• Reporting businesses that cheat the system - an audio guide

    The cash and hidden economy exists because some businesses avoid their tax and super obligations and, in the process, undercut honest businesses. This audio guide provides information on what 'cheating the system' is, what it means for you as a business owner, and what you can do to help end the cash and hidden economy.

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    The information in this guide was current at May 2015.

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    Audio guide transcript

    Welcome to your audio guide on how to report businesses that cheat the system, from the Australian Taxation Office (ATO).

    The recording lasts for approximately five minutes.

    David
    Businesses play an important part in Australian society. Businesses put people in jobs, are a source of income to many, and they keep the Australian economy strong.

    Jenny
    That’s right, and the tax businesses pay to the Australian Government funds important community services like schools and hospitals, so it’s important that businesses pay the right amount of tax.

    David
    The majority of taxpayers do the right thing. However, some people deliberately take cash only, pay cash wages to their staff and do other things to avoid paying their fair share of tax and obtain an unfair advantage over other businesses; it’s called the cash and hidden economy.

    Jenny
    I think it’s important that we let our listeners know exactly what we mean when we refer to the cash and hidden economy.

    David
    I agree. Cash and hidden economy activities refer to businesses using these methods to deliberately avoid paying tax. It is also referred to as the black, hidden, underground economy or cheating the system. Essentially, they aren’t competing fairly. Honest businesses face enough competition but this is unfair competition.

    Jenny
    Do you have some examples?

    David
    I do. Examples include paying wages in cash and not paying tax or superannuation on the wages and not reporting, or only reporting some of the businesses’ takings.

    The ATO are working to protect honest businesses from this type of unfair competition.

    Jenny
    And it’s important for our listeners to also know that it’s more than just cash, that’s why we refer to it as the cash and hidden economy. Traditionally, it referred to just physical cash, but we now see people trying to hide income from their card and online transactions. If a business is not paying tax on all its income then it is hurting honest businesses and participating in the cash and hidden economy. But we should note, just because a business operates using cash, does not mean they are participating in the cash and hidden economy.

    David
    Cash and hidden economy activities cheat the community and honest businesses, which is why the ATO is committed to putting an end to it.

    Jenny
    That's right, and the ATO has advanced systems and processes to detect the cash and hidden economy, so it's only a matter of time before tax cheats are caught.

    David
    It is. The ATO can match data from sources like banks and Centrelink to identify these businesses and take appropriate action to recover any tax owed.

    Jenny
    Businesses that are found to be operating in the cash and hidden economy, face penalties and fines, and in some cases even imprisonment.

    David
    There are a number of ways honest business can help end the cash and hidden economy. Can you take our listeners through these?

    Jenny
    Sure, a good rule of thumb is to ask for a receipt for any cash payments you make. If a business refuses to provide you with a receipt, they may not be playing by the rules.

    David
    The other thing you can do is report other businesses you think may be involved in cash and hidden economy activities.

    You can ask us to take a closer look by reporting it anonymously at ato.gov.au/reportaconcern or by calling 1800 060 062.

    Jenny
    We take all reports seriously and the more information you can give us the better.

    David
    Businesses that make voluntarily disclosures usually face fewer penalties then businesses who the ATO have detected doing the wrong thing.

    If you have not reported all of your income or you think you may have made a mistake, you should contact us to make a correction. You can make a voluntary disclosure by following the instructions on ato.gov.au/voldisclosureform. You can also call us on 13 28 66 any time for anonymous help.

    Jenny
    Great, that brings us to the end of our guide. Thanks for listening.

    David
    This information was provided to you by the Australian Taxation Office. We are committed to providing you with advice and information you can rely on.

    The information in this recording was current at May 2015. Your narrators were Jenny Seedsman and David Tradinic. This concludes the recording.

      Last modified: 07 Oct 2016QC 42343