Business owners that seek to avoid tax by taking illegal cash-in-hand payments are set to become a renewed target of scrutiny from the taxman, Tax Commissioner Michael D’Ascenzo says.
D’Ascenzo fired a shot across the bows of business owners who participate in the black cash economy in a speech to the Council of Small Business of Australia national summit in Sydney today.
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“Cracking down on the cash economy will remain a priority for the ATO,” D’Ascenzo says. “Unrecorded cash transactions are an unfair practice and have an adverse impact on the vast majority of small businesses that abide by the rules.”
Tax office compliance activity directed against the cash economy is yielding significant dividends, he says, with tax avoidance prosecutions in the area yielding $238 million in liabilities and penalties over the past two years.
The introduction of improved methods of detecting possible business breaches of tax laws will see that tally rise if business “rogues” do not reform their ways, D’Ascenzo warns, with the building and construction, hospitality, taxi, retail and transport sectors to come under the heaviest scrutiny.
Data-matching techniques – most recently applied to identify yacht or luxury car buyers who do not appear to have the income required to afford them – are set to improve as the tax office gets greater access to information from across government.
And the tax office plans to increase its use of industry benchmarks – lists of average business costs and income for particular services or products – to identify business owners who appear to be under-declaring income.
“If people are outliers in relation to the benchmarks, they will receive a call from us for explanation,” D’Ascenzo says. “This will help business to take an important reality check in terms of their income and what they are declaring.”