Millions of dollars have been rorted from a federal government scheme introduced to encourage Australian companies to invest in research and development, including claims from bankrupts, a property spruiker and a disgraced businessman.
The Research and Development (R&D;) Tax Incentive program is the government's largest industry innovation package, providing about $3 billion in tax offsets to businesses each year. But serious concerns have been raised about compliance and enforcement.
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Millions rorted from government R&D; scheme
A federal government scheme introduced to encourage Australian companies to invest in R&D; has had millions of dollars have been rorted through the program.
Fairfax Media can reveal the scheme has been abused by notorious property spruiker Jamie McIntyre, former bankrupt Ramon Russell and accountant Arjuna Samarakoon, who has pleaded guilty to three fraud charges following an investigation by the Australian Federal Police.
Disgraced AFL player agent Ricky Nixon received an R&D; tax offset of $153,268 in July 2015.
It is unknown what research and development was undertaken by Mr Nixon, but in the 2014/15 financial year he was reported to be working on an online sports agency course and a fantasy game called Super Agent.
He was also putting the finishing touches to his biography, My Side, which detailed his tryst with "St Kilda schoolgirl" Kim Duthie.
Mr Nixon hung up on Fairfax Media when asked why the Australian Tax Office had paid the significant rebate to his company Flying Start Australia Pty Limited, but he is understood to have used much of the taxpayer funding to settle personal debts.
![Former AFL players manager Ricky Nixon.](http://web.archive.org./web/20170705043347im_/http://www.smh.com.au/content/dam/images/g/x/3/o/8/m/image.imgtype.articleLeadwide.620x349.png/1499062867145.png)
Former AFL players manager Ricky Nixon. Photo: Penny Stephens
Under the scheme, rebates of up to 43.5 per cent of total R&D; expenditure are provided to businesses that "conduct experimental activities, in a scientific way, for the purpose of generating new knowledge".
Administered by the Tax Office and the Department of Industry, Innovation and Science, the program requires applicants to self-assess their eligibility based on a list of approved R&D; activities.
A spokeswoman for the Department of Industry Innovation and Science confirmed "the two agencies have identified some high-risk areas in the R&D; Tax Incentive program".
Fairfax Media can reveal several discredited business figures received massive rebates from the ATO between 2012 and 2015, which were siphoned from the companies for personal use.
Brothers Jamie and Dennis McIntyre were the subject of a long-running investigation by the corporate regulator before they received 10-year bans from managing a company or providing financial advice in October 2016.
Jamie McIntyre was branded a "conman" during a Senate hearing in 2015 over his land banking scheme that targeted vulnerable investors with promises of massive financial returns.
![Jamie McIntyre speaking at a public hearing for scrutiny of financial advice in September 2015 in Melbourne.](http://web.archive.org./web/20170705043347im_/http://www.smh.com.au/content/dam/images/g/w/e/9/e/t/image.imgtype.articleLeadwide.620x349.png/1495785132789.png)
Jamie McIntyre speaking at a public hearing for scrutiny of financial advice in September 2015 in Melbourne. Photo: Wayne Taylor
But in March 2014, a company linked to him, Education Holdings Pty Limited, received $530,510.40 in rebates under the R&D; scheme. Two years later, the company was placed into liquidation by the Federal Court, owing more than $55,000 to creditors.
It is not known how the company qualified for the government's R&D; incentive, when Education Holdings was primarily responsible for organising get-rich-quick seminars and publishing Jamie McIntyre's books.
Mr McIntyre, who was placed into bankruptcy by the Australian Securities Investment Commission in April, did not respond to requests for comment.
Despite being declared bankrupt in 2011, "technology entrepreneur" Ramon Russell also received more than $645,000 from the Australian Tax Office in five instalments between May 2013 and May 2015.
![Ramon Russell.](http://web.archive.org./web/20170705043347im_/http://www.smh.com.au/content/dam/images/g/x/2/u/q/q/image.imgtype.articleLeadwide.620x349.png/1498953289081.png)
Ramon Russell. Photo: Supplied
The rebates were paid into two companies, Advanced Algae Australia Pty Limited and Fluid Processing Pty Limited, which were part of the corporate structure behind Mr Russell's technology complex in Seaford.
The Victorian Innovative Science and Technology Complex was launched in June 2014 by then federal minister for small business Bruce Billson, who lauded Mr Russell for his "chutzpah" and "can-do attitude".
But by June 2016, the complex was shut down, while the two companies that received the ATO rebates were recently deregistered.
The ATO and the Department of Industry, Innovation and Science appear to have ignored, or been unaware of, the 70-year-old's bankruptcy and poor governance record when assessing Mr Russell's suitability for the tax incentives.
Mr Russell had repeatedly defaulted on business partners and investors, and was the subject of two damning reports to the Australian Securities and Investment Commission.
He was brought to the attention of corporate regulators in 2011 following serious allegations of mismanagement from a corporate liquidator and again in 2013 over claims the identity of an intellectually disabled woman was used as a front for one of his companies.
"In my view the company has failed due to very poor management. I believe the director has committed a number of offences [against] the Corporations Act," liquidator RJM said in a report in 2011.
But Mr Russell insisted his companies invested in legitimate R&D.; He blamed Frankston Council for contributing to the demise of his technology complex, after a string of planning disputes.
"I've made a few mistakes along the way, but I never deliberately set out to cheat anyone," he said.
An ATO spokesman refused to comment on the tax affairs of individuals or private companies, but insisted that all participants were "risk assessed" before further reviews were undertaken to determine the eligibility of activities conducted or expenditures claimed.
"If claims are found to be ineligible upon review, the Commissioner of Taxation will actively seek repayment of R&D; tax offsets which have been claimed inappropriately," the ATO spokesman said.
In 2015, the ATO referred fraud allegations against Arjuna "Arj" Samarakoon to the Australian Federal Police, which charged the Melbourne accountant and tax agent with obtaining almost $770,000 by deception.
![Arjuna 'Arj' Samarakoon](http://web.archive.org./web/20170705043347im_/http://www.smh.com.au/content/dam/images/g/x/3/2/c/7/image.imgtype.articleLeadwide.620x349.png/1499066329455.png)
Arjuna 'Arj' Samarakoon Photo: Supplied
Samarakoon has pleaded guilty to three charges of defrauding the R&D; Tax Incentive scheme and will be sentenced in September. The ATO and AFP continue to investigate his business affairs, which includes a network of companies in Australia and Asia.
Last week, Crystal Mavroyeni – an associate of Samarakoon and director of several of his companies – faced the Magistrates Court over 73 charges relating to the use of forged documents.
In documents lodged with the County Court, the AFP alleges that some of the tax rebates were funnelled from companies associated with Samarakoon into his private accounts with the ANZ and Bendigo banks.
"I am further informed by the ATO that Samarakoon is a registered tax agent with the Tax Practitioners Board, and more than 40 separate entities are suspected by the ATO to be connected to Samarakoon," an AFP officer said in a court affidavit. "This goes some way in explaining the sophisticated nature of the suspected offending."
It was also alleged in legal documents that Samarakoon owes more than $2.5 million to the ATO and is closely linked to Sydney businessman, Michael Pearce, who was implicated in a multimillion-dollar text messaging fraud in the United States.
The AFP and ATO placed freezing orders on properties in Glen Iris, St Kilda and Port Melbourne, which were allegedly purchased with proceeds of crimes.