The ATO is targeting small businesses in a clamp down on the cash economy according to media reports over the weekend and today.
Using a range of tools and benchmarks, the ATO plans to make the point that those ripping cash out undetected will be detected.
In the 1990s newsagents were in target of the ATO because of a reported systematic approach to under reporting tax. There was a meeting at the ATO office in Box Hill where AFP, SRO, ATO and other government departments were represented in an investigation of the systematic approach. While nothing public came of that meeting, the activity engaged in appeared to disappear for a time. That’s what happens when there is public awareness around an investigation.
I was not a target of the 1990s investigation. My involvement was to bring people to the room who could explain how other software could be used to commit tax fraud.
If you take cash out of your business be aware that the ATO has a range of means through which to detect this. The likelihood of being caught is greater today than in the 1990s.
I think it would be quite difficult for our industry to hide large amounts of cash or maybe I’m being naive. Tradesman and cafes are a different story though. Every tradesman I have ever employed almost without question does the old “job was for $1500 but I will give you an invoice for $750 and you will pay me the rest in cash”
Shayne unfortunately some newsagents do and that brings us into frame.
Hard to hide COGS with large invoices from Publishers and magazine distributors leaving a paper trail.
Wish I had some cash to pull out 🙂
Call me dumb or naive or both but wouldnt you be mad to pull cash from your Newsagency?
Given that the sale value is between 2.5 and 4 times (or they at least used to be) your profit, wouldnt you be costing yourself in the long run?
Allan some people are mad.
In the current climate newsagent who are pulling cash out aren’t just devalueing their business, they risk making them unsaleable. The ATO puts a lot of faith in the ability of their industry benchmarks to pick up this sort of activity so between the loss of value in your business and the real chance of getting audited you would have to be a fool.
The benchmarking for newsagencies is wrong though. It is way out.
Yes, the ATO benchmarking is wrong. There are other ways they check.
I haven’t looked at the newsagency benchmarks but we’ve fallen foul of the cafe/lunchbar benchmarks. Thankfully we have a good accountant who argued our case successfully and stopped the audit. And no we were not ripping cash out. Wether the benchmarks are right or wrong if you fall outside of them expect a please explain from the ATO.
I think the multiple of 2.5 to 4 times net was some time ago. Not so now.
We were audited about 2 years ago.
Seems if you report large cash amounts and small (relatively) GST payments it sets off the alarm.
The ATO took 5 seconds to see that its the lotto that creates the problem.
Audit over in days.