Federal Budget 2017: using digital tech to crack down on ‘black economy’
9th May, 2017
The government is cracking down on what it calls the ‘black economy’ – otherwise known as the cash economy – and small businesses could be affected.
Broadly, the cash economy is worth about 1.5 percent of Australia’s GDP, or $21 billion – although it’s difficult to say how large it actually is.
It’s estimated that the government is missing out on about $15 billion of tax revenue from cash payments going untaxed.
Some so-called ‘black economy’ activity is taking place as a function of fraudulent or criminal activity.
But a fair amount is simply people doing cash jobs and not paying the ATO – or other businesses just mistakenly not paying their share of tax.
It also goes to not reporting income properly, as business owners can simply not enter cash payments into their sales record – whether by simple accident or a wish to avoid tax.
If you’re running a business that handles a lot of cash payments, there could be extra scrutiny on your reporting.
If you’re doing the right thing, great, but it’s best to double-check that all your cash payments are accounted for and you’re paying the right level of tax. Your MYOB accounting software will make it easier for you to be sure you’re doing the right thing.
Get your accountant or advisor to help you out if you have questions.
What is the government doing – and does it apply to you?
As part of a broader tax integrity package, the Government is doing several things that may affect small businesses.
Firstly, it’s extending the Taxable Payments Reporting System to contractors in the courier and cleaning industries, which builds in an extra level of reporting for business owners in those areas.
That measure is set to come in on 1 July 2018 and is forecast to make the government $318 million over the next four years.
The measure already exists in the construction industry, but the widening of scope is certainly worth noting.
Meanwhile, it’s giving the ATO $32 million to specifically look at the small business space for non-compliance. We’re talking about things like non-lodgment, omission of income, and non-payment of employer obligations.
Plus, it’s also amending the small business capital gains tax concessions to make sure that they can only be used in relation to assets used to assist in revenue-generation for a small business.
READ: Why a move to a cashless society could quash the black economy