THE Australian Taxation Office (ATO) today announced that it has received nearly double the amount of referrals from the community about tax evasion compared to the same time last financial year.

The ATO received nearly 60,000 reports of suspected tax evasion, the black economy or illegal phoenix activity from July 1, 2018 to May 31, 2019, which is a 42 percent increase on the volume of referrals in the same time period in the previous financial year.

While not all referrals result in an audit, they help build a more complete view of risk and help us determine if any further action is required.

More than half of all referrals received from were for suspected under reporting of income or about the cash economy, for example businesses demanding cash from customers or paying their workers cash in hand.

The top 5 ‘tip offs’ to the ATO (July 1, 2018 to May 31, 2019) were:

1. under reported income (31%)
2. cash economy (27%)
3. non lodgment (25%)
4. inadequate or no superannuation paid (8%)
5. over stating expenses (3%)

Assistant Tax Commissioner Peter Holt said, “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.

“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,” Mr Holt said.

"We are committed to supporting business meet their tax and super obligations, and offer a range of resources for businesses to get it right.

"We understand the pressures business owners face in running a business and that sometimes they make legitimate mistakes. The best way to stay on top of your tax and super is to ensure your records are kept up-to-date. Good record keeping will help you complete and lodge your tax returns, manage cash flow, meet your tax obligations and understand how your business is doing."

ATO TAX INTEGRITY CENTRE

The record number of referrals coincides with improvements to the process for letting the ATO know about suspected tax evasion, according to Mr Holt.

The "new and improved" Tax Integrity Centre will be launching on July 1 and will provide a single point of contact for reporting suspected or known illegal phoenix, tax evasion, and black economy activity.

“Our tip-off line is the taxation equivalent of Crime Stoppers for tax. Members of the community will be able to tip the ATO off online or by calling our hotline on 1800 060 062,” Mr Holt said.

"Members of the community can report any known or suspected activity where someone might be gaining a competitive advantage by intentionally doing the wrong thing. This is not just limited to tax issues."

Mr Holt said it involved behaviours such as:

• demanding or paying for work cash in hand to avoid obligations

• not reporting or under-reporting income

• illegal phoenixing – deliberately liquidating and re-forming a business to avoid obligations

• over-claiming deductions e.g. paying for home renovations through their business account.

“We value referrals from the community," Mr Holt said. "Tip-offs are assessed and referred to experienced staff for review to determine if any action is required. Tip-offs help us build a more complete view of risk.

"A community tip-off may be the missing piece of the puzzle that we need to finalise an investigation and seek prosecution action to help protect honest taxpayers. Even if you only know part details, this information is still very useful. It helps us understand industry trends and emerging issues and forms part of our engagement strategies,” Mr Holt said.

"All tip-offs are private and can be anonymous. The ATO does request contact details in case information provided needs further clarification.

“Sometimes we may need to ask you about the information you provided. Leaving your name and contact details can help us to do that. We will only contact you for more information if you tell us it’s okay," Mr Holt said.

“Due to privacy laws, we won’t be able to inform you of the outcome of the information you provide. We also won’t be able to provide you with any updates on progress of the information you provided.

"The Black Economy Taskforce estimates that the black economy is costing the community as much as $50 billion each year, which is approximately three percent of Gross Domestic Product (GDP). This is money that the community is missing out on for vital public services like schools and roads,” Mr Holt said.

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

“Improvements to evasion reporting and analysis of intelligence received are just two of the many ways we’re tackling the black economy,” Mr Holt said.

ABOUT THE BLACK ECONOMY TASKFORCE

The Black Economy Taskforce was established to provide a whole-of-government approach to combat the black economy in Australia. It was established in December 2016 to develop a policy framework involving new proposals to tackle black economy activity. The Black Economy Taskforce's Final Report was released in October 2017.

The ATO plays a significant role in leading and delivering on the Black Economy Taskforce recommendations accepted by the government. Since July 1, 2018, the ATO has coordinated an extensive program of work to tackle the black economy. This program of work includes a multi-faceted approach.

The ATO is responsible for addressing the following aspects of the black economy:

• under-reporting income and over-claiming expenses

• ensuring businesses meet their employer obligations – so they don’t pay employees or contractors cash in hand, underpay wages, fail to withhold tax or not contribute to super

• addressing illegal phoenixing (together with Phoenix Taskforce partner agencies) – deliberately liquidating and reforming businesses to avoid obligations

• preventing tax fraud

• dealing with illicit tobacco, duty and excise evasion

• targeting intermediaries and agents who enable black economy behaviour.

