REVEALED: Australia's biggest tax scam and its tricks
Thousands of Australians have been duped for shrewd tax-related behavior with those in the building and construction sector topping the list.
Aussies across the country made a total of 43,000 tip-offs to the Australian Tax Office (ATO) in the 2021-22 financial year, with businesses, customers, employees and members of the public picking up the phone to report suspected violators.
Hairstyling and beauty services came second on the list, followed by cafes and restaurants, road transport, and related management advice and consulting services.
More than 13,400 calls were made to ATOs in the state, followed by Victoria, 11,500, and Queensland, 9,200.
While Sydneysiders are the main culprits, Australians in regional locations are also exposing their alleged local criminals.
Sunshine Coast Hinterland and Cairns in Queensland, Wellington in Sydney and Wodonga and Mornington Peninsula in Victoria were among the top five regional locations for tip offs – nearly 7,000 calls came from people outside the major cities.
Examples of dodgy transactions include businesses demanding cash from customers or offering discounts on cash, paying workers ‘cash’, not declaring all sales, failing to provide workers with payslips, or even running illegal software that alters sales transactions.
The ATO is currently using intelligence from tip-offs to tackle the “shadow economy,” which is estimated to cost us $11 billion in taxes each year.
ATO Assistant Commissioner Peter Holt said while the past few years had been difficult for businesses, it could not be used as an excuse for this kind of behavior.
“The shadow economy is an economic and social problem that affects all of us,” Holt said.
“As businesses recover from the impact of COVID and natural disasters, it is more important than ever to protect the most honest businesses and try to do the right thing.”
Mr Holt said fraudulent behavior had put greater pressure on public services.
“Every dollar of tax evaded is a dollar that cannot be used for vital services such as health and elderly care,” he said.
“We have all witnessed over the last few years how much society depends on this important service.”
The assistant commissioner, however, said it wasn’t just businesses the ATO was investigating.
“We know that many customers also demand to pay cash and ask for discounts to avoid paying taxes, and we also know that many workers demand cash, especially where there is a labor shortage,” he said.
“Our message is – regardless of which party encourages the behavior – it is illegal and we support it.”
More than ninety percent of the information received was deemed worthy of further investigation or kept for intelligence purposes, Holt reported, adding that assistance from the public to identify criminals was “valuable intelligence”.
“Sometimes that tip can be the last piece of the puzzle we need to work on,” he said.
While the tax expert confirmed that digital payments have increased in popularity through COVID-19, he said the shadow economy has not stalled.
“Just because digital payments have increased in popularity, this doesn’t mean that the shadow or cash economy has disappeared, it still exists, and we are determined to shine a light on it,” he said.
“It’s all about keeping the playing field as level as possible.”
The ATO confirmed that it had also received a number of leads as part of Operation Protego, which investigated a significant fraud involving participants creating fake businesses to claim counterfeit refunds.
Tip-offs, which can be done anonymously, can also be submitted online at ato.gov.au/TipOff, via the ATO app, or by calling 1800 060 062.
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