The Australian Taxation Office has announced measures to make it harder for people in business who use cash transactions to hide income and evade tax obligations.
This includes businesses:
- paying cash in hand wages
- skimming some or all of the cash takings
- running a part of their normal business activities off the books
- not reporting barter transactions
- operating underground; avoiding their obligations by not registering or lodging returns.
The ATO strategies to tackle the cash economy and detect these businesses doing the wrong thing include:
- the publication of benchmarks which provide a guide as to the expected profitability on over 100 business industries
- educating the broader community about the risks of not getting a receipt for cash jobs,
- reviewing the records of businesses to ensure they are reporting all business income and expenses, and
- acting on information received from the community on suspected tax evasion.
The ATO is targeting industries which have ready access to cash in their business dealings such as businesses in the hospitality industry and the building and construction industry.
Another way of detecting businesses which cheat is through data matching, a program used by the ATO to identify those who are either not lodging returns or who are not reporting all income - with more than 500 million transactions matched in the past year.
This expanding net now includes coffee suppliers' and hardware store trade account information, with their customers' purchase information being available to the ATO. From this information, the ATO will be able to tell if a business is skimming cash.
As detailed in the Commonwealth Gazette on 22 February 2012, information received about coffee shops buying more than 15 kilograms of coffee a week from suppliers will be checked by the ATO to ensure they are reporting all their business income.
Individuals and businesses holding a hardware store trade account with annual purchases of $10,000 or more will also attract close scrutiny from the ATO, with data on purchases and reported income being cross checked.
The ATO will also be given data on complaints and licensing information from New South Wales Fair Trading, Queensland Building Services Authority and Government of South Australia Consumer and Business Services to identify those in the building industry who use cash transactions to avoid tax or fail to report correctly.
Second Commissioner of Taxation Bruce Quigley said "the message to tax cheats is clear - with increasing sources of information coming to the ATO, if you don't play by the rules, you are more likely to be caught and penalised."
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