HELP AND SUPPORT

The ATO said most businesses use a registered tax agent for tax advice and to lodge their tax return.

"We also offer a range of learning resources for business operators to understand their tax and super obligations and get it right, including business webinars and workshops," the ATO spokesperson said.

"Businesses can chat with us one-on-one through our Live chat and After-hours call back service. We can also answer general questions via social media or you can join the discussion in our peer-to-peer forum, ATO Community.

ato.gov.au/sbsupport 

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FEDERAL Tourism Minister, Simon Birmingham, will officially open the first-ever National Wine Tourism Conference Beyond the Barrel in South Australia today.

The three day conference (June 18–20, 2019) delivered by Australian Tourism Export Council (ATEC) is for Australian wine businesses looking to enhance their wine tourism offering and increase the number and expenditure of international tourists visiting their regions.

ATEC has introduced the conference after securing a $35,000 grant through the Australian Government’s $50 million Export and Regional Wine Support Package, which is administered by Wine Australia.

The event will feature educational workshops, commercial businesses meetings, conference sessions and networking events – all designed to propel wine businesses into the world of tourism.

Mr Birmingham officially opened the first conference session on Thursday June 20, 2019 at the National Wine Centre.

“Australia is lucky to have some of the best wine regions in the world and there is no doubt we are well positioned to capitalise on this growing part of the tourism market and attract more international visitors seeking premium food and wine experiences,” Mr Birmingham said. 

 
“We want people from around the world to not only taste our world class wines but to also visit the spectacular regions in which they are made, where visitors can genuinely indulge in the experiences of a lifetime.
 
“Our Government has backed Beyond the Barrel because we want Australian wine businesses to have the capabilities, connections and knowledge to deliver world-class premium experiences, which ultimately injects more tourism dollars into our economy and creates more jobs.”

ATEC managing director, Peter Shelley, said, “Beyond the Barrel recognises the value of our wine industry as part of the tapestry of offerings Australia brings to the international tourism marketplace.

“Our wine industry is an important part of the future growth and expansion of the international visitor experience and Beyond the Barrel will focus on helping businesses and tourism regions develop and deliver quality, authentic and engaging wine tourism experiences.”
 
Beyond the Barrel provides a unique opportunity for wine businesses to participate in commercially focused discussions with international travel buyers and to find insights and advice on how to create and expand a sought-after wine tourism experience.  Speakers including MONA’s CEO Mark Wilsdon and Mat Janes, the head of Winery and Restaurant Innocent Bystander will both shed light on their experiences, challenges and inspirations.

www.atec.net.au

 
Background
 
The International Wine Tourism Competitive Grants program is administered by Wine Australia on behalf of the Australian Government. Grant applications were assessed by an Independent Expert Assessment Panel in accordance with the grant guidelines, and co-contributions applied. More information about the $50m package is available at:  http://erwsp.wineaustralia.com 

OFFICIAL results show that 2018 was one of the strongest years on record for population growth, with the number of people living here rising by 404,780 during the year, accordinvg to Master Builders Australia.

“This reinforces the need for state and territory governments to work with the Federal Government to implement microeconomic reform measures that will support the fast tracking of congestion busting infrastructure projects and more efficient planning, tax and red tape cutting regimes to support an increase in new housing construction,” Master Builders Australia chief economist Shane Garrett said. 

The ABS data indicates that Australia’s population rose by 1.6 percent over the course of 2018. Net migration from overseas accounted for about 250,000 additional residents while the excess of births over deaths added 156,000 to the population. 

“There is a very strong linkage between inward migration to Australia and the pace of job creation. The 270,000 increase in total employment during 2018 is very similar to the figure for overseas migration,” Mr Garrett said. 

“Population and jobs growth drives construction activity right across the spectrum including for residential, offices, shops, schools and hospitals – not to mention all of the support infrastructure needed,” he said. 

“Australia’s building sector is currently facing challenges in the form of weakening economic growth and difficulties around access to finance in some parts of the market. Fast tracking the rollout of previously announced government infrastructure projects would help strengthen confidence on the ground in addition to meeting the needs of a growing population,” Mr Garrett said. 

