The taxman has recorded a massive spike in tip-offs from the community about tax evasion this financial year.
Between 1 July 2018 and 31 May 2019, the Australian Taxation Office received 60,000 reports of suspected tax evasion, the black economy or illegal phoenix activity – a 42 per cent uptick compared to the same period last financial year.
For businesses doing the wrong thing, the ATO warned the higher volume of tip-offs could mean more raids.
“While not all referrals result in an audit, they help build a more complete view of risk and help us determine if any further action is required,” the ATO said.
Most of the tip-offs this financial year was about under-reporting income or about the cash economy.
These are the top five types of tip-offs reported to the ATO between 1 July 2018 and 31 May 2019:
Under reported income (31%)
Cash economy (27%)
Inadequate or no superannuation paid (8%)
Overstating expenses (3%)
“We’re seeing an upwards trend in the volume of referrals about people suspected of participating in the black economy, which suggests that honest businesses have had enough of competitors cheating the system and getting an unfair advantage,” said assistant commissioner Peter Holt.
The tax office is on track to receive 70,000 community referrals before this financial year is over, he added.
“By way of comparison, we received over 51,000 referrals in 2017–18 and that was the highest ever number of referrals received,” Holt said.
The best way for businesses to stay on top of their tax and super was to ensure records were up to date, he advised.
In order to report tax evasion to the ATO currently, the online tax evasion form is available here.
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‘Crime Stoppers for tax’ launching 1 July
On 1 July 2019, the tax office will launch a single point of contact for reporting suspected or known tax evasion, black economy or illegal phoenixing activity, called the ATO Tax Integrity Centre.
“Our tip-off line is the taxation equivalent of Crime Stoppers for tax. Members of the community will be able to tip the ATO off online or by calling our hotline on 1800 060 062,” said Holt.
But you can report more than just tax issues to the ATO Tax Integrity Centre. The public will also be allowed to anonymously report on the following behaviours:
Demanding or paying for work cash in hand to avoid obligations
Not reporting or under-reporting income
Illegal phoenixing – deliberately liquidating and re-forming a business to avoid debt obligations
Over-claiming deductions (eg paying for home renovations through their business account)
The tip-offs are assessed and referred to experience staff for review in order to decide whether further action is needed, Holt said.
“Tip-offs help us build a more complete view of risk. A community tip-off may be the missing piece of the puzzle that we need to finalise an investigation and seek prosecution action to help protect honest taxpayers.
“Even if you only know part details, this information is still very useful. It helps us understand industry trends and emerging issues and forms part of our engagement strategies."
While the tip-offs can all be private and anonymous if the caller chooses, the ATO will request contact details if further clarification is needed.
“Sometimes we may need to ask you about the information you provided. Leaving your name and contact details can help us to do that. We will only contact you for more information if you tell us it’s okay, ” the assistant commissioner said.
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