Australian Taxation Office cracks down on cash cheats to recoup $33b

The ATO will attempt to claw back some of the $33.4 billion in taxes lost to the cash economy by cracking down on dodgy individuals and businesses.

A crackdown on tax cheats will attempt to claw back some of the $33.4 billion that individuals and dodgy businesses in the “shadow economy” are estimated to owe the federal government.

Over the next four years, it is hoped at least $5.66 billion will be collected and returned to the budget, after new figures released by the Australian Taxation Office showed just how significant the tax “gap” between the amount of money expected versus received has become.

A $1.9 billion investment in additional compliance measures means the government is hoping to return at least $3.7 billion back to the budget bottom line by 2025-26.

Assistant Treasurer Stephen Jones told The Daily Telegraph tax avoidance was “not a victimless crime”.

“We all have a stake in ensuring that we can balance the budget and we can pay for all the services that Australians expect,” he said. “If we had $30 billion in the budget this year that would be what we‘re spending on Medicare.”

Assistant Federal Treasurer Stephen Jones says the Australian Taxation Office will crack down on people avoiding tax by using cash.

Mr Jones said the majority of businesses were doing the “right thing”, but those who operated in the “shadow economy” using cash were reaping an unfair advantage.

“Business tax avoidance means you’ve got one business getting unfair and illegal advantage over another business,” he said.

“We’ll have a task force working on it, state and federal police involved.

“For example, some (tax evasion) is often associated with criminal activity.”

Mr Jones said in cases of unpaid or incorrectly paid taxes that were “accidental” or an “honest mistake”, then those detected through compliance would only be required to pay the correct amount.

“But if there are patterns of ongoing deception and illegality, obviously there are fines involved as well,” he said.

It’s estimated that businesses and individuals using the ‘cash economy’ owe the federal government $33 billion.

During the pandemic the ATO took a similar approach as during a natural disaster, which included easing off on compliance activities as businesses and individuals grappled with more pressing issues.

“But when the urgency and the emergency passes, the ATO returns to normal compliance activity,” Mr Jones said.

With the government’s extra $1.9 billion investment, the tax office will go a step further and increase the amount of compliance it and other law enforcement agencies have the capacity to undertake.

About $1.1 billion will extend funding for the Tax Avoidance Taskforce, which focuses on multinational, large business, and high wealth tax avoidance, while $242.9 million will extend the Shadow Economy Program to stop “dishonest and criminal activities” outside of the tax system.

About $80.3 million will go to extending the Personal Income Taxation Compliance Program for a further two years, and $20.8 million to the Tax Practitioners Board to increase compliance investigations on “high-risk” practitioners.

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