The Australian Taxation Office will audit more small businesses after new figures suggest the shadow economy is preventing about $25bn each year from being spent on the nation’s schools, hospitals and vital infrastructure.
The figures, cited in News Corp Australia papers, point to a growing problem with business owners not declaring cash payments – a trend which means taxpayers are having to pick up the slack.
The figures contained in a report for the Australian Payments Clearing Association (ACPA) also show that everyday Australians have turned to “hoarding” and are stashing away as much as $10bn under the bed.
This contributes to a substantial amount of cash being removed from the economy and means people are forgoing the interest that can be earned on depositing their savings in the bank.
Senior Assistant Commissioner Michael Hardy told the Daily Telegraph that the ATO was looking to stand “shoulder to shoulder” with small business owners and help them fight rivals who charged lower prices by operating in the cash economy.
“Traditionally, it was just physical cash, but we see people trying to hide income and not pay tax, which is what it’s all about, with their card transactions, with online transactions,” Mr Hardy said.
Mr Hardy cited one case where the ATO compared a restaurant’s stated income with its bank statements and presented the business owner with a $750,000 cash bill. ATO officers also visited 168 businesses in Chinatown to emphasise the need to declare all cash payments.
Mr Hardy said about 275,000 small businesses out of about 1.6 million dealing in high volumes of cash payments showed sings of failing to declare income.
The ATO will focus its audit efforts on restaurants, carpenters, beauty specialists, road freight operators, household cleaners and building tradespeople.
