In the last two decades as cashless transactions have become more common, if not the preferred option for most Australians, it would be easy to think that the cash economy, otherwise known as the black economy, was a thing of the past. Yet this is not the case.
Paying for goods and services in cash today, perhaps more than ever, opens up the potential for a person or business not wanting to pay the GST or other taxes to hide the transaction and avoid payment.
For this reason, in 2017, the federal government undertook a national inquiry into what they call the ‘black economy’. Clearly the main reason to ask questions from the government’s perspective is the potential lost tax. Some reports estimate over $25 billion or 1.5 per cent of Australia’s GDP is occurring in the black economy.
From the industry’s perspective, non-payment of tax disadvantages our members who do the right thing and meet their obligations. HIA participated as a member of the Black Economy Industry Reference Group supporting the taskforce throughout 2017.
While the final report from the taskforce is yet to be publicly released, most recently there were a number of potential changes that may be made to reduce tax avoidance and other illegal activities which were identified during the consultation process.
The 2017 federal budget included two early recommendations from the taskforce. The taxable payment reporting requirements that already apply to building trade contractors will apply to contractors in the courier and cleaning industry from 1 July 2018. Sales suppression software was also banned.
This year’s federal budget is expected to include a number of actions based on the recommendations in the final report. It is possible that the taxable payment reporting system will be further extended to other high-risk sectors, including logistics, security contractors, owner-builders and IT contractors.
There was discussion on the creation of digital identities which could be used to stop identify fraud and seek to better manage company directors, employees and other business obligations.
The way Australian Business Numbers (ABNs) are managed is also on the radar to ensure that any business gaining an ABN uses that given ABN, and to capture fraudulent use of ABNs.