The majority of small businesses who do the right thing are set to be recognised by new measures to crack down on the black economy tipped to be included in the May Budget.
According to the Australian Bureau of Statistics, the so-called black economy accounts for around 1.5 percent of the nation’s GDP, or about $21 billion a year.
The Turnbull Government has established a Black Economy Taskforce, led by former KPMG global chairman Michael Andrew, to investigate ways to reduce the use of cash to evade tax.
Mr Andrew delivered an interim report in March with recommendations that may feature in the coming Budget.
Although Mr Andrew has not revealed the findings of the taskforce to date, it is believed to have uncovered examples of legitimate businesses missing out on contracts because their wages costs were higher than those operating in the cash economy.
It is expected to make recommendations about how to educate individuals and businesses on tax obligations and suggest that better co-operation between government agencies could reduce the burden of regulation on small business. The taskforce has also been considering a ban on cash payments over a certain amount.
Attempts by government to curb the cash economy are not new but the latest campaign also coincides with an overall reduction in the use of cash thanks to the rapidly growing electronic payments system.
Despite this, the Australian Taxation Office says up to 45 percent of business in some sectors could potentially still be operating on a cash-only basis.
Assistant Commissioner Tom Wheeler said the ATO was focused on ensuring fairness for all businesses and helping small businesses stay on top of their tax affairs.
Mr Wheeler said this included compliance visits to small businesses, particularly those in sectors that had ready access to cash, such as restaurants and cafes, and hair and beauty businesses.
“We know that the majority of businesses get it right, so our first aim is to help businesses by checking they are properly registered and provide them with an opportunity to ask questions in person,” he said.
“We then work to protect honest businesses from unfair competition by taking action against those who do the wrong thing.”
His comments are echoed by Revenue and Financial Services Minister, Kelly O’Dwyer, who announced the establishment of the Black Economy Taskforce late last year.
“Nothing makes fair minded Australians angrier than having to pay more tax as a result of someone else not paying the tax that they are supposed to pay,” Ms O’Dwyer said at the time.
“There is nothing wrong with cash – the issue is when people don’t declare it and when they don’t pay tax on it. This is an issue when it comes to welfare fraud, where people have been paid cash and are also claiming welfare.”
Another issue under consideration by the taskforce has been the future of the $100 note.
Australia has approximately $30 billion worth of $100 notes in circulation and there are three times as many $100 notes as there are $5 notes.
Ms O’Dwyer has not ruled out taking the $100 note out of circulation, asking the taskforce to look at all issues and make sensible recommendations.
The Black Economy Taskforce will hand down a final report to the Government in October.