Australian business owners are being warned after the Australian Taxation Office carried out an unannounced compliance operation at 25 fast-food outlets, restaurants and cafes.

The venues, located in Melbourne’s CBD, were visited on September 22 and 23 as the ATO examined suspected tax evasion, unpaid superannuation and income that may have been underreported.

Data obtained by news.com.au shows the ATO received more than 52,000 tip-offs across Australia during the last financial year—around 1,000 leads each week. More than 2,500 concerned the hospitality sector.

ATO assistant commissioner Tony Goding said information supplied by the public was crucial to identifying businesses that were not complying with their obligations.

“Much of our most valuable intelligence comes directly from community tip-offs,” he said.

“Often, it’s a worker, customer or competitor who recognises something that doesn’t seem right.”

Mr Goding said businesses could come under scrutiny when their declared income appeared inconsistent with the level of activity at their premises.

“Melbourne diners know a busy cafe when they see one, so do we,” he said.

“When a venue is packed, staff are flat out and the coffee machine never stops, but the books tell a different story, that’s something we’re going to take a closer look at.”

The Melbourne operation is part of the ATO’s wider Shadow Economy Taskforce, which also visited farms in Griffith, NSW, in July and vineyards throughout South Australia’s Barossa Valley, Adelaide Hills and McLaren Vale in April.

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The agency said its work over the past couple of years had identified more than 350 individuals and entities, leading to fines totalling more than $2.7 million.

Beyond hospitality, the ATO said a significant number of tip-offs involved the building and construction sector, as well as hairdressing and beauty businesses.

The allegations most commonly involved undeclared income, cash-in-hand payments and lifestyles that appeared out of step with the earnings reported to authorities.

Mr Goding said people who intentionally avoided paying tax or meeting their superannuation responsibilities would ultimately be detected.

“Tax crime leaves telltale signs, and the community is getting better at spotting them, and less tolerant of people getting away with these activities,” he said.

“The message is simple: if you’re deliberately avoiding your tax or super obligations, there’s a good chance someone will notice.

“Whether it’s an employee, customer, supplier, former partner, competitor or member of the public, there are eyes everywhere.”

– READ MORE: ATO puts Australians on notice over commonly abused tax deduction: ‘We’re watching more closely than ever’ 

Whenever the prospect of further immigration cuts in Australia is raised, Labor and the Coalition tend to offer the same response.

We cannot reduce migration that far because the economy needs migrants to fill vacant jobs.

It is an instinctive—and revealing—argument. Immigration Minister Tony Burke repeated it recently at the National Press Club.

As I will explain, that reasoning assumes the only workers who count are those who have not yet arrived in Australia.

Critics of One Nation’s proposal to return temporary migrant numbers to pre-Covid levels warn that the move would create skills shortages and leave Australia exposed to the pressures of an ageing population.

That simplistic thinking has infected the broader immigration debate. The choice is presented as either maintaining exceptionally high migration or watching hospitals and construction sites come to a standstill.

Apparently, there is no middle ground.

Australia clearly needs a continuing flow of skilled migrants. No credible government would close the door to highly specialised doctors, engineers or other essential professionals.

But the assumption that every new arrival automatically fills a labour shortage overlooks a fundamental economic reality: migrants add to the supply of workers, but they also create new demand for workers.

A migrant nurse may help staff a hospital, but that nurse also needs access to a doctor, a home and the infrastructure required to support a growing population.

Two decades of high migration have not eliminated Australia’s skills shortages. One reason is that rapid population growth generates additional demand at the same time as it adds to the labour supply.

If simply adding more people were a guaranteed economic solution, Australia would have resolved its workforce problems long ago.

The argument that mass immigration can solve population ageing is equally unconvincing. At most, it delays the problem. Migrants grow older too.

As each new intake ages, an even larger intake is required behind it to maintain the same demographic momentum.

Relying on successive waves of migration to keep lowering the median age resembles a demographic Ponzi scheme.

Rather than focusing only on how many people Australia can bring in, politicians should ask why they are overlooking the millions of workers already living here.

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Nearly five million Australians are over the age of 65, yet their workforce participation rate is only 16 per cent. In New Zealand, the figure is above 26 per cent.

What explains the difference?

One important reason is that New Zealand doesn’t punish its seniors for working. New Zealanders can keep working after 65 without having their pensions clawed back.

Australia does the exact opposite. We claim we want more older workers, then financially punish them for remaining in the workforce. 

After the available Work Bonus and income-free allowances are exhausted, the pension is clawed back by 50 cents for every additional dollar earned, and that is before ordinary income taxes whittle wages away even further.

It’s a big deterrence tax on work for older Australians. A pensioner who gives up their leisure to help an employer fill a vacancy is financially penalised for the privilege well beyond normal tax rates. And politicians wonder why so many stay home?

MacroBusiness chief economist Leith van Onselen has done the arithmetic: ‘Australia would gain just over 500,000 workers if its 65-and-over labour force participation rate matched New Zealand’s,’ he argues.

