How the ATO is Catching Up with the Cash Economy

Cash economy businesses, which are being targeted by the Tax Office, run part of their business off the books or don't report all their income.

The ATO uses its data matching programs to gather information from a variety of sources and cross match it with taxpayer information and the ATO’s small business benchmarks to identify businesses which have not reported all their income.

Recently, the ATO has commenced four new data matching programs:

Merchant Payment Cards Project – data matching merchant card sales through the CBA; Westpac; ANZ; and NAB. 300,000 individuals within cash economy industries will be matched.

Plasterers Project – collecting details of taxpayers that have purchased plasterboard, etc, in NSW from Boral Ltd, CSR Limited and La Farge Plasterboard Pty Ltd. 10,000 individuals will be matched.

Motor Vehicle Data Matching Project – collecting details of taxpayers that have purchased or acquired a motor vehicle valued at $10,000 or higher from the relevant road traffic authority in every state and territory, eg, Vic Roads, Transport SA, etc. Approximately 2.5 million individuals will be matched.

Banking Transparency Strategy – collecting data and intelligence on Australian taxpayers that have offshore accounts in jurisdictions that are of interest to the ATO.

Transactions through most major financial institutions in Australia, including the big four banks, international financial institutions and credit card providers such as American Express, Diners Card, MasterCard and Visa will be reviewed. In excess of 100,000 taxpayers will be targeted.

Industry Benchmarks vs The Cash Economy
The second string to the ATO’s assault on the cash economy is using industry benchmarks.

These benchmarks provide a snapshot of what, on average, the ATO believes is happening in businesses operating in a particular industry by comparing various costs to turnover.

The benchmarks will not only apply to the traditional cash economy targets, ie, building and construction and restaurants/cafés, cleaners, etc. The following is a list of soon to be published benchmarks issued by the ATO:

• architectural services;
• automotive electrical services;
• cabinet makers;
• child care services;
• chiropractic and osteopathic services;
• confectionary retailing;
• craft shop;
• discount and variety stores;
• electrical, electronic and gas appliance retailing;
• entertainment media retailing;
• general dental services;
• gift shops;
• health and fitness centres and gymnasia operation;
• health food retailing;
• lawn mowing services;
• machinery equipment repair and maintenance;
• musical instruments retailing;
• physiotherapy services;
• picture framing;
• printing;
• printing support services;
• specialist dental services;
• sport and camping equipment retailing;
• sports and physical recreation instruction; and
• veterinary services.

For more information please contact your Baker Affleck accountant or tax consultant on (07) 5538 3088 or click here and we will contact you.