Black Economy Standing Taskforce

Budget Review 2018–19 Index

Joseph Ayoub

As discussed in the Parliamentary Library brief: Targeting the black economy, the Final Report of the Black Economy Taskforce (the Taskforce) made 80 recommendations to Government.[1] Black Economy Package—new and enhanced ATO enforcement against the Black Economy[2] and Black Economy Taskforce—Standing Taskforce[3] implements recommendations 8.1 and 16.2 of the Taskforce—namely that the Government:

  • implement a multi-pronged strategy to increase the level and visibility of enforcement and prosecutions, covering tax, industrial relations, welfare, immigration and financial regulatory compliance. The strategy needs to make better use of intelligence and be focused on problem areas.[4]
  • establish a standing taskforce to identify, respond to and prosecute serious, complex black economy fraud.[5]

The Australian Taxation Office’s (ATO) current funding for compliance and audit activities for black economy activities is due to expire on 30 June 2018.[6] The Government will provide the ATO with $3.5 million over four years from 2018–19 to lead a multi-agency Black Economy Standing Taskforce (BEST).[7] This strategy is supported by the Government’s announcement that it will provide the ATO with an additional $318.5 million over four years from 2018–19 ‘to implement new strategies to combat the black economy’.[8] According to the Budget announcement, this will involve establishing ‘mobile strike teams’ and increasing the ATO’s audit presence.[9] This is part of the Government’s plan to ‘deliver more targeted, stronger and more visible enforcement’.[10]

According to the Taskforce, there is a community perception that it is currently ‘too easy to get away with’ participating in the black economy.[11] The Final Report notes that businesses and individuals in regional areas may ‘not think that they will be subject to enforcement proceedings because they do not see a visible presence by major regulators in the area’.[12] The Taskforce considered that increased publicity and presence can help change this perception.[13]

The Taskforce envisaged that the BEST would be modelled on the Serious Financial Crimes Taskforce and deal with serious, complex and high-value cases which require a cross-agency approach.[14] Criminal behaviour in labour hire operations and pockets of entrenched labour exploitation are examples provided by the Taskforce.[15] While it is not clear from the Budget announcement which agencies the ATO will be working with, the Taskforce noted that the ATO would work with the Australian Federal Police, the Australian Criminal Intelligence Commission, as well as relevant policy and regulatory agencies such as the Department of Home Affairs and the Fair Work Ombudsman.[16]

In recent times, the ATO has led and participated in a number of taskforces, including:

The publicity of the investigation and prosecution of egregious behaviour is intended to discourage individual and business participation in the black economy. This approach to dealing appears to have been utilised in the past. In 1996 the Cash Economy Task Force (CETF) was established by the Commissioner of Taxation to examine the nature of the cash economy and develop ways to prevent evasion in the cash economy.[18] The Commissioner of Taxation responded to the first of the CETF’s reports Improving tax compliance in the cash economy by increasing the ATO’s staff presence in cash industries and developing Task Force initiatives.[19] In its second report, also titled Improving tax compliance in the cash economy, the CETF found that there was ‘widespread acceptance in the community that not paying tax on cash income is OK’.[20] The ATO also implemented an inter-agency cooperation program involving the Department of Social Services (Centrelink), Department of Immigration and Multicultural Affairs, and Department of Employment, Education and Training and Youth Affairs to facilitate joint case work and improve understanding of compliance activities.[21]

The Taskforce also noted that the Government will need to maintain a sustained focus on the implementation of the Final Report, something which in the Taskforce’s opinion has not happened with earlier black economy reviews.[22] In this respect, the Government has also provided $12.3 million to Treasury over five years to ‘manage implementation of the whole-of-government response’ to the Final Report.[23]

As part of the Government’s response, a ‘Black Economy Hotline’ will be established.[24] While suspicion of tax evasion can currently be reported both online and over the telephone,[25] the Government considers that this hotline will allow the community to better report black economy and phoenix activity.[26] Further, the hotline will be supported by new IT infrastructure so that information provided by the community can be converted into metadata to facilitate enforcement action.[27] This appears to be consistent with the Taskforce’s statement that there is a need to devote resources towards enforcement activities in more ‘efficient and smarter ways by making better use of data and focussing on problem areas’.[28]

Related to this is recommendation 11.2 that the Government undertakes a ‘national cultural change campaign’ to shift social norms and the ‘psychological contract between the taxpayer and the Government’. Part of the implementation considerations is that this campaign be delivered ‘by the private sector through a non-government branded approach’.[29] The Government has accepted this recommendation.[30]

It is expected that Black Economy Package—new and enhanced ATO enforcement against the Black Economy will have a net gain to the budget of $2.4 billion in fiscal balance terms over the forward estimates.[31]



[1].          Black Economy Taskforce (Taskforce), Black Economy Taskforce: final report–October 2017, The Treasury, Canberra, October 2017, pp. vii-xi.

[2].          Australian Government, Budget measures: budget paper no.2: 2018–19, p. 23.

[3].          Ibid., p. 181.

[4].          Taskforce, Black Economy Taskforce: final report–October 2017, op. cit., pp. 181-5.

[5].          Ibid., p. 337.

[6].          Australian Government, Budget measures: budget paper no.2: 2018–19, p. 24.

[7].          Ibid., p. 181.

[8].          Ibid., p. 23.

[9].          Australian Government, Tackling the black economy: government response to the Black Economy Taskforce final report, The Treasury, May 2018, p. 10.

[10].       Ibid.

[11].       Taskforce, Black Economy Taskforce: final report–October 2017, op. cit., p. 184.

[12].       Ibid., p. 178.

[13].       Ibid., p 184.

[14].       Ibid., p. 338.

[15].       Ibid., p. 337.

[16].       Ibid.

[17].       For further information, see Parliamentary Library brief: Tax integrity package—establishing the tax avoidance taskforce from the Parliamentary Library’s Budget review 201617.

[18].       B Pulle, ‘Budgeted Tax Revenue, the Cash (or Black or Underground) Economy and the Tax Gap’, Budget Review 1998–99, Parliamentary Library, Canberra, May 1998, p. 50.

[19].       Ibid.

[20].       Ibid.

[21].       Cash Economy Task Force. Improving tax compliance in the cash economy, Australian Taxation Office, Canberra, 1998, pp. 10–11.

[22].       Ibid., p. 335

[23].       Australian Government, Budget measures: budget paper no.2: 2018–19, p. 180.

[24].       Ibid., pp. 23–4.

[25].       ATO, ‘Report fraud, tax evasion, a tax planning scheme or unpaid super’, ATO website, last updated 20 February 2018.

[26].       Australian Government, Budget measures: budget paper no.2: 2018–19, p. 24.

[27].       Ibid., p. 24.

[28]        Taskforce, Black Economy Taskforce: final report–October 2017, op. cit., p. 177.

[29].       Ibid., p. 272.

[30].       Australian Government, Tackling the Black Economy: Government Response to the Black Economy Taskforce Final Report, op cit., p. 29.

[31].       Australian Government, Budget measures: budget paper no.2: 2018–19, p. 23.

 

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