As part of a crackdown on the black economy, the Tax Office is set to visit hundreds of businesses to make sure income is being properly declared.
What is the black economy?
According to the office of the Australian Treasury, the black economy refers to people who operate entirely outside of the tax and regulatory system or who are known to the authorities but do not correctly report tax obligations.
What does it cost the national economy?
Assistant commissioner Peter Holt believes that not paying taxes is not a victimless crime, with communities as a whole being worse off.
“The Black Economy Taskforce estimates that the black economy is costing the community as much as $50 billion, which is approximately 3 percent of gross domestic product (GDP). This is money that the community is missing out on for vital public services like schools, welfare, roads, healthcare and infrastructure,” said Mr Holt.
Who is being targeted?
The crackdown will continue in the 2019-20 financial year, with the ATO expecting to visit around 10,000 small businesses across the country.
As part of these visits, the ATO will also visit tax practitioners of small businesses to help with early intervention strategies.
Mr Holt said the crackdowns were in relation to pay as you go services withholding taxes or GST.
“We’re particularly concerned about businesses in these locations who are not registered for pay as you go withholding or GST. Local visits provide us an opportunity to talk to business owners and help them get things right.”
“Businesses who pay cash in hand or fail to lodge income tax returns or business activity statements get an unfair advantage and make it harder for other businesses who are doing the right thing,” said Mr Holt.
Is cash still king?
Late last year, big four bank NAB found that Australians still have a reliance on cash, despite the fast-growing popularity of digital transactions.
The average Australian still carries about $76 in cash over a period of a week, NAB found.
Use of cash is generational and, unsurprisingly, is a preference for many older Australians, but young consumers are holding strong to cash also.
For example, about three in five respondents to NAB’s survey said they would choose a cash payment if they were to receive a $1,000 payment.
“Despite young people using cash differently and less often than older Australians, one in two people aged between 18 and 29 still wanted the cash,” NAB’s report said.
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