The Tax Office has confirmed that the majority of “tip-offs” it receives about possible tax avoidance are related to business, amid concerns competitors may play dirty by “dobbing in” innocent businesses.
The ATO recently revealed it is on track to receive more than 70,000 tip-offs about undeclared income and dodgy tax practices this financial year — a major increase on the 51,000 received last 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,” said ATO assistant commissioner Peter Holt at the time.
At least one My Business reader expressed concerns that some of these tip-offs may have nefarious intentions.
“My concern is what happens if someone wants to cause harm to a business or person out of spite?” the anonymous commenter said.
“Dobbing is very un-Australian and I believe that guidelines should be given so that people know what is a tax dodge and what may be a legitimate occurrence of payment either way.
“Many small business[es] receive cash or pay cash to non-tax-claiming employees such as casual jobs of a couple of hours to teenagers for simple jobs.”
Almost three-quarters relate to business: ATO
The ATO was approached for comment on these concerns about the authenticity of tip-offs it receives.
While it did not directly respond to questions about the proportion of tip-offs that are found to be unsubstantiated, the ATO confirmed via a spokesperson that not all reports lodged result in action being taken.
“We take all tip-offs seriously. All information is assessed and referred to experienced staff who consider the information provided with other indicators to determine the veracity of risk and if any further action is required. We do not take action on all reports,” the spokesperson told My Business.
The spokesperson did, however, confirm that the majority of tip-offs it receives are business related.
“The new Tax Integrity Centre system will enable better reporting capability. However, at a high level, approximately 70 per cent of tip-offs were where someone identified a business,” the spokesperson said.
That would equate to around 49,000 of the projected 70,000 tip-offs the ATO will receive for the 2018–19 financial year.
My Business was advised that the ATO does not keep track of an individual’s motivation for making a tip-off.
New tip-off website set to launch
Asked about what guidelines are provided to taxpayers who may want to lodge their concerns about a third party, the ATO said that it is preparing to launch a dedicated reporting guide.
“From 1 July, our website will be updated (ato.gov.au/tipoff) to include information to support providing a tip-off, including how to make a good tip-off and what information to provide,” the spokesperson said.
“Our hotline staff have [also] received additional training.”
The spokesperson urged anyone making an honest tip-off to be as detailed as possible.
“Even if you only know part details, this information is still very useful,” they told My Business.
“To help us to identify who you are reporting, proving information like their name, an ABN and any social media details are helpful.
“If you know, it is also helpful for us to hear about:
- what they are doing and where it is happening
- how long it has been happening
- information about others involved
- any advertising they are doing
- copies of receipts or other materials you have that support your report
- details of any supporting information you are aware of, what it is and who holds it