The government announced a whole-of-government package in response to the taskforce report to tackle the Shadow Economy in 2016 (Shadow Economy Treasury Website)External Link. The Shadow Economy Compliance Program was established in response to the taskforce report. Since establishment, this measure has been extended through to 2027–28 with the most recent funding boost announced in the December 2024 Mid-Year Economic Forecast.
A number of new measures were implemented during the formation of the program including:
- removing tax deductibility of non-compliant payments
- expanding the Taxable payments annual report requirements into new industries
- increasing the integrity of the Commonwealth procurement process
- collecting tobacco duties and taxes at the Australian border
- establishing the new Tax Integrity Centre (making it easier to make a tip-off) – a single point of contact to report suspected or known illegal activity or behaviour of concern.
Shifting to a compliance focus through the Shadow Economy Compliance Program extensions, by 30 June 2024 the ATO has identified and treated $7.9 billion in unpaid taxes. The program seeks to address the shadow economy across a range of activities and risk areas by focusing on:
- identifying and responding to new and emerging risks through improved risk detection analytical models
- prevention activities focusing on building knowledge and participation in the tax and superannuation systems through community education and support for small businesses
- ensuring Lodgment obligations are met to facilitate correct reporting and payment, as well as support correct treatment of employer obligations
- addressing opportunistic and deliberate behaviour such as omission and under reporting of income and unexplained wealth
- addressing digital tax fraud, which involves the use of software and other mechanisms to hide or redirect income
- addressing the domestic production of illicit tobacco to prevent the supply of illicit tobacco into the retail market
- addressing illicit alcohol by removing the most egregious entities from the supply chain
- ensuring tax professionals and other intermediaries do not participate in the shadow economy or negatively influence their client’s behaviour
- enabling cross-agency information sharing and activities through the Shadow Economy Taskforce.
For more information see:
- updates on recent government announcements on tax and superannuation law and policy
- ‘Essentials to strengthen your small businessExternal Link’ learning platform for small business support with business essentials .
- illicit tobacco