“Master Builders estimates that between 193,850 and 201,705 new homes will need to be built each year over the coming two decades to accommodate future growth. Failing to do this will surely result in home ownership becoming an even more formidable quest for our younger generations. 

“Given that we managed to build just 173,350 dwellings per year over the past 20 years, the onus is on all tiers of government to lift their game and ensure that land supply, planning policy and taxation settings are more conducive to the delivery of the homes and buildings we will require,”  Mr Garrett said. 

During 2018, the fastest rate of population growth was in Victoria (+2.2%), followed by the ACT (+1.8%) and Queensland (+1.8%). More modest growth was recorded in NSW (+1.6%) and Tasmania (+1.2%). 

Particularly challenging economic conditions in the NT contributed to a 0.4 percent decline in its population during 2018. Population growth was quite modest in South Australia (+0.8%) and Western Australia (+0.9%).

www.masterbuilders.com.au

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THE Australian Taxation Office (ATO) has reminded employers that any ‘cash in hand’ payments made to workers from July 1, 2019 will not be tax deductible.

‘Cash in hand’ refers to cash payments to employees that do not comply with pay as you go (PAYG) withholding obligations. Payments made to contractors where the contractor does not provide an ABN and the business does not withhold any tax will also not be tax deductible from July 1.

Assistant Commissioner Peter Holt said the new rules have a dual purpose of levelling the playing field for honest businesses that are doing the right thing by their workers as well as tackling the black economy.

“It’s fairly straight-forward: do the right thing and you can claim a deduction. Deliberately do the wrong thing and you’ll miss out on a deduction and risk being penalised," Mr Holt said.

This new measure will take effect for payments made to workers from July 1, 2019 for income tax returns lodged for the 2020 income year onwards and is part of the government’s response to recommendations from the Black Economy Taskforce.

“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). This is money that the community is missing out on for vital public services like schools and roads.” Mr Holt said.

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

In addition to the loss of a tax deduction, employers caught not complying with their PAYG withholding obligations may be penalised for failing to withhold and report amounts under the PAYG withholding system.

“This new measure is just one of the many ways we’re tackling the black economy," Mr Holt said.

Mr Holt said “transacting in cash is a legitimate way of doing business, and we recognise that some industries do tend to take more cash than others”.

“But when cash is used to deliberately hide income to avoid paying the correct amount of tax or superannuation it’s not only unfair, it’s illegal," Mr Holt said.

Employers who mistakenly classify their employee as a contractor will not lose their deduction where their worker provides them with an ABN. 

Mr Holt said that payers who attempt to do the right thing but make a mistake do not need to worry; they will not lose their deduction.

“Our objective is to support small business to help them get it right. But anyone caught deliberately doing the wrong thing will lose their deduction."

Mr Holt said employers that failed to withhold or report their PAYG obligations can come forward and voluntarily disclose this to the ATO before we take any compliance action. If they do they will not lose their deduction and may be entitled to reduced penalties.

If a member of the community has any knowledge or concerns about an employer paying their workers cash in hand, they can report it to the ATO online at ato.gov.au/ReportAConcern or by phone on 1800 060 062. Reports can be made anonymously. One in five of the reports we received in 2017-18 were about the black economy.

More information is available at ato.gov.au/paygwdeductions

About the Black Economy Taskforce

The Black Economy Taskforce was established to provide a whole-of-government approach to combat the black economy in Australia. It was established in December 2016 to develop a policy framework involving new proposals to tackle black economy activity. The Black Economy Taskforce's Final Report was released in October 2017.

The ATO plays a significant role in leading and delivering on the Black Economy Taskforce recommendations accepted by the Government. Since July 1, 2018, the ATO has coordinated an extensive program of work to tackle the black economy. This program of work includes a multi-faceted approach.

The ATO is responsible for addressing the following aspects of the black economy:

• · under-reporting income and over-claiming expenses
• · ensuring businesses meet their employer obligations – so they don’t pay employees or contractors cash in hand, underpay wages, fail to withhold tax or not contribute to super
• · addressing illegal phoenixing (together with Phoenix Taskforce partner agencies) – liquidating and reforming businesses to avoid obligations
• · preventing tax fraud
• · dealing with illicit tobacco, duty and excise evasion
• · targeting intermediaries and agents who enable black economy behaviour.

www.ato.gov.au

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