Cash economy under attack

The government has vowed to clean up the cash – or black – economy via a new taskforce.

According to the federal Minister for Revenue and Financial Services, Kelly O’Dwyer, nothing makes fair-minded Australians angrier than someone not paying their tax. That being the case there must be a reasonable number of unfair-minded Australians out there, with the Australian Bureau of Statistics (ABS) estimating the size of Australia’s black economy at around $24 billion dollars per year.

Typically, the black economy refers to people who operate entirely outside the tax system or who are known to tax authorities but deliberately misreport their tax (and superannuation) obligations. This could range from the person cleaning your house for cash in hand right through to an organized crime figure. Or it may be a business owner paying wages in cash and not paying tax or superannuation on the wages and not reporting, or only reporting some of the businesses’ takings.

According to a Fairfax article, in the 15/16 financial year there were 5,573 people who dobbed in their employer for paying them illegally through hidden “cash in hand” payments.

Perhaps not for much longer.

The Turnbull Government has established a taskforce to crackdown on the black economy. The Black Economy Taskforce, to be chaired by former chair of the B20 anti-corruption taskforce, Mr Michael Andrew AO, will provide an interim report to Government in March 2017. Tackling the black economy requires a whole of government approach and participants will include the Reserve Bank of Australia, the Australian Federal Police, ASIC, APRA, AUSTRAC, and the Departments of Human Services and Immigration.

“The Taskforce will look carefully at successful measures that have been employed overseas,” said Minister for Revenue and Financial Services, Kelly O’Dwyer.

“Experience from both Australia and overseas shows that successful black economy strategies must avoid one-size-fits-all approaches, include a mix of both traditional tax enforcement and other tools and provide positive incentives as well as sanctions. Presumably the government will look to avoid the type of chaos that was unleashed in India recently due to the snap withdrawal of 86% of India’s currency that was aimed at stamping out corruption.

“The Taskforce will provide a final report in October 2017 which will include an overarching whole of government policy framework and detailed proposals for action to counter the black economy,” said Ms O’Dwyer.

If you think that a business may be avoiding tax you can let the Australian Taxation Office (ATO) know by reporting it anonymously at ato.gov.au/reportaconcern or by calling 1800 060 062.