Shadow Economy Advisory Forum key messages 28 May 2024

Welcome

Co-chairs welcomed attendees with an acknowledgment of country. No conflicts of interest were declared. Members were reminded of confidentiality requirements.

The Shadow Economy Advisory Forum (SEAF) 2024–25 Charter was tabled with no issues and members were advised of the requirement and introduction of Integrity Declarations.

CPA Australia Asia-Pacific Small Business Survey for 2023–24

CPA Australia presented on the results of the CPA Australia Asia-Pacific Small Business Survey for 2023–24 to the forum, covering:

• survey design and methodology
• small business conditions in 2023
• small business expectations in 2024
• importance of cash to small business
• drivers of small business growth
• impact of demographics on small business performance.

Australian Financial Security Authority

Australian Financial Security Authority (AFSA) presented on the linkages to the shadow economy including:

• the AFSA’s role as the Official Trustee and regulator of personal insolvency, and how it deals with shadow economy activities
• personal insolvency volumes
• linkages to shadow economy
• untrustworthy advisors, their impacts and the next steps in addressing them.

Members discussed various approaches in assisting and providing quality information to small businesses for them to access trustworthy advisors.

Member updates

Industry members shared key observations which focused broadly on current environmental pressures. The discussion noted:

• Industry bodies raised concerns of small businesses owners having limited knowledge of the reporting and tax obligations required and own industry regulations due to lack of education and low digital update usage.
• Small businesses continue to be impacted by labour shortages and recruitment challenges, with restrictions placed on migrants and international students.
• Small business owners are struggling to keep up with the volume, variety and pace of regulatory, legislative and system changes.
• Difficulty in Client Agent Linking due to fraud detecting strategies was noted, with funding announced in the 2024–25 Federal Budget to strengthen myGov and Digital Id.

Agency updates

Treasury

Treasury provided an update on the following:

• The 2024–25 Budget includes a measure extending the Shadow Economy Compliance Program for 2 years from 1 July 2026.
• The Budget documents include the Australian Government Small Business Statement which sets out a range of targeted supports for small business.

Australian Border Force

Australian Border Force (ABF) discussed the following:

• The frequency and significant quantities of vaping products being detected and the parallels with the illicit tobacco industry, including $12.4 million worth of vapes seized in Sydney in May 2024.
• Increasing volumes of trade and its impact on border operations.
• Signing of the ABF Mutual Recognition Arrangement with India, which will speed up trade for accredited Trusted Traders who export to India.
• An overview of the issue and action being taking to address migrant worker exploitations.
• The successful prosecution in the Federal Court in relation to exploitation of the visa system.
• The ABF publication of employers involved with the exploitation of migrant works.

An ABF presentation on the topic of exploitation of migrant workers and steps to protect them from exploitation was suggested to the forum.

Australian Taxation Office

The Australian Taxation Office (ATO) updated the forum with matters relating to the Shadow Economy Program including:

• The government will provide further funding over four years from 2024–25 to continue combat scams and online fraud. Funding includes $23.3 million for the ATO to continue to oversee and operate the secure e-Invoicing network.
• The Shadow Economy Program has undertaken more than 196,000 activities and raised more than $1.65 billion in liabilities.
• The Illicit Tobacco Taskforce has undertaken 78 seizures supporting taskforce activities and state law enforcement agencies. These operations have seized approximately 15 tonnes of illicit tobacco and more than 11.6 million illicit cigarettes, equating to approximately $39.7 million in forgone excise.
• The Shadow Economy Taskforce has made 135 disclosures to member agencies in line with the Memorandum of Understanding and Regulations.

Other business

The SEAF co-chair outlined the governance processes coming including:

• a deep dive session into Digital Shadow Economy Behaviours
• conducting a member survey to solicit feedback
• reviewing the current membership composition.

Action items