The Australian Taxation Office (ATO) today revealed it received a record-breaking 15,000 tip-offs to its Tax Integrity Centre in the first quarter of this financial year as the agency continues its focus on the black economy.
The top categories of tip-offs the ATO has received so far this year have been about:
- Not declaring income
- Demanding cash from customers and / or paying workers “cash in hand”
- Someone’s lifestyle does not appear to match their income level
- Not reporting sales.
Assistant Commissioner Peter Holt said the results are not surprising.
“We’re hearing loud and clear that people are sick and tired of this kind of dodgy behaviour. Running a small business can be a really tough gig, and when dishonest competitors are cheating the tax system by operating off the books, it’s really unfair and makes it even harder to succeed. It’s also effectively stealing from the community.
“So it’s hardly surprising that so many people have tipped us off about this kind of behaviour so we can investigate and keep things fair for everyone,” Holt said.
ATO figures show that cafés and restaurants top the list in terms of the total number of tip-offs received in the first quarter this year.
“Trading in cash and paying your workers in cash is perfectly legal but failing to report the income to the ATO and not paying your workers their entitlements like superannuation is not only illegal but also incredibly unfair.”
“Regardless of what industry you’re in, if you’re cooking the books, your competitors and workers are probably aware of it. And they’re not hesitating to let us know about it,” Holt said.
“Profit margins in this sector are low, which is probably why some operators think they can top up their bottom line by dealing in cash. But this is a very risky strategy.
“Cash is not favoured by most customers as a payment method, we all prefer to ‘tap and go’. Also, we know that businesses that deal primarily in cash tend to make more mistakes.”
The ATO also received high volumes of tip-offs about black economy behaviour in the hairdressing and beauty, building and construction, and cleaning industries.
“A tip-off from the community could be the missing piece of the puzzle we need to successfully audit or prosecute someone who is illegally operating in the black economy, so we really value and rely on the community letting us know when something doesn’t add up.”
In one day in early August, the ATO’s Tax Integrity Centre received almost 300 tip-offs. Tip-offs from New South Wales topped the ATO’s list, closely followed by Victoria and Queensland.
Fifty three per cent of people who provided a tip-off in the first quarter of 2019–20 provided their contact details to the ATO, which is a significant increase when compared to the same quarter in the previous year, when only one in four people provided their contact details.
The ATO requests contact details in case information provided needs further clarification, but this is not a requirement.
“Sometimes we may need to ask you about the information you provided. Leaving your name and contact details can help us to do that. We will only contact you for more information if you tell us it’s okay,” Holt said.
“The fact that more and more people are willingly handing over their contact details when they give us a tip-off goes to show that the community has had enough of this kind of mischief. They want to help us uncover and deal with this behaviour.”
Due to privacy laws, the ATO cannot inform people about the progress or outcome of the information they provided.
The Black Economy Taskforce estimates the black economy is costing the community as much as $50 billion each year, which is approximately three per cent of GDP.
The ATO plans to visits 10,000 businesses this financial year as part of their strategy to deal with the black economy.
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