Australia markets closed

Is this Australia’s tax fraud hotspot?

Is this Australia's tax fraud hotspot? Source: Getty

The Australian Taxation Office has announced plans to visit a whopping 400 businesses in Sydney’s suburb of Bankstown after a spike in dob-ins tipped them off.

“We’ve seen a spike in tip-offs about businesses in Bankstown paying their workers in cash and not withholding tax or paying super,” said ATO Assistant Commissioner Peter Holt.

“This is simply not on and it’s not fair for those honest businesses who are doing the right thing as well as the employees who are missing out on their super.”

The ATO said it had received intelligence that some Bankstown businesses had refused to provide tax invoices for sales, were underreporting income, and not reporting sales to the ATO.

“Certain industries are on our radar in Bankstown, including cafes, restaurants and takeaway food services, transport businesses, building completion businesses, delivery businesses, and businesses providing cleaning, pest control and gardening services.”

According to the tax office, there were a significant number of businesses in Bankstown with more than two years of overdue income tax returns, and a large number of them also had outstanding business activity statements – something the ATO says is “unfair”.

“What they’re doing is unfair to the majority of businesses in Australia who are doing the right thing, but if businesses genuinely just need some help to get back on track, they can talk to us.”

And, the ATO says this is contributing to the black economy.

“The Black Economy Taskforce estimates that the black economy is costing the community as much as $50 billion, which is approximately three percent of Gross Domestic Product (GDP),” Holt said.

“This is money that the community is missing out on for vital public services like hospitals, roads, welfare, and schools.”

The ATO said it would attempt to notify businesses about the visits before they arrive via phone, SMS, email or letter, and they would be paying particular attention to cafes, restaurants and takeaway food services.

“During the visits, we may discuss record-keeping and payment facilities, outstanding lodgments, tax debts, and managing employee entitlements such as superannuation,” Holt said.

Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, property and tech news.