Published on Jul 8, 2019
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The cash only, or black economy, is widespread in Australia. It was thought that it would be all but eliminated through the introduction of the GST, but it’s as prevalent as ever. While many think of it as a victimless crime, the Australian Taxation Office (ATO) understandably has a vastly different perspective.
From 1 July 2019 the ATO will be targeting those who hide, falsify or deliberately under-declare their income. They will also be looking at anyone who underpays staff superannuation and wages, particularly through cash-in-hand payments.
The crackdown is in response to recommendations made by the federal government’s Black Economy Taskforce. The cash economy is estimated to be worth up to $50 billion a year.
What will this mean for businesses?
The ATO will crack down on companies that make cash-in-hand payments to their employees. From 1 July payments to workers will only be tax deductible if they comply with pay-as-you-go withholding and reporting requirements. There will also be tighter restrictions on who is considered a contractor versus an employee, and on ABN compliance.
There will be an increased focus on cash only businesses, through physical visits and better use of data analytics.
From 1 July, the single-touch payroll system (STP) for businesses with fewer than 20 staff will be introduced. STP will make payments to staff more transparent. The Tax Office can then see how much staff are being paid. And it will allow staff to see how much they are actually being paid.
What will the ATO be focusing on?
- The under-reporting of income and over claiming of expenses
- ensuring businesses meet their employer obligations when paying employees or contractors,
- addressing employers paying cash-in-hand, underpaying wages, failing to withhold tax or not contributing to super,
- addressing illegal phoenix activity – liquidating and re-forming businesses to avoid obligations,
- working to prevent tax fraud,
- dealing with illicit tobacco, duty and excise evasion and money laundering,
- targeting intermediaries and agents who enable behaviour,
- prosecution of offenders.
ATO launching tip-off hotline
The Tax Office has also launched a tip-off hotline designed to report suspicious cash payment activity. Businesses reported to the ATO will attract further scrutiny.
“Transacting in cash is not illegal” says Assistant Commissioner Peter Holt. “But it’s often used to deliberately hide income.”
“Our tip-off line is the ATO equivalent of Crime Stoppers for tax cheats and criminals.”
There is more information about the hotline on the ATO website.
Go here to revisit an article on the Black Economy on the ACC website.
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