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Businesses using cash to dodge obligations

Our focus on businesses that use cash to avoid obligations.

Published 30 April 2026

Our focus

We’re cracking down on businesses that use cash to avoid meeting their tax, employer and business obligations. We are focused on businesses that are operating outside the system by not reporting or by under-reporting cash income, paying for business goods using cash or paying cash wages. Keeping transactions 'off the books' is not a mistake – it’s a deliberate action that affects everyone.

Businesses that do this may:

  • fail to report all sales transactions and fail to issue receipts
  • avoid paying GST, income tax, PAYG withholding, super guarantee, insurance and workers compensation
  • report their income as an amount below the $75,000 threshold to avoid registering for GST
  • exploit workers by not meeting award conditions and workers compensation protections
  • undercut honest businesses by offering cheaper prices for cash.

This behaviour creates an unfair playing field for businesses doing the right thing. It undermines the integrity of the tax system, erodes public trust and reduces funding for essential services like hospitals, schools and roads.

The hidden cost of cash-in-hand

Workers who are paid cash-in-hand or are working 'off the books' are often disadvantaged. They typically:

  • miss out on entitlements such as paid holiday and sick leave
  • receive less than the award wage
  • have income tax liabilities if no tax is withheld from their pay
  • don't receive the super they are entitled to, impacting their future retirement
  • lack coverage under workers compensation for injuries.

This means they are not receiving the entitlements and protections they should be. If they are injured at work, they are not protected and may have large medical expenses to pay themselves.

How to get it right

If you run a business, it’s important to:

Small businesses often rely on tax professionals to help them stay on top of their tax and super obligations. These professionals play a vital role in supporting the integrity of the system by asking the right questions about cash income and ensuring businesses report correctly.

We use sophisticated data and analytics to detect businesses that aren’t doing the right thing. Our compliance teams, along with joint operations across government agencies, are actively targeting cash-only businesses that deliberately avoid their obligations.

If you suspect a business is avoiding its obligations, you can report it to our Tax Integrity Centre.

If you're an employee who is paid in cash, you can refer to receiving cash for work you do.

Example: Failure to report cash income

Mario runs Zavollo Pizza. The business mostly operated on a cash-only basis, and earned income from a shopfront ATM. Customers were often told to withdraw cash from the ATM to pay.

Zavollo Pizza didn’t keep accurate records and failed to report all their income. A previous audit already resulted in penalties, but the practices continued.

A 2024 audit was conducted after we received a community tip-off about possible under-reporting. We found:

  • around $140,000 in income was not reported
  • about $80,000 in expenses were claimed without proof, including car costs, phone bills, insurance and interest.

The behaviour was considered intentional.

As a result, we issued:

  • adjustments to GST reporting, leading to a GST shortfall of over $17,400
  • a 75% penalty for intentional disregard plus a 20% uplift on the GST shortfall, resulting in penalties of over $11,500
  • a shortfall penalty of over $38,000, for making false and misleading statements when reporting their cash income.

This shows the importance of keeping accurate records and reporting all income including cash, as ignoring tax obligations can lead to serious penalties and extra costs.

End of example

How we're taking action

We’re taking firm action against businesses that try to gain an unfair advantage by using strategies to omit income including dealing in cash. The community plays an important role, as we receive more than 1,000 tip-offs each week about dishonest activities. Most tip-offs relate to shadow economy practices, such as demanding cash payments for work.

Since July 2025, we’ve:

  • audited 300 small businesses, uncovering more than $70 million in unpaid taxes
  • issued over $26 million in penalties to those deliberately omitting or under-reporting income including cash.

For more information, see Action to address the shadow economy.

Example: director omitting cash income

Peter is the director of the Ink & Olive Bistro in Adelaide.

He uses a bank account and POS system to record income, wages, sales and expenses, with a 10% discount on cash payments.

Data showed poor record keeping, missing invoices and reports, under-reported cash sales and omitted income. A 2021 and 2022 financial year audit found that:

  • records of cash sales weren’t properly kept with amounts being lower than those reported, using price overwrites and voided sales and discounts for cash
  • wages and expenses paid in cash weren’t reported
  • cash income was mixed between business and personal use by depositing cash into personal accounts and using it to pay personal credit cards and expenses.

These actions resulted in a total of:

  • $1,430,946 unreported income for both years with adjustments made
  • a PAYG withholding shortfall of over $550,000
  • additional tax of around $392,000 when omitted income was added to the director's returns.

Because of this, we:

  • disallowed over $120,000 in deductions due to missing records
  • treated $862,174 as unreported income of the director
  • imposed penalties for false or misleading statements, which were applied at 75% for intentional disregard with a 20% uplift
    • $338,093.10 for income tax
    • $129,276.30 for GST shortfall
    • $317,577.03 due to the director’s intentional disregard and repeated behaviour.

We also applied a director penalty of $416,583.75 for failure to withhold. This was reduced by 25% due to the disclosure made during our audit.

This shows how important it is for small businesses to:

  • keep accurate records of all transactions
  • report all income, including cash
  • understand tax obligations as a director, as ignoring them can lead to serious consequences.
End of example

Keep up to date

Keep your small business on track by staying up to date with the latest tax and compliance information. Learn more by taking our free self-paced online courses designed to help small businesses get it right:

You can also:

  • Subscribe to our free Small business newsletter to get updates that might affect your business.
  • Contact your tax professional to obtain advice specific to your business needs.

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