Australian Tax Office (ATO) staff prepare to investigate Melbourne CBD restaurants and cafes for tax evasion. Courtesy of the ATO
The Australian Tax Office (ATO) has launched a major crackdown on businesses in Melbourne’s hospitality sector after receiving thousands of tip-offs about suspected tax evasion, referred to as the “shadow economy.”
In response, ATO officers conducting more than 25 surprise visits to Melbourne CBD cafes, restaurants and fast food eateries as part of Operation Tonberry from Sept. 22 to 23.
“We understand many fast food, restaurant and café owners have a lot on their plate, but deliberately avoiding your tax and super obligations isn’t the recipe for success,” ATO Assistant Commissioner Tony Goding said in a statement.
The ATO says the food and hospitality sector accounted for 2,500 tip-offs covering concerns like paying workers in cash, not paying employees superannuation, under-reporting or omitting income, and compliance issues with record-keeping.
The ATO says it received around 1,000 reports a week in the 2025-26 financial year about tax evasion in general with 83 percent investigated.
Since July 1, 2019, the ATO has received 360,000 tip-offs.
ATO officers prepare to investigate Melbourne CBD businesses. Courtesy of the ATO
“The vast majority of owners are honest operators who pay the right amount of tax and meet their employee entitlements,” said Goding.
“What really leaves a bad taste is when businesses doing the right thing see their competitors cutting corners, ripping off workers, and skimming off the top to gain an unfair advantage.”
“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,” he said.
“In a city where competition is fierce, some operators can be tempted to look for shortcuts to boost profits.
“What they need to understand is that cutting corners can quickly become a dead end.”
The investigations are ongoing.
The Epoch Times contacted the Australian Restaurant and Cafe Association and Restaurant and Catering Australia for comment.
The Labor government expanded federal funding for the ATO to $999 million over four years in a major blitz on compliance.
While the headline focus has been on corporate tax compliance, small businesses have also come under the microscope with the ATO estimating about $17.7 billion in lost revenue during the 2021-22 financial year.
Part of the funding will target “cash-only” businesses, underpayment of wages, and expansion of the Tax Avoidance Taskforce by another 1,000 audit staff.
