Tax Office to target cash economy in crackdown


July 9, 2010

THE Tax Office will expand its use of data matching to crack down on businesses using cash transactions to hide income.

The ATO has also identified refund fraud, wealthy Australians and tax-secrecy havens as some of its top priorities in its compliance program for the current financial year, released yesterday.

The tax commissioner, Michael D'Ascenzo, said the agency would data match more than 500 million transactions to ensure taxpayers were correctly declaring their full income, including from bank accounts, investments, overseas transfers and property transactions.

''We have new risk filters and upgraded technology in place to better detect incorrect or fraudulent refund claims this year,'' Mr D'Ascenzo said.

This year will also be the first time employers and the institutions that administer employee share schemes will be required to disclose information from such schemes.

As part of its efforts to combat the cash economy, the ATO plans to review and audit the tax affairs of more than 26,000 micro businesses this year. The ATO says some businesses are evading their obligations by paying cash wages or treating employees as contractors, skimming some or all of their cash takings, or operating underground, not registering or lodging returns.

To help it identify businesses that may be breaking the law, the agency has compiled benchmarks for more than 100 industries. Businesses operating outside the benchmark for their industry may be selected for audit. The ATO expects to contact about 100,000 micro businesses because their reported income is outside benchmark ranges.

It also hopes to pick up people who are not declaring their full income through their lifestyle, including purchases of property, luxury cars or boats or private jets, which would not seem to be supported by their reported income.

Another focus will be on ensuring employers lodge business activity statements on time, meet their pay- as-you-go obligations and make correct superannuation payments to their workers.

It expects to take action on more than 17,500 employee complaints about unpaid super, and undertake 800 compliance reviews of businesses in targeted industries, including road freight transport, automotive repair and electrical services.

It has promised increased efforts in relation to wealthy Australians, with more than 360 risk reviews of people who control $30 million or more in net wealth planned and will also step up its work on mechanisms used by Australian and offshore affiliates to shift profits from Australia and losses to Australia.

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