Share with your friends

Shining a light on the black economy

Shining a light on the black economy

Grant Wardell-Johnson, Lead Tax Partner, KPMG Economics & Tax Centre, assesses the scale of the untaxed economy and proposes some specific recommendations the government should consider to address it.

Grant Wardell-Johnson

Lead Tax Partner, KPMG Economics & Tax Centre

KPMG Australia


Also on

Man holding a lamp illuminating the darkness

The last frontier

In 2017, the ATO published for the first time its estimate of the black economy’s contribution to the PAYG ‘income tax gap’, amounting to $2.08 billion for 2014-15.

Using a methodology employed by the Australian Bureau of Statistics (ABS), KPMG estimates the size of the country’s black economy as $32 billion per annum.

We believe the annual aggregate gap in terms of the GST on sales, PAYG tax on wages, plus income tax on businesses and on self-employed profits, would exceed $5 billion.

Key insights

In this report, KPMG unveils a series of proposals which could claw back untaxed income:

  • Additional funding for coordinated enforcement action against serious tax crime.
  • Two-stage amnesty for incorrect reporting, with subsequent higher penalties.
  • Legislation to deny income tax deductions for cash payments.
  • Strengthening evidentiary requirements for eligibility to obtain an Australian Business Number (ABN).
  • Bringing the current ASIC company register up to date and review it for accuracy. 
  • Including a clean tax history as a requirement for participating in Commonwealth, state and local government tenders.
  • Implementing a government ‘one stop shop’ for all necessary business and employer registrations.
  • Making any cash transaction involving more than $10,000 illegal. 
  • Tying vendor rights to maintenance of invoice records and evidence of electronic payment.
  • Government to support the Business Council of Australia (BCA) supplier payment code of conduct.

©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.

Liability limited by a scheme approved under Professional Standards Legislation.

For more detail about the structure of the KPMG global organisation please visit

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Save, Curate and Share

Save what resonates, curate a library of information, and share content with your network of contacts.

Sign up today