ATO Prosecutions Jump 80% as Shadow Economy Fines Top $2.7M
Synopsis
The ATO has recorded more than 350 successful shadow economy prosecutions, with fines exceeding $2.7 million over two years.
Australia's shadow economy is under siege with ATO prosecutions up nearly 80% in two years and a rising number of individuals and entities successfully prosecuted, with courts levying fines of more than $2.7 million.
The number of convictions also grew by about 60%, with more than 305 people and entities convicted over the period. Queensland had the largest share of prosecutions (28%), followed by Queensland, New South Wales and Western Australia, which combined had nearly three-quarters of prosecutions.
ATO steps up action on undeclared income
The figures are part of a wider clamp down by the ATO on income and business activity not properly declared to the tax office.
In 2024–25, nearly 50,000 tips from the community were received by the ATO for suspected tax and superannuation non-compliance. The agency also uses data matching and other information to find cases for investigation.
In recent years, compliance enforcement has been carried out across a variety of industries. The ATO has worked with the Fair Work Ombudsman and the Australian Border Force on inspections at farms, vineyards and food businesses, and will be checking on tax, wages and superannuation requirements.
The program is part of the ATO's ongoing work to understand the size of the tax gap in Australia. According to its latest estimates, the tax gap of the shadow economy was roughly $25 billion in 2022-23.
The ATO's estimate for the small business income tax gap was $27.2 billion, equal to 17.4% of the theoretical tax liability. That gross difference equates to approximately $17.1 billion due to shadow economy activity.
Tax gap remains concentrated in small business
The ATO has previously stated that deliberate non-compliance is just one factor in the tax gap. The differences between the amount of taxes that should be paid and the amount collected are also caused by mistakes, by the incompleteness of the records, and by other forms of non-compliance.
Data from ATO prosecutions showed there were 226 successful prosecution outcomes and $2.86 million in fines in 2023–24. The last two years statistics are for a wider area of enforcement and provide larger numbers of prosecutions that have been successful.
The ATO has stated that, for serious tax offences, financial penalties or criminal convictions may be imposed and for those that are more serious, imprisonment can be served.
Source: Smart Company
Pooja Malik is a business journalist with over six years of experience covering startups, entrepreneurship, and emerging trends. She has previously worked with leading media platforms such as YourStory Media and BW BusinessWorld, where she reported on business, policy, and market developments. Currently, she serves as Editor at The Inspirepreneur Magazine, where she writes and edits stories across business, lifestyle, and travel, with a focus on clarity, accuracy, and reader relevance.
