Melbourne businesses cop surprise ATO visit as part of operation to expose tax cheats in shadow economy

More than two dozen restaurants, fast food outlets and cafes in an Australian city known for its world-class coffee have been investigated as part of the tax office’s ongoing battle to disrupt the country’s $80 billion shadow economy.

The ATO made surprise visits to 25 hospitality businesses in Melbourne ’s CBD on Tuesday and Wednesday off the back of community tip-offs about cash-in-hand payments, issues with record keeping and missed super entitlements.

The ATO did not say which businesses were looked into but that their investigations are ongoing.

“Melbourne diners know a busy café when they see one — so do we,” ATO assistant commissioner Tony Goding 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.

“In a city where competition is fierce, some operators can be tempted to look for shortcuts to boost profits.”

The shadow economy refers to economic activity that is not reported and taxed.

The size of Australia’s shadow economy is estimated to have been more than $80 billion in 2025, and it is believed to have doubled in the last decade.

Takeaway businesses, cafes and restaurants, pubs, taverns, bars and catering services were the source of more than 2500 reports about off-the-books activity in the 2025-26 financial year.

Nationally, there was more than 52,000 tip-offs in the same period about individuals and businesses evading their fair share of tax, employers not paying their employees’ super and other shadow economy activities.

Building and construction firms, cafes and restaurants, hairdressing and beauty services industries were in the spotlight most often.

Information reported to the ATO is cross-checked against its data and intelligence sources, and shared with partner agencies through the Shadow Economy Taskforce.

More than 83 per cent of all reports last financial year were considered suitable for further review.

“Aussies know when something doesn’t seem right, and they’re increasingly calling it out when they see someone trying to gain an unfair advantage by operating in the shadows,” Goding said.