The ATO is ramping up a strategy to clamp down on the ‘cash economy’. This strategy targets businesses that use cash in order to avoid paying taxes.
Primarily this includes:
- – Paying employees ‘cash in hand’ and not withholding tax or superannuation contributions
- – Skimming cash takings
- – Running all or part of the business ‘off the books’
- – Offering a discount for cash and not providing a receipt
The ATO has a number of methods to detect businesses operating in the cash economy. These include:
- – Data matching – comparing your business records to external sources
- – Small business benchmarks – comparing your business records to your industry and pinpointing businesses that show signs of participating in the cash economy
- – Encouraging the public to report non-compliant businesses
The ATO is also implementing a support system to encourage businesses to be compliant. They are providing tools and information to help pay your tax. Check out this brochure from the ATO for more details: Small Business, Tax and the Cash Economy
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.