To protect honest, compliant Australian businesses, the Australian Taxation Office (ATO) has placed a strong emphasis on targeting the cash and hidden economy.
The ATO is visiting businesses that deal predominantly in cash, with a focus on those that:
- Neglect to meet super or employer obligations, and fail to register for GST or lodge activity statements.
- Operate and advertise as cash-only.
- Pay their employees cash-in-hand.
- Income does not correlate with the lifestyle of the business owner, i.e., assets and spending habits exceed what is expected of someone with their reported income.
- Operate on the fringe or outside of regular small business benchmarks specific to their industry.
- Show discrepancies between what they have reported and ATO collected data relating to electronic payments.
- Estimate their sales and income.
- Use the ‘no sale’ and ‘void’ button on cash registers when taking cash payments.
- Are part of an industry that is known for dealing primarily in cash-only.
- Are reported to the ATO by members of the community or any third party regarding potential tax evasion.
- Do not reconcile at the end of the day and do not keep cash register tapes.
When out visiting cash-only businesses, the ATO will be working in unison with local authorities and industry associations to asks questions and discuss:
- The need to lodge tax returns and activity statements.
- Why the business operates primarily or only in cash.
- The general community preference to have EFTPOS or electronic payment options available to them.
- How to be compliant in relation to tax and super obligations.
- Different claims and tax deductions businesses can make.
- Benefits of electronic payment and record keeping facilities.
- Relaying tools and services businesses can use if they are struggling to ensure they are compliant with Australian tax laws.
If the ATO comes across a business that is doing the wrong thing or failing to meet their obligations, they have a duty to take action. This may result in the business facing an audit and possible prosecution.
If you have made a mistake and make a voluntary disclosure detailing your errors, the ATO will work with you to rectify this and create a solution.
*** This publication is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. Publication date January 2018