That busy local café where the till only takes cash and payslips are nowhere to be seen? The ATO has it in its sights, and so do customers.
Cash-in-hand arrangements can sometimes appear to benefit everyone involved. The worker takes home more money on the day, the business owner appears to save on tax and super, and the paperwork disappears.
But when cash is being used to hide income or employment arrangements, the consequences can be serious. These arrangements can leave workers without important entitlements, undercut businesses that are doing the right thing and expose employers to ATO scrutiny, penalties and other consequences.
What the ATO is seeing
New figures from the ATO show that more than 52,000 tip-offs were made during 2025–26, with around 1,000 reports each week from community members concerned about businesses and individuals potentially doing the wrong thing.
Since 1 July 2019, the ATO has received more than 360,000 tip-offs about suspected tax evasion and other dishonest behaviour.
Businesses in the building and construction, café and restaurant, and hairdressing and beauty services industries were among those most commonly reported during the year. Allegations included failing to declare income, demanding or paying for work cash in hand, and lifestyles that appeared inconsistent with reported income.
Hospitality in the spotlight
The hospitality industry, including cafés, restaurants, catering businesses, pubs and takeaway outlets, accounted for more than 2,500 tip-offs nationally.
The allegations included undeclared income, cash-in-hand work and unpaid superannuation.
Acting on this intelligence, the ATO conducted more than 25 surprise visits to fast-food outlets, restaurants and cafés across Melbourne’s CBD on 22 and 23 September.
Under Operation Tonberry, the ATO is investigating businesses suspected of paying workers cash in hand to avoid tax obligations, failing to pay employees’ superannuation entitlements, under-reporting or omitting income, and failing to meet reporting and record-keeping obligations.
The compliance consequences
Operating outside the normal payroll and reporting system creates significant compliance risks.
For employers, deliberately avoiding tax and superannuation obligations can result in ATO investigation, super guarantee liabilities, penalties, interest and reputational damage. Poor record-keeping can add to the problems if the ATO investigates.
For workers, being paid cash off the books can have consequences beyond income tax.
Superannuation is an important one. Missing compulsory super contributions can mean losing not only the contributions themselves but also the investment returns those contributions could have generated over many years.
Workers who are not properly recorded as employees may also miss out on other workplace entitlements and protections. Depending on the circumstances, these can include paid leave and workers compensation coverage. Having little or no documented employment income can also make it more difficult to demonstrate income when applying for a loan or other financial product.
The community is paying attention
The ATO says community tip-offs are an important source of information about suspected shadow economy activity.
Information received through tip-offs can be cross-checked against ATO data holdings and shared with partner agencies, including the Fair Work Ombudsman, through the Shadow Economy Taskforce.
During 2025–26, approximately 83% of tip-offs received were assessed as suitable for further review.
The message for businesses is clear: the fact that an arrangement is informal, or that a worker agrees to be paid cash, does not remove the employer’s tax, superannuation or record-keeping obligations.
What should you do?
If you’re an employer, it’s a good time to review your payroll, PAYG withholding, superannuation and record-keeping practices. Make sure employees are being paid correctly and that cash transactions are properly recorded and reported.
If you’re a worker who suspects you’re missing out on tax or superannuation entitlements, check your payslips and superannuation statements and consider getting advice about your position.
Cash payments aren’t necessarily illegal. The problem arises when cash is used to conceal income, avoid tax or superannuation obligations, or keep workers off the books.
If you’re unsure whether your business is meeting its tax and superannuation obligations, contact our office. We can review your arrangements and help you understand what needs to be done.
20 October 2026