ATO refuses to say whether 'promoter' charged over $1 million outback scam

Locals have told the ABC the majority of the money was spent quickly and won't be recoverable. (ABC Kimberley: Vanessa Mills)

The Australian Taxation Office has revealed for the first time that $1 million of taxpayer money was wrongly paid out in an outback tax scam, but is still refusing to say if anyone's been charged or paid back the funds.

In 2019, word spread through remote Aboriginal communities in the Kimberley about an easy way to get a big refund in a tax return.

More than 700 people incorrectly claimed $20 million before the ATO twigged and shut down the scheme.

But the agency has always been cagey about how much money was actually paid out, and what has been done to recover the funds and prosecute those who promoted the fraudulent claims.

A parliamentary interrogation by WA Liberal Senator Dean Smith has revealed for the first time the scale of the rort and what has happened since.

Questions on Notice

Many of the people who received inflated tax returns were from communities on the Dampier Peninsula north of Broome. (Supplied: Main Roads WA)

ATO Client Engagement Commissioner Jeremy Hirschhorn was initially questioned about the Kimberley tax scam at Senate Estimates in June.

Asked about the immediate response to the escalating number of false claims in 2019, he said "our first priority was the shut down the scam, which we did very quickly".

The ATO took most of the questions on notice and provided a written response in early August.

After 18 months of unanswered questions from the ABC, the document reveals for the first time the scale of the rort.

Senator Dean Smith interrogated the ATO about the Kimberley tax scam during Senate Estimates. (ABC News: Gary-Jon Lysaght)

"This includes the 42 clients mentioned in the ABC article, and another 8 identified after the article was published.

"These 50 clients received an average incorrect refund of $21,180."

Silence on criminal investigation

Community leaders who watched the scam play out have previously told the ABC the money was spent quickly, largely on second-hand cars and shopping trips in Broome and Derby.

The ATO is still not saying now much — if any — of the money was recovered.

"Compliance activity has been undertaken on all 50 clients … all have had debts raised for the incorrect refunds received," the ATO submitted to parliament.

Mystery surrounds the identity of the person reported to have been actively promoting the tax return loophole and claiming a portion of the illegal windfall.

Hr Hirschhorn told the Senate Committee in June:

"Other people who were not introduced by the promoter, I suppose, copied."

In its written submission, the ATO refused to say whether the "promoter" had been identified or charged "due to the risk of prejudicing operations".