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Shadow Economy Advisory Forum key messages 22 May 2023

Key messages from the Shadow Economy Advisory Forum meeting 22 May 2023.

Last updated 27 July 2023

Key messages from the Shadow Economy Advisory Forum meeting 22 May 2023

Welcome and Chair update

Co-chairs, Deputy Commissioner Will Day, Australian Taxation Office (ATO) and Dr Michael Schaper welcomed attendees. No conflicts of interest were declared. Members were reminded of confidentiality requirements.

Member updates

Industry members shared key observations which focussed broadly on current environmental pressures. The discussion noted:

  • Small businesses continue to be impacted by labour shortages
  • Small businesses continue to struggle to remain afloat, resulting in less engagement with advisors
  • Increased regulation/reporting obligations are impacting small business engagement with the regulatory bodies
  • Credit rating reporting has increased by 140% indicating lack of trust in business-to-business trading
  • There is an uptrend in small business payment related disputes seen by the Australian Small Business and Family Enterprise Ombudsman
  • Same Job, Same Pay measure (currently in consultation phase) is causing concern within member industries.

Agency updates

Will Day updated the forum with matters relating to small business and the shadow economy:

  • the Shadow Economy Program was extended for a further 3 years, from 1 July 2023 (announced after the Mid-Year Fiscal Economic Fiscal Outlook)
  • the Sharing Economy Reporting Regime begins on 1 July 2023 for those in the rideshare and short-term accommodation sectors
  • Federal Budget 2023-24 measures:
    • Lodgment penalty amnesty program will remit failure to lodge penalties for lodgements that were due between 1 December 2019 and end of February 2022, when lodged between 1 June 2023 and 31 December 2023 for small businesses, providing them with an opportunity to re-engage with the tax office
    • Tobacco excise is set to increase by 5% per year for 3 years, starting from September 2023 which may drive shadow economy behaviours (e.g. sales of illicit tobacco).

Geoff Francis, Assistant Secretary, Treasury provided an update on the following:

  • Treasury is still undergoing the Australian National Audit Office (ANAO) audit into the ‘Implementation of the government’s response to the Black Economy Taskforce Report’, with Treasury currently preparing a response to the ANAO section 19 report, which is scheduled to be tabled in parliament in June 2023
  • Federal Budget 2023-24 measures of interest to the forum:
    • Extensions of several compliance programs, including:
      • Serious Financial Crime Taskforce (SFCT) and Serious Organised Crime (SOC) programs have been merged and extended for four years
      • GST Compliance Program extended for four years
      • Personal Income Tax Compliance program extended for two years
    • Securing Australians’ Superannuation Package - from 1 July 2026, employers will be required to pay their employees’ superannuation guarantee entitlements on the same day that they pay the employee’s salary or wage
    • Small Business Support:
      • Small Business Instant Asset Write-off threshold of $20,000 from 1 July 2023 to 30 June 2024 for businesses with an aggregated turnover of less than $10m
      • Small Business Energy Incentive – providing an additional 20% deduction of the cost of eligible depreciating assets that support more efficient use of energy for businesses with an aggregated turnover of less than $50m.

Tony Goding Assistant Commissioner, ATO, advised on Action Item 20230308-01 Update on direction to educate modules – how the modules were developed and who was involved in this process.

The module content and structure were developed through a gap analysis including using data from:

  • the random enquiry program findings
  • risk assessment and treatment plans
  • existing webinar feedback from small business owners.

The modules were developed in consultation with ATO Marketing and Communications, Small Business Risk and Strategy and Technical Leadership and Advice areas. SEAF member inclusion will be suggested when these modules are user-tested.

The Australian Border Force (ABF) were an apology for this meeting.

Electronic Sales Suppression Technology presentation

Assistant Commissioner Peter Vujanic and Director Jacinta Lawson of the ATO presented on Electronic Sales Suppression Technology (ESST) to the forum, covering:

  • Overview of ESST – the ‘what’ and ‘how’
  • ESST legislation
  • Quantifying the tax risk, and
  • ATO compliance strategy and observations.

There was general member interest in continuing to examine this issue, and in working with industry associations to alert them about this threat and ways to combat it. ESST will be discussed further in future meetings.

CPA Australia Asia-Pacific Small Business Survey

Gavan Ord, CPA Australia presented on the results of the CPA Australia Asia-Pacific Small Business Survey 2022-23 to the forum, covering:

  • Survey design and methodology – including 4,280 small business participants
  • Small business demographics
  • Business and economic conditions
  • Cash use within small business data
  • Technology and innovation
  • Characteristics of high growth businesses, and
  • Characteristics of Australian small businesses.

Other business

A member survey regarding this forum has been issued to members with a due date to respond by 31 May 2023.

Face to face meetings were tabled and some members indicated interest in pursuing this for a future meeting.

Members to consider providing a ‘Deep Dive’ for the industry or organisation they represent at future forum meetings and advise the secretariat if they are agreeable.