Federal budget tipped to include measures to tackle Australia’s $21 billion “black economy”
Thursday, April 6, 2017/
The small business community can reportedly expect to see measures that address the so-called “black economy” in next month’s federal budget, but one accounting body has urged the federal government to approach any changes with caution.
The government gave its “black economy taskforce” the job of investigating how individuals and businesses use cash payments in December 2016, and that taskforce has now handed its interim report to the government.
A final report is due in October, however, the head of the taskforce, Board of Tax chair Michael Andrew, told Fairfax this week he was shocked at the scale of the illegal cash payments in Australia.
Federal government estimates have previously put the value of the “hidden” or “black” economy at $21 billion, or 1.5% of gross domestic product (GDP).
Andrew’s interim report found the black economy is costing the federal government on two fronts: Lost tax revenue and incorrect welfare payments.
While he described some of the activity as “outright cheating”, he acknowledged that many operators are turning to cash payments because of the complexity of the law, including around workplace awards.
He identified the labour-hire sector as one of the worst performing areas in terms of hidden cash economy activity, however, cash payments are also common in other industries, including hospitality and construction.
The interim report is also said to include recommendations around educating individuals and businesses on their tax obligations, as well as suggestions for how government agencies at all levels can co-operate better, and therefore avoid unnecessary and confusing regulations on businesses.
“You have to fill out 48 different government forms and have 72 licenses just to set up a restaurant in NSW … that’s causing people to lose confidence in the system,” he told Fairfax.
However, it’s not yet clear what measures, if any, the government will include in the May 9 federal budget to tackle these concerns.
Alex Malley, chief executive of CPA Australia, told SmartCompany this morning before considering any new regulations, the government must first ensure there’s enough evidence to prove that the problem cannot be tackled under existing laws.
“Australians are, by and large, compliant, and we have a robust system of laws to tackle the black economy,” Malley says.
“We also have effective agencies to enforce these laws, including the Australian Tax Office and the Australian Federal Police, the multi-agency Serious Financial Crime Taskforce and AUSTRAC.
“We need to ask if our existing agencies are adequately resourced to enforce the laws that already exist.”
CPA Australia is concerned that a “drag-net” could be placed over all businesses in a bid to “try to catch the few outliers”.
“If the government does decide a new legislative or administrative response is required, it is important any proposed measure is properly targeted and avoids imposing unreasonable burdens on the 95 percent of compliant businesses,” Malley says.
“We encourage the government to release the black economy taskforce’s interim report as soon as possible to enable time for considered community responses.”
SmartCompany has contacted the office of Kelly O’Dwyer, minister for revenue and financial services, for more information and is waiting for a response.
Feel the churn: How to bounce back after losing staff and clients Sue Parker DARE Group founder
“Motivation is a feeling, commitment is a mindset”: Why you should start investing in yourself right now Lisa Stephenson Who Am I Projects founder
How to call your team into action with a winning presentation Emma Bannister Presentation Studio founder
The link between diet and mental health — and how to eat your way to wellbeing Kate Save Be Fit Food co-founder
From interactive videos to AI: The five marketing trends that will dominate 2019 Warwick Boulter Collaboro co-founder
Australia is leading the legaltech revolution, but what does this mean for lawyers, firms and clients? Jodie Baker Xakia founder
Why a video news release needs to be part of your PR strategy Leisa Goddard Adoni Media managing director
Want to catch more customers? Here's how to create a super sales funnel Jovana Vujnic Bumper Leads founder