Tax and financial criminals may weave a complex web for law enforcement to untangle, but sometimes their downfall comes after being “dobbed in” by a concerned citizen.
The ATO’s tip-off system allows the public to report a range of crimes that pose a threat to Australian businesses and the community.
What can be reported?
In addition to tax fraud and tax evasion, the ATO encourages the reporting of a wide range of activities including:
- Fraud related to COVID-19 stimulus measures.
- Identity fraud.
- Money laundering.
- Trading in illegal drugs and tobacco.
- Trading in counterfeit goods.
- Illegal purchase of Australian property by a non-resident.
- Bypassing visa restrictions, and visa fraud.
- Unregulated gambling.
Some encouraged reporting activities focus on targeting unscrupulous professionals such as business owners and tax professionals.
The ATO encourages reporting business owners who are behaving inappropriately, including those who engage in:
- Paying for work cash in hand to avoid tax obligations.
- Not reporting or under-reporting income.
- Underpayment of wages.
- ABN, GST and duty fraud.
- Sham contracting – presenting an employment relationship as a contracting arrangement.
- lllegal phoenixing – deliberately liquidating and re-forming a business to avoid obligations.
The ATO also encourages the reporting of misconduct by tax professionals, including by other tax professionals. Examples of situations that may warrant reporting include:
- Inappropriate conduct of a client’s previous tax professional.
- Hearing about potential tax avoidance schemes from clients.
- Seeing others representing themselves as tax professionals when they are not.
How does the ATO respond to tip-offs?
When the ATO receives information through a tip-off, it cross-checks the information and assesses whether further action is required.
Of the 56,000 tip-offs received in the 2020 financial year, 71% were deemed as suitable for further investigation.
Specialised teams and taskforces
Tip-offs warranting further investigation are often handled by specialised teams and taskforces within the ATO, such as the Black Economy Standing Taskforce, Illicit Tobacco, Financial Crimes and Phoenix Taskforces.
The ATO has also developed specialised teams to address allegations relating to JobKeeper and other government stimulus measures.
In a recent case, following an anonymous tip-off it was found that an employer was abusing JobKeeper payments relating to four employees. Two employees were paid less than the required fortnightly sum, and the other two employees being claimed for were ineligible for the JobKeeper payment. The employer was required to repay $22,500 to the ATO.
Tip-offs are an important mechanism that help the ATO and its specialised taskforces to combat tax and financial crime. It’s not only sophisticated criminal networks who can be reported to authorities – increasingly, businesses and tax professionals engaging in misconduct are being reported by employees, business associates, and the community.