Visits from the ATO

ATO Assistant Commissioner Peter Holt recently announced that in the 2019/20 financial year, the ATO will be visiting a further 10,000 small businesses across the country including up to 500 small businesses in Tasmania.

They will also target businesses that advertise as ‘cash only’ and who’s operation contributes to the black economy.

“Businesses that pay cash in hand, or fail to lodge income tax or business activity statements, get an unfair advantage and make it harder for other businesses who are doing the right thing.  By detecting and addressing this behaviour, we’re helping to ensure a level playing field for honest small businesses.”

Businesses in the following industries are most likely to get a visit from the ATO:

  • Restaurants and cafes
  • Vehicle repairers
  • Personal care businesses including hairdressers and nail salons;
  • Pharmacies
  • Construction businesses
  • Clothing stores
  • Grocery stores / small supermarkets
  • Butchers

Mr Holt also said “We understand that people are busy and most businesses are trying to meet their obligations – but there is a difference between needing help, making mistakes and deliberate cover-ups.”

There will be no hesitation with enforcement actions on any visits that uncover any deliberate non-compliance activities.

During the exercise, ATO Officers will also be available to help those businesses that are trying to do the right thing as well.

Here is a link on the recent announcement:

https://www.ato.gov.au/Media-centre/Media-releases/Up-to-500-Tasmanian-small-businesses-can-expect-a-knock-on-the-door-from-the-ATO-in-March/

What is the black economy and how does it impact on payroll?

Payroll related black economy behaviours include:

  • Underpayment of wages
  • Bypassing visa restrictions and visa fraud
  • Identity fraud
  • Sham contracting – presenting an employment relationship as a contracting arrangement
  • Illegal phoenixing – liquidating and re-forming a business to avoid obligations

In December 2016, the government established the Black Economy Taskforce (BET) to develop a multi-pronged response to combat the black economy in Australia.

In addition to the visits from the ATO mentioned in this article there have already been a number of initiatives instigated to address this issue.

For example: 

The Taxable Payments Reporting System (TPRS) has been extended to include additional industries. The TPRS originally applied only to the construction industry and was introduced to discourage sham contracting arrangements in the industry.  Businesses will now need to report any payments to contractors in the following industries:

Courier or cleaning services      

Legislation received Royal Assent on 3 October 2018 and took effect from 1 July 2018 with the first report being due on 28 August 2019

Road freight, security, investigation, surveillance or IT services

Legislation received Royal Assent on 29 November 2018 and took effect from 1 July 2019 with the first report being due on 28 August 2020

A link to more information on the work of the black economy taskforce can be found below:

https://www.ato.gov.au/General/Black-economy/The-whole-of-government-black-economy-action-plan/