| The term ‘black economy’ has now changed to ‘shadow economy’. This change has been made to reflect the Organisation for Economic Co-operation and Development’s (OECD) definition of unreported or dishonest economic activity. |
The shadow economy is not limited to tax issues. It is a complex, multi-faceted phenomenon operating across Australia’s workplace relations, financial, welfare, procurement and migration systems.
Shadow economy activities are not victimless crimes. They have harmful consequences such as:
- workers missing out on their entitlements (for example, proper wages, leave or employee protection)
- honest businesses being undercut by dishonest businesses that don’t pay the tax or superannuation they're supposed to
- criminals operating business models outside regulatory systems, and funding organised crime.
The shadow economy puts pressure on Australians who are doing the right thing. It also has broader impacts on our community by reducing funds for essential services such as health, education, transport and infrastructure, and funding for disaster response and other community services.
Shadow economy behaviours include:
- demanding or paying for work cash-in-hand to avoid obligations
- not reporting or under-reporting income
- underpayment of wages
- visa fraud and bypassing visa restrictions
- identity fraud
- ABN, GST, and duty fraud
- dealing in illegal drugs and tobacco
- sham contracting – presenting an employment relationship as a contracting arrangement
- illegal phoenixing – liquidating and re-forming a business to avoid obligations
- excise evasion
- money laundering
- unregulated gambling
- dealing in counterfeit goods.