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  • Shifty sales suppression tools now against the law

    It is now illegal to manufacture, distribute, possess, use or sell electronic sales suppression tools (ESSTs).

    Taxpayers can now face financial penalties of up to 5,000 penalty units, which currently equates to over $1 million depending on the offence and severity of the crime.

    Assistant Commissioner Matthew Bambrick said the Australian Taxation Office (ATO) is determined to protect honest businesses by dealing with operators who gain an unfair advantage over their competitors by trying to avoid their tax obligations.

    “These tools serve no purpose other than intentional tax evasion. They can be used to delete, change or falsify electronic point of sales (POS) records and are often referred to as ‘phantomware’ or ‘zappers’.

    “We know these tools are being used by dodgy businesses, and now that we have legislation passed that specifically sets out sanctions, we can also go after the manufacturers and suppliers.

    “Businesses using legitimate POS software shouldn’t be concerned – we can tell the difference between a salesperson correcting an error when ringing up a sale and the deliberate manipulation of sales data.”

    Mr Bambrick said the ATO will be working closely with businesses that may have inadvertently purchased software with an ESST function.

    “Businesses that have acquired an ESST on their software before the legislation was first announced on 9 May 2017 have a six-month transitional period until 3 April 2019 to let us know about it without any penalty being applied,” Mr Bambrick said.

    “We will be sending letters to businesses who we believe may have an ESST in their POS system to inform them to take action.

    “I urge all businesses to keep detailed records of every transaction so you can explain any adjustments or calculations for tax purposes.”

    For more information on ESST and to report a concern, visit ato.gov.au/ESST

    Example of ESST use:

    After looking into a number of community concerns about a hospitality company, we found they weren’t keeping accurate records. We found that the business was:

    • using an ESST and deliberately not reporting all their cash income
    • falsely reporting regular losses
    • not managing their employee obligations properly.

    The audit identified omitted income of $2.73 million, resulting in a shortfall in GST payable of $354,000 as well as $1.5million in penalties related to the deliberate manipulation of tax records.

    Last modified: 10 Oct 2018QC 56984