Cash economy too risky

Think that dabbling in the cash economy may cut your costs or give you an edge over your business competitors? Think again.

Tax Commissioner Michael D'Ascenzo said you might consider how the five defendants currently before the courts facing 68 charges, most involving the cash economy, are feeling.

'They would almost certainly be considering the 5  year and 4  year jail sentences handed down in late June to two defendants in Melbourne; or the 7  year sentence handed down in early September in Adelaide,' he said.

'A a further four people are currently waiting to see how many charges they may be facing... they'd probably wish they had a chance to reconsider their actions.'

Mr D'Ascenzo said there's just too many ways to get caught.

'Last year we wrote to, phoned or visited more than 68,000 businesses and undertook 7,300 reviews and audits.

'And we had more than 50 prosecutions during that year.

'We will remain vigilant by increasing our visibility in the community and taking firm action against those who evade their obligations at the expense of the overwhelming majority who do the right thing.'

Mr D'Ascenzo said compliance modelling, data matching and information provided by individuals and businesses means that those who dabble in the cash economy will be caught.

'If you think doing business by cash means there's no record of your activities and you can't be detected, you're very mistaken,' he said.

'It only takes one of the people or businesses you deal with to do the right thing, and keep appropriate records, and you are vulnerable.

'If this alone doesn't give you reason to rethink involvement in the cash economy… then you'll probably be talking to the Tax Office quite soon.'

Profile of a tax cheat

John (not his real name) provided seasonal workers to orchards and vineyards.

His non-compliance with his GST, PAYE and PAYG obligations came to the attention of the Tax Office as a result of an audit on a vineyard for which he provided workers.

John's Business Activity Statements didn't correspond with the vineyard's GST records. In fact he recorded his total income for one financial year as nil. He was also seriously under-reporting PAYG tax on more than $400,000 paid to his workers; and income he declared in his personal income tax was well below what the audit of the vineyard indicated it should be.

John was charged with a total of 48 charges involving nearly $2 million in tax he attempted to evade. Charges were also laid against an accomplice identified during the subsequent investigation.

John was convicted and sentenced to a total of seven and a half years' jail.

    Last modified: 28 Jan 2010QC 28247