In the first quarter of the 2019–20 financial year, the ATO revealed that “a record-breaking” 15,000 tip-offs about alleged tax non-compliance were made to its Tax Integrity Centre.
That equates to an average of 230 calls every weekday over the period. One day in early August attracted close to 300 tip-offs, it said.
According to the Tax Office, there are four main gripes that Australians are reporting:
- Undeclared income
- Cash-in-hand pay to workers or cash demands to customers
- A lifestyle incompatible with their level of income
- Unreported sales
Despite the volume of tip-offs, Mr Holt said he was not surprised, suggesting that people are fed up with others rorting the system.
“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,” he said.
“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.”
Every tip-off investigated
Mr Holt said that tip-offs are an invaluable resource for the ATO to identify wrongdoing by businesses.
“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,” he said.
Every tip-off received is investigated, with almost half (47 per cent) of those last quarter being reported anonymously or without leaving contact details.
The ATO said this was “a significant increase [in people leaving their contact details] when compared to the same quarter in the previous year, when only one in four people provided their contact details”.
Cafés, restaurants most complained about
According to Mr Holt, cafés and restaurants attracted the highest number of tip-offs last quarter.
It comes after the Fair Work Ombudsman also singled out the café, restaurant and fast food sector as being the prime hotspot for non-compliance with workplace laws.
One café even stands accused of paying its workers in food and beverages.
“The proof is in the pudding. Our risk indicators tell us that there is a black economy problem in the café and restaurant industry, and the fact that tip-offs about this industry top our list tells us that there is still more work to be done to protect honest café and restaurant owners and workers in this industry,” Mr Holt said.
“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.”
According to Mr Holt, over 800,000 people are employed within the hospitality sector. He said that low profit margins are likely the reason 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’,” he said.
“Also, we know that businesses that deal primarily in cash tend to make more mistakes.”
Other industries attracting tip-offs
The hospitality sector was not the only one to attract complaints of wrongdoing, however.
Other industries to attract tip-offs to the ATO include:
- hairdressing and beauty
- building and construction
The volume of tip-offs broadly followed population size, with NSW attracting the highest number of tip-offs, followed by Victoria and Queensland, the ATO said.
Tip-offs about suspect or dodgy practices can be reported to the ATO online via its tip-off form or by phoning 1800 060 062.