That’s more than three per cent of our current workforce, a perfect way to fill existing gaps without super-charging migration numbers, which as mentioned, cause other issues.

Health, workplace flexibility, retirement savings and personal preferences also influence whether older Australians choose to continue working. But even if Australia is only able to entice a fraction (say 20 per cent) of the over 65-year-olds New Zealand has back into the workforce, that’s around 100,000 extra workers to fill gaps.

‘These people already live in Australia’, Leith points out. They increase labour supply without producing a corresponding population driven demand shock.

The fix is glaringly obvious: exempt employment earnings from the pension income test. 

Let pensioners pay ordinary income tax on their combined income like everyone else. It would preserve the safety net while eliminating the penalty for working, giving Australia more workers in industries where we need them.

One Nation deserves credit for injecting a version of this reform into the debate. It is vastly more economically serious than the media’s reflexive insistence that a large scale reduction in migration risks economic ruin.

Any cost attached to letting working pensioners keep their payments would be more than recovered via additional income taxes and associated economic growth.

Nobody is forcing retirees back to work. It’s about giving them the choice in a way that helps address skills shortages. 

A dramatic reduction in the immigration intake doesn’t have to be a foolhardy endeavour.

The countdown is under way. In little more than a month, taxpayers and savers will once again be bracing for what critics fear could be another blow to financial security and independence.

This time, Rachel Reeves will not be the Chancellor delivering the message. John Healey is set to present Labour’s third Budget in three years—an event opponents already expect to be deeply damaging to household finances and retirement plans.

From this perspective, the individual occupying the Treasury post makes little difference. The argument is that Labour is targeting investments, accumulated wealth and property, regardless of who signs off the measures.

Some taxpayers may wish the clock could simply stop—or turn back to a time when Labour was a much weaker force in Opposition.

Healey has already signalled that the next Budget will be “tough”, fuelling concern that wealth and personal finances will be firmly in the Government’s sights.

The familiar justification will follow: difficult decisions, ministers will argue, are unavoidable in the current economic climate.

Healey is expected to point to ongoing conflict in the Middle East when explaining the country’s precarious finances. Critics, however, will argue that the Government’s anti-business policies—by increasing costs for employers—have also contributed to an economy moving at a painfully slow pace.

There is unlikely to be much focus on Labour’s reluctance to rein in the rapidly rising welfare bill, even as defence spending comes under pressure and the cost of Government borrowing climbs.

Prime Minister Andy Burnham’s suggestion that social security spending should take precedence over national security has been described by opponents as both dangerously naïve and misguided.

The concern among taxpayers is palpable.

The likely consequence is another round of tax increases designed to shore up the public finances. Once again, critics say, the burden will fall disproportionately on taxpayers in Middle England.

That group includes almost everyone: younger workers and retirees, ambitious savers and established homeowners, and those who earn a living while putting money aside for later life. It also includes people who have spent decades acting prudently and are now relying on their savings in retirement or semi-retirement.

Healey has revealed few details about the tax increases he may be considering. However, Treasury advisers are expected to allow selected proposals to emerge before the Budget on Wednesday, October 28—a date some taxpayers already regard as doomsday.

That would follow a pattern set over the past two years, when speculation and unofficial briefings have repeatedly circulated ahead of major announcements.

One proposal likely to resurface is a restriction on the amount of tax-free cash people can withdraw from their pension. Similar warnings appeared before the previous two Budgets.

Ahead of the 2024 Budget, investors concerned about a possible crackdown withdrew an estimated £10billion in additional tax-free pension cash.

No restriction was introduced, leaving tens of thousands of savers holding money that might have remained better invested inside their pensions—and potentially exposed to tax. A similar rush occurred the following year.

Investment platform AJ Bell has urged Healey to make a commitment before the Budget that the right to tax-free pension cash will not be weakened. Whether the Chancellor listens remains uncertain.

And if I was a betting man, I’d put my garden shed on him pushing up rates of capital gains tax on profits from second homes, buy-to-lets and investments so they are aligned with income tax rates.

It’s a move that most Left-leaning think tanks have been calling for since I wore shorts to school. 

I am sure its announcement in the Budget would result in many Labour MPs partying late into the night. Negronis all round (nice and red). 

For diehard socialists, utopia. For us, yet another spiteful attack on thrift.

What we do know for certain, because Healey has already said it, is that there will be no breaking of Labour’s 2024 manifesto which pledged not to increase ‘National Insurance, the basic, higher or additional rates of income tax, or VAT.’ Thank you for small mercies.

But there’s far more we know about what lies ahead taxation-wise as we march towards the end of Labour’s term in office in 2029 (of course Burnham could call a snap election before then).

There are a myriad of tax rises coming that are set in stone, but which we can plan for and, in most cases, take action to mitigate – with the aid, of course, of our brilliant Money team at the Daily Mail and This is Money.

