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 2016–17.
[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.
All online articles accessed May 2018
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