The federal government has been searching for ways to tackle illegal behaviour in the so-called “black economy” since it first established its taskforce by the same name at the end of 2016. On Tuesday, it used the budget to announce a suite of new measures to continue this fight.
The tax office’s resources will be beefed up, large cash payments will be banned, and businesses vying for government contracts will need to show they are meeting their tax obligations. A plan to crack down on the illegal tobacco trade was also revealed prior to the budget being handed down.
“The black economy undermines community trust in the tax system, gives some businesses an unfair competitive advantage, puts pressure on the margins of honest businesses and often includes the exploitation of vulnerable employees through the underpayment of wages and the loss of entitlements,” said Kelly O’Dwyer, Minister for Revenue and Financial Services.
New funding for the ATO
The 2018 budget provides for $318.5 million in new funding for the Australian Taxation Office over four years “to implement new strategies to combat the black economy”.
The funds will be spent on a new “enforcement strategy”, which will include mobile strike teams; more audits; a “Black Economy hotline” for members of the public to report black economy and illegal phoenix activity; better data analytics; and educational activities.
They will also support a new multi-agency Black Economy Standing Taskforce, which will make use of data analytics and information sharing between government agencies.
Cash payments above $10,000 banned
From July 1, 2019, Australian businesses will no longer be able to accept cash payments of more than $10,000. Instead, those transactions will now have to be made through an electronic payment system or cheque.
The government’s Black Economy Taskforce recommended introducing this change, which is aimed at addressing tax evasion and money laundering.
This budget measure won’t affect transactions with financial institutions or consumer-to-consumer non-business transactions.
Businesses that apply for federal government tenders will also see changes from July 1, 2019. From that time, any business that is tendering for a government contract worth more than $4 million (inclusive of GST) will need to prove they have a satisfactory tax record.
Taxable payments reporting extended
In the 2017 federal budget, the Coalition extended its existing taxable payments reporting system (TPRS) from operating only in the building and construction industries, to include the cleaning and courier industries, starting July 1 this year.
In this year’s budget, the system has once again been expanded, this time to security providers and investigation services; road freight transport; and computer system design and related services.
The TPRS requires businesses to report payments to contractors to the ATO, in order to bring those payments into line with wages that are reported to the ATO.
An online form will be provided for these businesses, which will need to keep track of their payments from July 1, 2019, ahead of the first annual report to be due in August 2020.
This part of the government’s black economy budget package is expected to deliver significant revenue gains of $605.8 million in fiscal balance terms over the forward estimates.