CANBERRA: The Australian government is struggling to clamp down on a gold scam which has left Australian taxpayers more than 430 million U.S dollars out of pocket, an industry insider told local media on Tuesday. The scam – in which gold bullion is purchased tax free (as is allowed under Australian law) – involves criminals breaking up the bullion into scrap pieces or jewelry before on-selling it to a refinery. As the gold is no longer considered to be bullion, it attracts the nation’s 10 percent goods and services tax (GST), thus giving criminals a 10-percent taxpayer-funded windfall on the sale. One source within Australia’s gold industry told News Corp that it was “extraordinary” that the government has been unable to stamp out the fraud sooner. “You buy the bullion, you smash it up, and it’s worth 10 percent more,” the source said. The Australian Tax Office has said it has recovered some of the scam money, however tax commissioner Chris Jordan told a Senate estimated committee that it was hard to distinguish legitimate business from fraudulent business in the “carousel” scam. He said the ATO had recovered just 40 million U.S dollars of the 430 million U.S dollars identified since 2013, while around 228 million US dollars’ worth was before the courts – with 142 million US dollars of that reportedly in dispute. “Part of the problem is you have legitimate jewelers and you have legitimate refiners carrying on a legitimate business,” Jordan told the Senate committee. “You cannot stop everybody. So we have to work out who are the criminal activity people, who are the fraudulent people.”