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The black economy refers to both dishonest and criminal activities that take place outside of, or involve misuse or abuse of, the tax and regulatory systems. Examples of black economy activities include:

• not declaring all income
• over-reporting deductions
• demanding (or paying for) work cash in hand to avoid obligations
• other illegal activities, such as illicit tobacco, sham contracting and ABN fraud.

According to the ATO Assistant Commissioner Peter Holt, “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).”

ATO Visits to Small Businesses

The ATO plans to visit almost 10,000 businesses this financial year in all states and territories, across a variety of industries. As part of the visits, the ATO will be providing information about recent changes, such as Single Touch Payroll and the extension of the Taxable Payments Reporting System to certain industries.

During the visits, the ATO will discuss record-keeping and payment facilities, outstanding lodgments, tax debts, and managing employee entitlements such as superannuation.

Industries more likely to be visited by the ATO

• Building cleaning, pest control and Gardening Services
• Automotive Repair and Maintenance
• Building Installation/Completion Services
• Cafes, Restaurants and Takeaway Food Services
• Residential Building Construction

For more information see the ATO website.

Tip-offs to the ATO

The ATO has revealed it received a record-breaking 15,000 tip-offs to its Tax Integrity Centre in the first quarter of the 30 June 2020 financial year as it continues to focus on the black economy.

The top categories of tip-offs the ATO has received so far have been about:

1. Not declaring income
2. Demanding cash from customers and/or paying workers “cash in hand”
3. Someone’s lifestyle does not appear to match their income level
4. Not reporting sales.

For more information see the ATO website.