Dealing with the cash economy

In 2010-11 we increased our scrutiny of businesses deliberately not reporting their cash income. This included activities specifically funded by the government.

We profiled over 1.4 million small businesses, using our sophisticated risk-detection systems and directly contacted over 20,000 businesses through a range of compliance activities.

Our compliance activities for dealing with the cash economy comprise:

  • a focus on record keeping, data matching and the performance of businesses against our small business benchmarks
  • visiting small businesses to understand their operations and discuss their tax and superannuation obligations
  • adopting more intensive approaches and audits for businesses intentionally avoiding their tax and superannuation obligations.

In 2010-11 these compliance activities raised $157.7 million in tax liabilities, including $74.4 million relating to specific commitments to government. We also raised $156.1 million in tax liabilities as a result of lodgment compliance activities we undertook in conjunction with our cash economy program.

We have published small business benchmarks across more than 100 industries, covering approximately 600,000 small businesses. Our small business benchmarks, and associated compliance activity, raised taxpayer awareness of the record-keeping obligations of all businesses. We wrote to over 112,000 taxpayers and their tax agents regarding their performance against small business benchmarks and other cash economy risk indicators.

We asked taxpayers to review their records and offered them the opportunity to make a voluntary disclosure. Approximately 1,500 made a voluntary disclosure and over 20,000 responded to us with an explanation of their particular circumstances or asked us to make a change to their records.

In addition, our analysis indicates changes in behaviour among taxpayers who have previously received a cash economy letter from us. Forty-five per cent of these taxpayers continued to report higher net GST 12 months after receipt of that letter.

    Last modified: 31 Oct 2011QC 28036