In the first half of the 2019–20 financial year, the ATO’s Tax Integrity Centre received 27,000 tip-offs about alleged tax non-compliance, after garnering a record 15,000 in the first quarter.
According to the Tax Office, there are five main gripes that Australian small businesses are reporting:
- not declaring income
- demanding cash from customers
- someone’s lifestyle does not appear to match their income level
- not reporting sales
- employer avoids reporting correct wages
A spokesperson for the ATO told My Business that cafés and restaurants continued to attract the highest number of tip-offs, which is a telling sign that there is still more work to be done in this industry.
Furthermore, a majority of tip-offs came from NSW, followed closely by Victoria and Queensland.
“Our intelligence tells us that honest businesses and workers are reporting black economy behaviour to us because they are sick and tired of this kind of behaviour,” the ATO said.
“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 for honest businesses 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.”
The ATO revealed that 53 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 fact that more people are willingly providing their contact details goes to show that the community has had enough of this kind of mischief. They genuinely want to help us uncover and deal with this behaviour,” the Tax Office said.
Tip-offs a critical part of intelligence gathering
When the ATO receives information through a tip-off, its dedicated team cross-checks the information and assesses whether further action is required.
It informed that investigations further to tip-offs can take anywhere between a few days and several years to complete.
“One of the factors our team considers includes the amount of detail provided. So, it’s a good idea to include as much detail as possible.
“Due to privacy laws, we won’t be able to inform you of the outcome of the information you provide. We also won’t be able to provide you with progress updates. Rest assured we take all information seriously.”
The ATO added that tip-offs from the community form a critical part of its intelligence-gathering capabilities, alongside other intelligence methods, like data matching and small business benchmarks.
“We’re committed to tackling phoenix, tax evasion and black economy behaviours and protecting honest businesses and the community, and referrals through to our Tax Integrity Centre are a key part of our approach. A referral could be the missing piece of the puzzle we need to finalise an investigation or prosecution.”
The case of Mr Likki
The sentencing of Tharun Likki in March 2019 is a good example of the ATO’s work generated out of a tip-off.
Mr Likki was in Australia studying computer networking and was sentenced to two years and three months in jail for his involvement in a tax fraud and crime scheme.
“Contrary to popular belief, tax crime is not victimless: when you claim a refund you’re not entitled to, you are stealing from the whole community and disadvantaging Australians who do the right thing,” ATO assistant commissioner Peter Vujanic said at the time.