Australians flagged almost 50,000 suspected tax dodgers this year, with the ATO confirming 85% warranted investigation.
What’s happening: Australians are flagging businesses demanding cash payments, incorrectly claiming expenses, and living beyond their declared means at unprecedented rates.
Why this matters: With 85% of analysed tip-offs leading to further investigation, community reports are becoming a critical tool in levelling the playing field and protecting legitimate operators.
Australians are raising red flags about tax dodgers at a staggering rate, submitting almost 1,000 tip-offs every week to the Australian Taxation Office.
The milestone reflects growing community frustration with businesses and individuals who dodge their tax obligations, particularly in construction, hospitality, and beauty services sectors where cash transactions remain common.
ATO Assistant Commissioner Tony Goding said businesses evading their obligations are harming the entire community. “When someone cheats the system, they’re not just breaking the law, they’re freeloading on honest businesses and the rest of the community.”
The ATO has received over 300,000 tip-offs since July 2019, with the 2024–25 financial year alone generating nearly 50,000 reports from vigilant Australians who spotted suspicious behaviour.
Most reports relate to shadow economy activity including demanding cash payment for work, incorrectly claiming business expenses, and failing to declare income. The ATO estimates this behaviour costs billions annually, directly weakening funding for essential services such as health, education, transport, infrastructure, and disaster response.
“Paying tax is not optional. Sooner or later, and probably sooner, if you’re operating in the shadow economy, the ATO will discover this, through our extensive data-matching through initiatives including the Taxable Payment Reporting System and the Sharing Economy Reporting Regime, our industry benchmarks or as a result of a tip-off from one of your workers, customers or competitors,” Goding said.
The industries under watch
The red flags aren’t limited to obvious “cash only” signs. Australians are reporting luxury cars parked outside businesses claiming financial struggle, consistently busy cafés that never report profits or employees, and workers being paid in cash without payslips or superannuation contributions.
New South Wales residents submitted the highest number of tip-offs with 15,907 reports, followed by Victoria with 11,890 and Queensland with 10,630. However, regional areas are increasingly active, with Newcastle, Robina, Sunshine Coast Hinterland, Townsville, and Toowoomba featuring in the top five areas for tip-offs.
The three industries attracting the most scrutiny are building and construction, cafés and restaurants, and hairdressing and beauty services.
“With tip-offs often coming from customers, employees, other businesses, and even family and friends, the community is clearly fed up with dodgy behaviours and is stepping up to help us make things fairer,” Goding said.
The effectiveness of community reporting is evidenced by the investigation rate. In 2024–25, approximately 85% of analysed tip-offs were deemed suitable for further investigation by specialised ATO teams working alongside cross-agency partners through the Shadow Economy Taskforce.
“People evading their tax and super obligations are directly harming honest businesses and putting an increased burden on other Australians. There really is no excuse. It’s unfair competition and it’s illegal. And when you’re caught, you don’t just have to cough up the tax. You’ll also face significant penalties plus interest on unpaid taxes and possibly even criminal sanctions,” Goding said.
What triggers suspicion
The consequences can be severe. In one case, a construction company owner who under-declared business income and fabricated receipts using AI tools was hit with over $2 million in estimated income tax and penalties, with the case referred to the Australian Federal Police for criminal investigation.
The ATO discovered the business owner’s reported income was five times lower than actual earnings, with income deposited directly into personal accounts alongside fabricated payslips and receipts.
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