These tax rises were of Reeves’ creation and come in the form of a series of tax bombs with in-built detonators designed to go off at specific times.

The tax raids coming from April 2027

The first batch of these detonators goes off in April, when the new tax year kicks off.

So, from April 6, tax on savings interest will jump by two percentage points, resulting in new tax rates for basic, higher and additional rate taxpayers of 22, 42 and 47 per cent.

Savage? Yes, but basic and higher rate taxpayers should still be able to shield, respectively, £1,000 and £500 of annual savings interest from these new tax rates through use of their personal savings allowance. 

I say this in the expectation (no, hope) that these allowances won’t be chipped away at or removed altogether by Healey (don’t rule it out).

These same higher tax rates will also apply to rental income earned by landlords (Labour truly hates landlords).

Saving into a cash Isa will be restricted at the same time – with only those aged 65 or over still being able to squirrel away up to £20,000 in any one tax year.

For all other adults, they will be allowed to put only a maximum £12,000 a tax year into a cash Isa. If they want to maximise their £20,000 allowance, they will have to run a stocks & shares Isa alongside their cash Isa. 

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While stocks & shares Isas and Junior Isas will keep their respective maximum annual allowances of £20,000 and £9,000, managing the former will become far more challenging for investors.

This is because Labour has decided to introduce a flat 22 per cent tax charge on all interest earned from cash held inside a stocks and shares Isa. 

Both a bewildering move and a dent in the tax-free label that makes Isas so attractive.

Yet probably the most damaging tax ‘bomb’ that will ignite in the next tax year will be that affecting on any unused pensions when people die. For the first time, they will fall into the inheritance tax (IHT) fishing net.

As I’ve said before, the taxation of such pension pots will be nothing short of egregious.

For some beneficiaries, it will result in the proceeds from an inherited pension fund (where the plan holder was aged 75 or more) being subject to both 40 per cent IHT and income tax.

In the most extreme of cases, 91 per cent of an inherited pension fund could be lost to tax.

Finally, we now learn that staycations in England will become more expensive towards the end of this tax year as a result of mayors being free to impose an uncapped tax on visitors staying in their regions. 

Where mayors don’t exist, new ‘foundation strategic authorities’ will be able to levy the tax.

Labour says the levy will not exceed 5 per cent, but the tax will still make holidays more expensive for hard-working families. Accommodation providers, especially independent B&Bs, could also be hit if holidaymakers are deterred from staying in the UK.

Similar tourist levies are already charged in Edinburgh and are set to be introduced in Wales just ahead of England.

In Reeves’s defence, this new tax will not be of her doing: the finger points at Burnham, Healey and Local Government Secretary Angela Rayner.

And a year later… more tax raids

Reeves’s detonators are far from spent when the tax year to April 2028 comes to an end. 

A new mansion tax will then kick in, landing those with homes worth £2million or more with annual bills up to £7,500.

Then, a year later, a new stealth tax will be imposed on salary sacrifice pension plans offered by many employers. The upshot is that many employees and employers will end up paying more in NI. Yes, more bloody tax!

So what can you do?

All rather scary? Absolutely – I’ve got into a right old flap just writing this article.

And I’ve not even mentioned the tax consequences of Burnham’s wish to ‘fix’ the social care crisis through the creation of a ‘national care service’. 

Reform of social care, the Prime Minister has already said, will require ‘difficult decisions’ – which is code for some form of tax rise. When it will all be decided is anyone’s guess. 

But in the meantime, between 30,000 and 40,000 people a year will be forced to sell their home to fund their long-term care costs.

To the good news, dear readers. There is a lot you can do to protect your wealth from what is coming down the road in the weeks, months and years ahead.

Most of it is centred around good, old-fashioned financial planning. For example:

– Ensuring your family assets (everything from pensions, investments and savings) are set up in the most tax advantageous way possible and are best in class in terms of the deal (investment growth, interest rate) they give;

– Taking full advantage of saving and investment tax-breaks (for example, Isas and pensions). Not just for you and your spouse or partner, but for your children via Junior Isas and pensions (yes, pensions);

– Making sure your existing Isas are fit for purpose ahead of the rule changes in April;

– Having up-to-date wills and being aware of a multitude of gift allowances that can help mitigate IHT bills further down the line (especially given the inclusion of unused pension funds in IHT calculations from April);

– Maybe downsizing your home to mitigate the mansion tax – or releasing equity to support your retirement finances;

– And finding out how to plan for the possibility – not probability – of care costs in later life.

Our brilliant six-part newsletter series, written by my colleague Simon Lambert, in the weeks leading up to the Budget and in its immediate aftermath will cover all these areas: IHT, pensions, savings and investments, property, care costs and later-life planning, and what the Budget means for you.

It will be essential reading, drawing upon a mix of the country’s best Money team’s extensive personal finance knowledge and that of leading financial experts. It’s unmissable.

More importantly, it will put you in a better place to mitigate the impact of the tax detonators coming all our way.

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