Weekend “cashies” are a risk: most common examples of tip-offs to the ATO
Demanding cash from customers, paying workers “cash in hand”, or not declaring all sales are the most common examples of the 43,000 tip-offs received by the ATO in the 2021–22 financial year.
The ATO is using intelligence from tip-offs as part of its approach to dealing with the shadow economy (previously referred to as the black economy).
The shadow economy refers to activities that take place outside of the tax and other regulatory systems. The ATO estimates that the community misses out on around $11 billion in taxes each year as a result of the shadow economy.
Topping the list of industries the ATO was tipped off about in the past year were building and construction, hairdressing and beauty services, cafés and restaurants, road freight transport, and management advice and related consulting services.
Tip-offs from New South Wales topped the ATO’s list with over 13,400, followed closely by Victoria (over 11,500) and Queensland (over 9,200).
ATO Assistant Commissioner Peter Holt explained that tip-offs helped the ATO shine a light on tax avoidance and protect honest businesses.
Mr Holt clarified that it’s not just businesses the ATO has its eye on. “We know that many customers also demand to pay in cash and ask for discounts to avoid paying tax, and we also know that many workers are demanding cash especially where there is a shortage of labour,” he said.
Mr Holt added that 90% of the 43,000 tip-offs received were found suitable for further investigation or retained for intelligence purposes.
There are some tell-tale signs that a business may be operating in the shadow economy, for example, “cash only” signs, offering a discount for cash, not accepting card payments, failing to provide payslips to workers, not ringing up sales, or even running illegal software that deletes or modifies sales transactions.
Mr Holt said that while it’s true that digital payments have increased in popularity through COVID-19, this doesn’t mean that the shadow economy has stalled.
The ATO also confirmed it has received a number of tip-offs as part of Operation Protego, which is investigating significant fraud involving participants inventing fake businesses to claim false refunds.
Case studies
• Janis noticed her boss at the nail salon unplugging a cable to the EFTPOS machine regularly, claiming that she was unable to accept card payments from customers. Janis felt guilty when she had to ask customers to get cash from an ATM to pay. She also noticed that her boss wasn’t ringing up these cash transactions. This all didn’t add up, so she made an anonymous tip-off to the ATO on her lunch break using the ATO’s app. An ATO officer looked at the tip-off and the total sales being reported by the business. An investigation followed, which revealed that the business owner was not only not reporting sales to the ATO but was also charging customers GST and pocketing it. The business owner had to pay the ATO the underpaid tax plus a 75% penalty and interest.
• Trent worked as a roof tiler in South East Queensland, having moved there from New South Wales to help on the reconstruction efforts after the floods. He picked up a job very quickly and was earning good money. One of his mates told him that he could earn some extra money by doing “cashies” on the weekend and by working for a builder during the week that paid in cash. He really liked his new boss so he asked him if he could start to pay him in cash instead. The boss declined so Trent went and worked for another builder down the road and got paid in cash, knowing he wasn’t paying tax. His old boss tipped off the ATO and an ATO investigator made enquiries into Trent’s tax affairs as well as his new employer. The employer that was paying their workers in cash had to pay the ATO the underpaid tax plus a 75% penalty, and interest, and Trent also had to lodge an amendment to his tax return and pay the unpaid tax, plus interest and penalties.
Tip-offs can be made online at ato.gov.au/TipOff, via the ATO app, or by phoning 1800 060 062. All tip-offs are private and providers can remain anonymous.
Source: Tipped off: ATO reveals most dobbed-in industries, [media release], ATO website, 22 July 2022, accessed 22 July 2022.
