Social media is helping the Australian Taxation Office catch tax cheats through community whistleblowers and the agency is encouraging the practice.

The ATO received 47,000 reports of tax evasion and “other dishonest behaviours” last financial year.

The reports were the latest among 250,000 that the ATO estimates that it has received since July 2019 and the agency says that 90 per cent of the reports were “deemed as being suitable for further investigation”.

The ATO was unable to provide detailed information on how frequently social media was involved in tip-offs that it investigates. However, it has confirmed that it considers information gathered through social media provides valid grounds for further investigation and that it supports the actions of whistleblowers that use social media to report suspected breaches.

“Community tip-offs are one of our best sources of information when it comes to letting us know about tax avoidance and other dishonest behaviours. When we receive information through a tip-off, we cross check the information and assess whether further action is required regardless of how the tip-off was informed,” an ATO spokesperson said.

“While we don’t have specific data, we are aware that social media plays a role in tip-offs we receive and encourage the community to continue to provide these,” the spokesperson added.

The ATO was keen to point out that tip-offs are risk-assessed using other data sources and analytical tools.

While the ATO was cautious in its statements about how frequently social media is involved in tip-offs it receives, it did reveal that social media played a part in one of only two investigations that it showcased in its recent media statement regarding complaints to investigators.

Penny and friends

In that case study, the ATO said, a home hair salon operator, pseudonymously  “Penny”, was reported to the agency by a “friend” who noticed that the lifestyle she displayed on social media seemed mismatched with her reported business circumstances.

The friend raised his concerns with the ATO after visiting Penny’s home salon and finding that she was running a cash-only business. Penny was left facing $1 million in penalties after ATO investigators found that she had never declared any business income on her returns.

Community concern

ATO Assistant Commissioner Tony Goding said the community tip-offs indicated that Australians were tired of tax cheats.

“The number of reports we have received tells us that Aussies have had enough. Dodging your tax obligations clearly no longer passes the ‘pub test’. We’re receiving tip-offs from other businesses, customers, members of the community, employees, and even family and friends,” Mr Goding said.

Dishonest operators engaged in evasion measures ranging from conducting cash-only business transactions to dodge income detection and super obligations to more sophisticated techniques involving manipulation of electronic point-of-sales devices.

The ATO estimated that the use of cash in the shadow economy could be responsible for revenue collection hole valued at up to $16 billion.

The building and construction industry, cafes and restaurants, and hairdressing and beauty services attracted the most complaints in the 2024 financial year. Complaints were highest in the most populous states of NSW (15,516), Victoria (11,256) and Queensland (10,629) with Sydney and Melbourne topping the list of cities for tip-offs.

Editor’s note: This story was updated to include comments by the ATO that were not made available until after its initial publication.