News: Top 5 industries dodging tax payments in Australia

Entrepreneurship

Top 5 industries dodging tax payments in Australia

Which business sectors didn’t pay taxes in full in the 2021-22 financial year?
Top 5 industries dodging tax payments in Australia

The Australian Taxation Office (ATO) has named the top five tax-dodging industries in the country over the past year. The agency also warned about the “shadow economy,” which has remained very active despite the COVID pandemic.

The ATO recently launched its investigation on specific business sectors that didn’t pay taxes in the 2021-22 financial year. Through the help of thousands of tip-offs from across the country, the agency was able to identify which ones are the worst offenders.

Tax-dodging sectors

Building & construction received the most number of tip-offs out of all sectors in the list. It was followed by the hairdressing & beauty services. Rounding out the top five are cafés & restaurants, road freight transport, and management advice & related consulting services.

The ATO also revealed which Australian states provided the most number of tip-offs throughout the year. New South Wales topped the list with over 13,400, followed by Victoria with over 11,500, and Queensland with over 9,200.

The shadow economy in the time of COVID

The tip-offs also played a crucial role in helping the ATO identify the activities of the shadow economy. The term refers to dealings that take place outside of tax and other regulatory systems. According to the agency, the government loses around $11bn in taxes every year because of these under-the-table transactions.

The ATO believes the shadow economy continues to operate even while other legitimate businesses struggle because of the Covid pandemic.

Read more: Gender pay gap costing Australian firms $1B weekly

“The last couple of years have been tough for some businesses. But this doesn’t make it okay to gain an unfair advantage over honest businesses playing by the rules,” Peter Holt, Assistant Commissioner of the ATO, said. 

“The shadow economy is an economic and social issue that affects all of us. As businesses recover from the impacts of COVID and natural disasters it is more important than ever to protect the vast majority of businesses who are honest and try to do the right thing.

Every dollar of tax dodged is a dollar that can’t be used for vital services like health and aged care. We’ve all witnessed over the past couple of years how much the community relies on these critical services.”

Aside from businesses, the ATO made it clear that it is also looking into the activities of individuals. 

“We know that many customers also demand to pay in cash and ask for discounts to avoid paying tax, and we also know that many workers are demanding cash especially where there is a shortage of labour,” Holt said.

“Our message is – regardless of which party is driving the behaviour - it’s illegal and we’re on to it.”

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Topics: Entrepreneurship, Leadership

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