Net closes on tax cheats

The Australian Taxation Office (“ATO”) is making it harder for people in
business who deliberately use cash transactions to hide income and evade tax
obligations – making it fairer for everyone.

This includes businesses:

• paying cash in hand wages
• skimming some or all of the cash takings
• running a part of their normal business activities off the books
• not reporting barter transactions
• operating underground; avoiding their obligations by not registering or
  lodging returns.

The ATO strategies to tackle the cash economy and detect these businesses
doing the wrong thing include:

• the publication of benchmarks which provide a guide as to the expected
  profitability on over 100 business industries
• educating the broader community about the risks of not getting a receipt for
  cash jobs,
• reviewing the records of businesses to ensure they are reporting all
  business income and expenses, and
• acting on information received from the community on suspected tax evasion.

The focus of this work is on industries which have ready access to cash in
their business dealings. Examples include businesses in the hospitality industry
such as coffee shops as well as the building and construction industry.

Another key and expanding way of detecting businesses which cheat the
community is through data matching. Data matching is a key program used by the
ATO to identify those who are either not lodging returns or who are not
reporting all income – with more than 500 million transactions matched in the
past year.

This expanding net now includes coffee suppliers’ and hardware store trade
account information, with their customers’ purchase information being available
to the ATO. From this information, the ATO will be able to tell if a business is
skimming cash.

As detailed in the Commonwealth Gazette on 22 February 2012, information
received about coffee shops buying more than 15 kilograms of coffee a week from
suppliers will be checked by the ATO to ensure they are reporting all their
business income.

Individuals and businesses holding a hardware store trade account with annual
purchases of $10,000 or more will also attract close scrutiny from the ATO, with
data on purchases and reported income being cross checked.

The ATO will also be given data on complaints and licensing information from
New South Wales Fair Trading, Queensland Building Services Authority and
Government of South Australia Consumer and Business Services to identify those
in the building industry who use cash transactions to avoid tax or fail to
report correctly.

Second Commissioner of Taxation Bruce Quigley said “the message to tax cheats
is clear – with increasing sources of information coming to the ATO, if you
don’t play by the rules, you are more likely to be caught and penalised.”

For more information about ATO data matching programs visit www.ato.gov.au/datamatching