ATO focus on the black economy continues

The Australian Taxation Office (ATO) focus on the black economy is starting to pay dividends. They have revealed it received a record-breaking 15,000 tip-offs to its Tax Integrity Centre in the first quarter of this financial year.

The top categories of tip-offs the ATO has received so far this year have been about:

1. Taxpayers not declaring income

2. Businesses demanding cash from customers and / or paying workers “cash in hand”

3. Someone’s lifestyle does not appear to match their income level

4. Businesses not reporting sales.

ATO figures show that cafés and restaurants top the list in terms of the total number of tip-offs received in these results

Running a small business can be a really tough, and when dishonest competitors are cheating the tax system by operating off the books, it’s really unfair and makes it even harder to succeed.

Trading in cash and paying your workers in cash is perfectly legal but failing to report the income to the ATO and not paying your workers their entitlements like superannuation is illegal and you now run the risk of exposure.

The ATO also received high volumes of tip-offs about black economy behaviour in the hairdressing and beauty, building and construction, and cleaning industries. A tip-off from the community could be the missing piece of the puzzle the ATO need to successfully audit or prosecute someone who is illegally operating in the black economy.

The ATO has a specialist team that looks at each and every tip-off, regardless of whether they are received anonymously or not. Fifty-three per cent of people who provided a tip-off in the first quarter of 2019–20 provided their contact details to the ATO, which is a significant increase when compared to the same quarter in the previous year, when only one in four people provided their contact details. The ATO requests contact details in case information provided needs further clarification, but this is not a requirement.

As can be seen above, the Australian community is becoming active in reporting businesses operating in cash. A tip off can come from anywhere, and all it can take is a disgruntled employee, customer/client, competitor or even a social acquaintance.

If you or someone you know operates in a business that deals only in cash, our AGS Accountants are able to assist in putting in place checks and balances to ensure that your reporting stacks up in the event you get an unannounced visit from the ATO. We can also assist in transitioning from a cash only operation to one that can handle electronic payment means – this can also include understanding the costs to your business of doing so. Contact us for some peace of mind.


Published : 02 Jan 2020

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