Cash payments of $10,000 or more to be outlawed

From 1 July 2019 cash payments of more than $10,000 made for goods and services will be outlawed under a widespread crackdown on the cash economy expected to raise more than $7 billion and improve the budget bottom line by $5.3 billion.

Black economy targeted

“We will be implementing the recommendations of our black economy taskforce, targeting sectors where there is higher risk of under-reporting of income,” The Treasurer Mr Scott Morrison said in his budget speech on 8 May 2018. “This will be bad news for criminal gangs, terrorists and those who are just trying to cheat on their tax or get a discount for letting someone else cheat on their tax,” he said.

Taxable payments reporting system to expand

As part of the cash economy package, the government will expand the taxable payments reporting system to security providers and investigative services, road freight transport and computer system design and related services.The measure follows findings by the cash economy taskforce last year that contractors in these sectors are at high risk of not complying with their tax obligations and is expected to raise more than $600 million. The government had already announced the extension of taxable payment reporting to courier and cleaning industries in response to the taskforce’s interim report.

No deductions where no PAYG or ABN

Businesses can no longer claim deductions for payments to their employees, such as wages, where they have withheld no PAYG payments. The government will also remove deductions for payments made by businesses to contractors where the contractor provides no ABN and the business withholds no PAYG.

Additional $318.5 million to fund expansion of ATO’s capabilities

An additional $318.5 million in funding will expand the Tax Office’s data analytics and data-matching capabilities and introduce a hotline for the public to report information on the cash economy and to identify illegal phoenixing activity. The measure is expected to raise up to $3 billion and net more than $1.9 billion over the next four years. There is also additional money allocated for Treasury and the Director of Public Prosecutions.

Future reforms to ABN system

The government will also consult on reforms to the Australian Business Number system, including the development of a rigorous identification system for company directors as part of new anti-phoenixing measures. “We are making sure that small businesses don’t get ripped off by other businesses who deliberately go bust to avoid paying their bills with tough new anti-phoenixing measures,” Mr Morrison said in his budget speech.

Standing taskforce to tackle Black economy

The ATO will introduce mobile strike teams and the government will create a black economy standing taskforce to prosecute the most egregious cases of black economy activity.

Satisfactory tax records for businesses tendering for Commonwealth contracts

In addition, the government will change the Commonwealth procurement process to require businesses tendering for Commonwealth contracts over $4 million to provide evidence of a satisfactory tax record.

 

Disclaimer

This article was written by Margaret Miller, partner at Bell Legal Group. It is general in nature, is not legal advice and must not be relied on as such. If the content of this article may affect you or your business please contact us to obtain advice specific to your circumstances. Call 07 5597 3366 or send an email to law@belllegal.com.au