In the event anything went awry with the job you would have to pick up the tab to make good.
A contract designed to avoid paying CGT is an illegal contract and totally unenforceable.
Yes, they do rob other taxpayers and as a result, things like income tax rates and even CGT itself theoretically has to be higher.
Also my guess is should the taxman find out about it, you will have to cough up the GST + penalties + interest. Even if they charged you the CGT component as well. In fact it is likely the extra 10% you would have paid had you not questioned it will be calculated as the invoiced amount and then the 10% applied to determine how much GST you initially owed.
I know this is something you wouldn't normally do, and as we all do, is a lapse.. but as they won't declare the job, they are increasing the casts they can offset against jobs they do put on the books, thereby reducing the tax they pay on those profits.. and by not putting that job on the books, they are also avoiding paying tax on the profits they make on that.
It adds up to more than the GST saved in lost tax revenue