Shadow Economy Advisory Forum key messages 10 May 2022

Welcome and chair update

Co-chairs Deputy Commissioner, Deborah Jenkins ATO and Dr Michael Schaper welcomed attendees; no conflicts of interest were declared. While not a conflict, Dr Schaper advised he is now a member of the board of the Gaming and Wagering Commission of Western Australia. The work of Secretary, Paul McCullough, Treasury was acknowledged on his retirement. New member, Simon Butt, Master Builders Association was welcomed to the forum, although he was an apology for this meeting.

Members were reminded of confidentiality requirements associated with forum discussions. Should information be required for circulation outside this forum, members are to engage co-chairs who will ensure appropriately classified information is provided for dissemination. Caretaker mode was noted.

Community engagement and messaging

Members were presented with a pack of draft messaging artefacts for discussion and feedback along with a calendar of potential speaking opportunities. The draft messages were in an industry-voice, designed to be delivered from members other than the ATO.

Members identified that the term ‘shadow economy’ may not resonate with all business owners in their industries and suggested using the term ‘cash economy’ or other alternatives. It was acknowledged that terminology could be tailored to the industry and audience to identify the associated shadow economy behaviours. The growing use of electronic sales suppression tools as growing risk was also raised, acknowledging that the shadow economy is more than the ‘cash economy’.

Members agreed firm language is needed to highlight that under reporting activities is a criminal offence, which is not victimless nor good business practice. There was discussion about some international examples. Other suggestions included to make messaging personal/emotive, focus on the ramifications and punishments for engaging in criminal activities, and to explore using behavioural economics to develop messages that would influence the audience. Members also raised additional speaking opportunities for the calendar.

Member updates

Industry members shared key observations which focussed on factors contributing to a highly challenging business environment. This included:

• high inflation not previously encountered by business owners
• wage increases, rising fuel costs, increasing cost of supplies, increase in interest rates, supply chain disruptions, profit margin pressures, insurance affordability, access to finance
• payment of deferred rents and likelihood of annual rental increases based on Consumer Price Index in the coming year
• future changes to the super guarantee percentage and the removing the $450 per month threshold for super guarantee
• difficulty in attracting and retaining staff is an issue with many industries seeing demand for their services/products at or exceeding pre-pandemic levels, but they are unable to meet demand due to staff and or skill shortages
• COVID-19 has meant changing business models, including hybrid models to ensure on-going sustainability.

Agency updates

Geoff Francis, Assistant Secretary Treasury advised the legislation to introduce a sharing economy reporting regime and the legislation to enable the Commissioner of Taxation to direct an entity to complete an approved record-keeping course as an alternative to financial penalties, known as direction to educate, did not pass the Senate prior to the election being called. This will be progressed with the incoming government, along with the review of the Increasing the integrity of the Commonwealth procurement process measure.

Geoff also advised that the Strengthening the Australian Business Number (ABN) system measure start date has been delayed by 12 months as announced in the recent federal budget.

Vanessa Holben, Customs, Australian Border Force (ABF) advised that the ABF Commissioner will deliver the keynote address at the inaugural International Forwarders and Customs Brokers Association of Australia conference on 20 May 2022. Data connectedness with industry will be a focus of the address. Vanessa also advised that integrity in supply chains would be an ABF focus next year and agreed to speak with members out of session on the topic of modern slavery.

Deb Goldfinch, Director ATO advised that additional funding was received for a 12 month shadow economy work program as part of Mid-Year Economic and Fiscal Outlook with focus on our compliance program, and prevention work.

Deborah Jenkins, Deputy Commissioner ATO provided members with information about Operation Protego. Deborah thanked members for sharing the recent media release and highlighted that work was underway to address the proliferation of this GST refund fraud risk, including working with banks and social media platforms. A hotline is in place and people are asked to contact the hotline if they have engaged in this behaviour inadvertently.

The next 12 months

Agreement was provided by members to extend the tenure and membership of this forum by 12 months and renew the forum charter. There was discussion around the value of the trust built between forum members, both in and out of session. Future potential meeting topics were raised, including covering behavioural insights, the international context, changes to the taxable payments reporting system, as it relates to shadow economy and the CPA Asia Pacific Small Business Survey results.

Other business

Co-chairs and members discussed the potential for a face-to-face meeting of this forum. The meeting closed at 3:50 pm.

Attendees

Guest attendees

Apologies