum Computing
While quantum computing is still in its infancy, researchers and experts are enthusiastic about its vast potential to revolutionize various industries and fields in the coming decades. Some of the most promising applications include:
- Drug Discovery and Materials Science – Quantum computing could significantly accelerate the process of drug discovery by simulating complex molecular interactions. It could also revolutionize materials science, leading to the discovery of novel materials with unique properties for various applications.
2. Cryptography and Cybersecurity – Quantum computers possess the potential to crack currently unbreakable cryptographic codes, threatening conventional digital security methods. However, they can also enable the development of quantum-resistant cryptographic algorithms to safeguard communication in the post-quantum era.
3. Optimization and Logistics – Quantum algorithms can solve optimization problems more efficiently, leading to optimized supply chains, transportation networks, and resource management, potentially saving significant costs and reducing waste.
4. Artificial Intelligence and Machine Learning – Quantum computing could enhance machine learning algorithms by speeding up complex computations, enabling the development of more advanced AI models and accelerating training processes.
5. Climate Modelling and Energy Optimization – Quantum simulations could aid in modelling complex climate systems, helping researchers better understand climate change and design efficient renewable energy systems.
6. Financial Modelling and Risk Analysis – Quantum computing can revolutionize financial modelling by enabling faster risk assessments, optimizing portfolios, and developing more sophisticated trading strategies.
Beneficiaries of Quantum Computing
Several companies stand to benefit from the quantum computing trend:
1. IBM – IBM is a leading player in quantum computing research and development. They have been at the forefront of building and operating quantum computers and developing quantum algorithms. As quantum computing advances, IBM is well-positioned to provide quantum computing services to businesses and researchers.
2. Google – Google has made significant strides in quantum supremacy by demonstrating quantum advantage over classical computers. With their expertise in quantum hardware and algorithms, Google is poised to explore various quantum applications and enhance their existing services.
3. Microsoft – Microsoft has been investing in quantum computing research and aims to democratize access to quantum technology through its Quantum Development Kit. As quantum computing matures, Microsoft may integrate quantum capabilities into its cloud computing services, expanding its offerings.
Conclusion
Quantum computing represents an unprecedented leap forward in computational power, introducing new possibilities and challenges. While still in its infancy, it has the potential to revolutionize various industries, address complex problems, and unlock new avenues of scientific exploration. However, the path to fully functional and scalable quantum computers is fraught with technical hurdles and requires ongoing research and development. As the quantum computing field continues to mature, we can expect to witness transformative applications that will reshape the landscape of technology and usher in a new era of digital innovation.
We’re always here to help
Financial Decisions knows the right questions to ask you to ensure you get the answers and advice you need.
If you have any concerns or need professional advice about financial scams, tax rules or other financial matters, please call us on (02) 9997 4647.
Disclaimer: This publication has been compiled by Financial Decisions (AFSL/ACL Number 341678). Past performance is not a reliable indicator of future performance. While every effort has been taken to ensure that the assumptions on which the outlooks given in this publication are based on reasonable data, the outlooks may be based on incorrect assumptions or may not take into account known or unknown risk and uncertainties. Material contained in this publication is an overview or summary only and it should not be considered a comprehensive statement on any matter nor relied upon as such. The information and any advice in this publication do not take into account your personal objectives, financial situation or needs. Therefore you should consider its appropriateness having regard to these factors before acting on it. While the information contained in this publication is based on information obtained from sources believed to be reliable, it has not been independently verified. To the maximum extent permitted by law: (a) no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up-to-date or fit for any purpose; and (b) Financial Decisions nor its employees are in any way liable to you (including for negligence) in respect of any reliance upon such information or advice. September 2023
Contact: Financial Decisions PO Box 484 Mona Vale NSW 1660, T 02 9997 4647, F 02 9997 7407