ATO Assistant Commissioner Tony Goding says Australians are fed up with dodgy behaviour in the community and are stepping up to help level the playing field. Photo: ATO.
Over the past five years, the Australian Taxation Office (ATO) has received a quarter of a million tip-offs from the community, with more than 47,000 coming through in the last financial year alone.
The ATO estimates that about $16 billion in taxes is stolen each year because of businesses doing such things as not declaring income, not reporting sales or demanding the use of cash from customers and to pay its workers.
Every week, the ATO receives almost 1000 tip-offs, with about 90 per cent of those received in 2023-24 deemed suitable for further investigation by its specialised teams and taskforces.
While Sydney and Melbourne had the most tip-offs about tax avoidance and other dishonest behaviour, reports did not just come from the capital cities. Queensland played host to the top-five regional postcodes that received tip-offs: Southport, Bundaberg, Toowoomba, Mackay and Caboolture.
Assistant Commissioner Tony Goding said community tip-offs were one of the ATO’s best sources of information when it came to tackling the shadow economy.
“It’s not just about ‘cash only’ or ‘EFTPOS out of order’ signs,” he said. “These businesses are deliberately undercutting their competitors and gaining an unfair advantage in their industry.
“The number of reports we have received tells us that Aussies have had enough. Dodging your tax obligations clearly no longer passes the ‘pub test’.
“We’re receiving tip-offs from other businesses, customers, members of the community, employees, and even family and friends.”
In the 2023-24 fiscal period, building and construction, cafes and restaurants, and hairdressing and beauty services topped the list of industries the ATO was told about. Between the states, it was NSW (15,516), Victoria (11,256) and Queensland (10,629).
Many community tip-offs related to the use of electronic sales suppression tools (ESSTs). Earlier this year, the ATO uncovered businesses using ESSTs to avoid paying tax, to the tune of $23 million.
One investigation example noted by the ATO involved ”Sabrina’s fish and chip shops”.
The business owner of several fish and chip shops used cash to pay her employees and under-declare her takings, but also implemented an ESST. After purchasing her new point-of-sale system from an operator who attached a cloud-based ESST to it, she was able to manipulate the stores’ transaction records to reduce her tax income.
This system allowed her to easily delete and re-sequence transactions, affording her the extra money to quickly pay off a large mortgage on a seaside property, buy a boat and transfer money to her family overseas.
However, when one of her employees, ”Paul”, was closing up for the day, he observed that the point-of-system transaction record was showing unusually low profits for one of their busiest days. After looking over the previous week’s transaction records and finding a similar pattern, he tipped off the ATO.
Upon closer inspection by a specialist shadow economy audit team, it was discovered Sabrina’s personal spending was up to eight times the amount declared as income. When a full review had been completed, the ATO found that over five years she had not reported close to $4 million of business income.
The Australian Federal Police ended up with the criminal investigation, which made Sabrina liable for $1.4 million in estimated income tax and penalties. The ATO also seized her seaside property and boat to recover her unpaid tax debt.
