Crackdown on Couriers & Cleaners but cash economy will still be hard to tame

24 October 2017

The ATO Crackdown on couriers and cleaners will not solve the problem of taming the cash economy according to BDO.

The government has stepped up its crackdown with the extension of the Taxable Payment Reporting System (TPRS) to ensure payments made to contractors in these sectors are reported to the Australian Tax Office (ATO).

BDO’s National Tax Director, Lance Cunningham said the draft legislation will impact on anyone looking to get jobs done on the cheap by paying workers cash.

“There are various indications that many cash payments to cleaners and couriers go untaxed and the ATO has indicated that this “cash economy” is costing up to $24 billion, or 1.5 per cent of GDP,” he said.

“But despite the Government’s increased integrity measures, the cash economy will remain a challenging adversary to tame. The success of the TPRS in the building and construction industries will be difficult to mirror in the higher volume cleaning and courier industries.”

“The focus on business to contractor payments may get some results, however the black economy of cash payments for private expenditure will continue to remain unreported and untaxed.”

Background

The Minister for Revenue and Financial Services released draft legislation and explanatory materials for public consultation on 24 October 2017 to address the Black Economy:

  1. Banning the manufacture, distribution, possession, use or sale of sales suppression technology which allows businesses to understate their income
  2. Extending the Taxable Payment Reporting system (TPRS) to two high-risk industries – cleaning and couriers – to ensure payments made to contractors in these sectors are reported to the ATO.

The draft legislation and supporting materials are available on the Treasury website, and submissions close on Friday 10 November 2017.