A while back I posted a thread about ATO plans to do a MASSIVE match of debit & credit card data...Seems they were thinking differently. What they have done is identify card acceptance ratio's in various industries and have identified those who ARENT accepting cards v's those in their industries who are. A reverse use of the data. This is a new cash economy hit list.
Reported in AFR and SMH http://www.smh.com.au/business/the-economy/ato-cracking-down-on-cash-economy-20140825-1082c9.html
Now nobody incl ATO are suggesting low card acceptance is fraud. Far from it. Some businesses choose to refuse cards and use excuses like merchant fees, handling costs and other reasons. But this may indicate a high encouragement of cash to avoid tax too. Its all those behaviours which will be under the spot light. Nailbars, health & beauty, take away food, restaurants, cafe's, hairdressers, vehicle repairers, tradesmen dealing with public etc...
So ATO have a 275,000 strong hitlist of businesses that don't accept cards who operate in industries where card acceptance is well accepted as the norm. Thus a high cash economy risk. They are looking for unreported cash, cash paid as wages, GST fraud etc....
I have seen a few of these over the years. No, they say, its not a audit...Just checking compliance (ie its stage one of the audit
). Lots of questions about how cash is recorded and banked or spent. Cash Registers, register tapes, banking processes, how all employees are paid even in cash etc etc....Surveillance footage - the lot.
One of the ways ATO catch these businesses is to walk in and use their services. One innovative way I saw them catch one owner was use of a $100 note. I wont spoil the ATO's party by explaining the trap but the fact is it wasn't banked. They then committed a further problem by declaring it was paid as wages....Making it a trifecta of issues (GST, income tax and PAYG withholding). It later became four issues - Super hadn't been paid either. Another caught through its purchase records of a key supplier item used in the store. The qty didn't reconcile with sales....(Take-away Coffee Cups)
Have seen a fair number of businesses come to me after encountering this issue. A few tips:
1. Shut up and say NOTHING. No talking. Despite everyone putting on a brave face you always have something you will say or do which may incriminate. Don't even arrange to meet with ATO. Tell them you will get your tax agent to make the appointment.
2. Seek advice.
In some cases you may make a disclosure & may just save a fortune. Remember that the business premises are just the start. Then they visit the home and consider asset betterment as part of an escalated audit. Nasty.
Reported in AFR and SMH http://www.smh.com.au/business/the-economy/ato-cracking-down-on-cash-economy-20140825-1082c9.html
Now nobody incl ATO are suggesting low card acceptance is fraud. Far from it. Some businesses choose to refuse cards and use excuses like merchant fees, handling costs and other reasons. But this may indicate a high encouragement of cash to avoid tax too. Its all those behaviours which will be under the spot light. Nailbars, health & beauty, take away food, restaurants, cafe's, hairdressers, vehicle repairers, tradesmen dealing with public etc...
So ATO have a 275,000 strong hitlist of businesses that don't accept cards who operate in industries where card acceptance is well accepted as the norm. Thus a high cash economy risk. They are looking for unreported cash, cash paid as wages, GST fraud etc....
I have seen a few of these over the years. No, they say, its not a audit...Just checking compliance (ie its stage one of the audit
). Lots of questions about how cash is recorded and banked or spent. Cash Registers, register tapes, banking processes, how all employees are paid even in cash etc etc....Surveillance footage - the lot.One of the ways ATO catch these businesses is to walk in and use their services. One innovative way I saw them catch one owner was use of a $100 note. I wont spoil the ATO's party by explaining the trap but the fact is it wasn't banked. They then committed a further problem by declaring it was paid as wages....Making it a trifecta of issues (GST, income tax and PAYG withholding). It later became four issues - Super hadn't been paid either. Another caught through its purchase records of a key supplier item used in the store. The qty didn't reconcile with sales....(Take-away Coffee Cups)
Have seen a fair number of businesses come to me after encountering this issue. A few tips:
1. Shut up and say NOTHING. No talking. Despite everyone putting on a brave face you always have something you will say or do which may incriminate. Don't even arrange to meet with ATO. Tell them you will get your tax agent to make the appointment.
2. Seek advice.
In some cases you may make a disclosure & may just save a fortune. Remember that the business premises are just the start. Then they visit the home and consider asset betterment as part of an escalated audit. Nasty.
