Australia’s black economy is now worth an estimated $32 billion

Brendan Smialowski/AFP/Getty Images

The size of Australia’s black economy, that part of commerce which operates mainly in cash and evades tax, is now $32 billion a year, according to analysis by KPMG.

And a concerted crackdown on this black economy could generate up to $5 billion in additional Commonwealth revenue, says the KPMG report, The Last Frontier.

Here’s a breakdown of KPMG’s estimate of Australia’s black economy tax gap:

KPMG urges an extra $100 million to $400 million be given to the ATO for additional enforcement on the black economy.

It estimates a healthy return on this investment. KPMG says the revenue-to-expenditure ratio would be at least 7:1, a return of seven dollars for each dollar invested.

KPMG recommends having a limited amnesty for businesses to voluntarily disclose incorrect tax reporting, followed by a second stage where employees can disclose their under-reported wages and the employer’s associated failure to withhold PAYG tax.

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