In the 2018-19 federal budget, the government announced a review of existing criminal offences and civil and administrative penalties for black economy activity. As part of this process, Treasury issued a consultation paper late last year, which was titled Improving black economy enforcement and offences (download it here).
Tax & Super Australia provided a submission to the government as part of our commitment to represent members’ interests and to present an informed voice to guide policy direction. You can download the submission from this page.
A dedicated survey was distributed to our entire membership base, and the responses to this survey formed the basis of our submission. While we reviewed the 26 questions put forward in the consultation paper, and noted responses where applicable, we also provided further information based on specific feedback from our members, which we consider to be valuable input from a base actively involved in the tax profession.
One of the resounding points that members made was that the ATO needed to be more active in tackling the black economy through more audits and spot audits for industries that deal in cash. There was also a strong agreement that it should be compulsory to pay wages into bank accounts.
What else members had to say about the black economy
- “There has to be a method of overseeing tradespeople quoting two prices, one for cash (with no GST) and one legitimate with GST.”
- “Introducing more requirements for very small cash businesses could increase the ‘black economy’ as they seek to avoid extra compliance time and work involved.”
- “Heavier penalties with ‘finders fee’ should be paid to employees who report proven black economy practice.”
- “If someone has an ABN and does not lodge their tax return before the end of the next financial year, then their ABN should be automatically suspended.”
- “Do not restrict cash in any way. It is an important backup for when (not if) the electronic banking system goes down.”
- “In the modern world why doesn’t the government move quickly to eliminate cash as a form of tender?”
- “Check mortgage loans and compare to income.”
- “The black economy prospers because marginal tax rates are too high and destroy incentives to work harder/longer.”
- “It is not just the black economy — it is a culture that has grown due to no fear of the ATO.”
You can download Tax & Super Australia’s black economy submission from this page. Also please take our poll at the top right hand side of this web page.