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ATO reveals industries most likely to be avoiding tax

·2-min read
cash only sign and ATO logo
A "cash only" sign could be an indication of shadow economy activity. (Source: Getty)

As part of a crackdown on businesses that aren’t paying their fair share of tax, the Australian Taxation Office (ATO) has revealed several industries on its watch list for tax avoidance, based on tip-offs from last year.

In the 2021/22 financial year, the tax office was alerted to 43,000 cases of potential tax evasion.

The top industries pinged for likely tax avoidance included:

  • Building and construction

  • Hairdressing and beauty services

  • Cafés and restaurants

  • Road freight transport

  • Management advice and related consulting services

The most common tax-dodging practises to arouse suspicion included demanding customers pay cash, paying workers ‘cash in hand’, and not declaring all sales.

The ATO said it would use this intelligence to target the “shadow economy”, which referred to transactions and activity outside the tax system.

According to the tax office, the community missed out on around $11 billion each year that could otherwise go towards public services such as hospitals and aged care.

ATO assistant commissioner Peter Holt said the number of tax-evasion tip-offs - from customers, business, members of the public and even employees - was on the rise.

“The surge in tip-offs tells us the community is not willing to let this behaviour slide anymore,” Holt said.

“If these businesses think they can continue to hide in the shadows and not pay their fair share of tax, they are mistaken.

“It’s not a matter of if the ATO will shine a light on this behaviour, it’s when.”

Businesses were not the only ones guilty of tax avoidance.

“We know that many customers also demand to pay in cash and ask for discounts to avoid paying tax,” he said.

“We also know that many workers are demanding cash, especially where there is a shortage of labour.

“Our message is – regardless of which party is driving the behaviour - it’s illegal and we’re on to it.”

The tax office said there were several “tell-tale” signs of shadow economy behaviour:

  • “Cash only” signs

  • Offering a discount for cash

  • Not accepting card payments

  • Failing to provide payslips to workers

  • Not ringing up sales

  • Running illegal software that deletes or modifies sale transactions

“The ATO will take firm action against business owners who deliberately avoid paying their fair share of tax,” Holt said.

“We know that honest businesses and the community expect us to do this.

“It’s all about keeping the playing field as level as possible.”

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