Written

For

The

Australian

-

ATO

cracks

down

on

‘shadow

economy’

as

tip-offs

dob

in

tax

cheats

Nearly 1,000 Australians a week are picking up the phone to dob in suspected tax cheats. That's not a small number — that's a community fed up with people gaming the system.

The so-called "shadow economy" is costing us more than $100 billion a year — roughly 5 per cent of GDP. Think about that for a moment. Every cash-in-hand deal, every undeclared rental room, every under-the-counter cigarette sale adds up to a hole in the national budget the size of our entire defence spend and then some.

I've long been sceptical of the argument that dodging tax is a victimless crime. It's not. When someone doesn't pay their fair share, two things happen: the government has less to spend on hospitals, schools and roads, and the rest of us — the ones doing the right thing — pick up the tab through higher taxes. It's straightforward theft from your fellow Australians, as ATO assistant commissioner Tony Goding puts it.

What struck me most in researching this is how sophisticated the ATO has become. Data matching, the Taxable Payment Reporting System, the Sharing Economy Reporting Regime, industry benchmarks — this is not the sleepy tax office of 20 years ago. Sydney accountant Megan Mitchell made a great point about business sales: owners who quietly tell buyers to "add back" personal expenses to inflate the sale price are effectively handing the ATO a signed confession. The sale price doesn't match the declared profits, and the audit letter arrives.

The tip-offs are heaviest in building and construction, cafes and restaurants, and hairdressing. Newcastle leads the country outside the capitals for dobbings.

So next time a tradie offers you 10 per cent off for cash, understand what's really happening. They're not doing you a favour — they're pocketing the GST plus dodging up to 47 per cent income tax. And you're helping them do it.