Updated June 21, 2019 13:24:12

Photo: The largely cash "black economy" could be keeping as much $50 billion out of the ATO's sight. (Reuters: Daniel Munoz )

The Australian Tax Office (ATO) has found Australians are only too willing to subvert their traditional distaste for dobbing when it comes to tax evasion.

Since the ATO pushed the idea of getting more help from the public in the surveillance of tax dodgers in its report on the black economy two years ago, tip-offs have flooded in.

The ATO reports that it has received nearly double the amount of referrals from the community about tax evasion compared to the same time last financial year.

"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," ATO assistant commissioner Peter Holt said.

"Going on current numbers, we're on track to receive over 70,000 community referrals before the end of this financial year.

"By way of comparison, we received over 51,000 referrals in 2017-18 and that was the highest ever number of referrals received.

"Businesses that operate in the black economy are undercutting competitors and gaining a competitive advantage by not competing on an even footing."

A report compiled by the ATO in 2017 found the black economy could be as large as $50 billion, or 3 per cent of Australia's domestic economic activity.

The biggest irritants for those making referrals to the ATO last year were suspected under-reporting of income or about the cash economy — for example businesses demanding cash from customers or paying their workers cash-in-hand.

Top five ATO 'tip-offs':

• Under-reported income (31 per cent)
• Cash economy (27 per cent)
• Non-lodgement (25 per cent)
• Inadequate or no superannuation paid (8 per cent)
• Over-stating expenses (3 per cent)

'Crime Stoppers for tax' hotline

The ATO is hoping the community policing of tax evasion may just be in its nascent stages and will launch a new Tax Integrity Centre to coincide with the new tax year, providing a single point of contact for reporting suspected or known illegal phoenix, tax evasion and black economy activity.

The ATO has extraordinary powers more akin to police and law enforcement agencies and when it makes mistakes, it can destroy small businesses and livelihoods.

"Our tip-off line is the taxation equivalent of Crime Stoppers for tax," Mr Holt said.

The hotline will accept private and anonymous tips.

But if you are hoping to get some vicarious pleasure from dialling in, the ATO may not be able to help.

"Due to privacy laws, we won't be able to inform you of the outcome of the information you provide," Mr Holt said.

"We also won't be able to provide you with any updates on progress of the information you provided."

The ATO's "Black Economy Taskforce" targets include: the under-reporting of income and over-claiming of expenses and ensuring businesses meet their employer obligations — so they don't pay employees or contractors cash in hand; underpayment of wages; failure to withhold tax; or not contributing to super.

It also focuses on addressing illegal phoenixing — or the deliberate liquidating and reforming businesses to avoid tax — and preventing tax fraud in illicit tobacco, duty and excise evasion.

Topics: tax-evasion, tax, business-economics-and-finance, australia

First posted June 21, 2019 11:47:08