During the last financial year, the ATO received approximately 70,000 ‘tip-offs’ or ‘dob-ins’ from the community in relation to the black economy, illegal phoenix activities and tax evasion. The number of tip-offs to the ATO nearly doubled compared to the previous financial year.
The most common ‘tip-offs’ related to:
|Topic||Percentage of All “Tip-offs”|
|1. Under reported income||31%|
|2. Cash economy||27%|
|3. Non lodgment of tax returns||25%|
|4. Inadequate or no superannuation paid||8%|
|5. Over stating tax deductions||3%|
A common reason for the increasing tip-offs is an aversion to competitors cheating the system and obtaining an unfair commercial advantage; that is, by not paying tax the competitors can offer cheaper prices and/or make greater profit. In other cases, taxpayers feel the injustice of them paying tax while others do not and those others not contributing to the costs of supplying Government services such as health care, education and roads.
Assistant Commissioner of Taxation Peter Holt said that the ATO values referrals from the community. According to Mr Holt, a community tip-off may be a missing piece of the puzzle that the ATO requires to finalise an investigation and or commence prosecution action.
All tip-offs are private and can be anonymous. If further clarification is required, the ATO may request contact details. However, due to privacy laws, the ATO cannot give updates on progress or the outcome of tip-offs.
From 1 July 2019, the ATO’s new Tax Integrity Centre will supply a single point of contact by phone or on-line for reporting suspected illegal phoenix, tax evasion and black economy activity. Behaviours that can be reported to the ATO include:
- Demanding or paying for work by cash;
- Not reporting or under-reporting income;
- Illegal phoenixing by deliberately liquidating a company and re-forming a business to avoid obligations to the ATO and to other creditors; and
- Over-claiming or incorrectly tax deductions (for example claiming private car expenses).
The ATO supports businesses which comply with their tax and superannuation obligations. According to the ATO, the best way to satisfy tax obligations is to ensure accurate records are kept up-to-date (we mentioned about record keeping here).