The cleaning industry is in the government’s sights as it plans to introduce new measures to curb the cash economy, but industry experts warn the crackdown will not solve the problem.
Minister for Revenue and Financial Services, Kelly Dwyer released draft legislation and explanatory materials this week, aimed specifically at the cleaning industry and couriers, for public consultation, in an effort to tackle the growing problem of the cash economy.
The legislation includes the extension of the Taxable Payment Reporting System (TPRS) to cleaning and couriers – which have been deemed “two high-risk industries” – to ensure payments made to contractors in these sectors are reported to the ATO.
The government also announced in its draft legislation to ban the manufacture, distribution, possession, use or sale of sales suppression technology which allows businesses to understate their income.
BDO’s national tax director, Lance Cunningham said the draft legislation will impact on anyone looking to get jobs done on the cheap by paying workers cash.
“There are various indications that many cash payments to cleaners and couriers go untaxed and the ATO has indicated that this ‘cash economy’ is costing up to $24 billion, or 1.5 per cent of GDP,” he said.
“But despite the government’s increased integrity measures, the cash economy will remain a challenging adversary to tame. The success of the TPRS in the building and construction industries will be difficult to mirror in the higher volume cleaning and courier industries,” Cunningham said.
“The focus on business to contractor payments may get some results, however, the black economy of cash payments for private expenditure will continue to remain unreported and untaxed.”
The proposed measures follow the release of the Black Economy Taskforce’s interim report released in August.
The taskforce is chaired by Michael Andrew AO, former global head of KPMG and current chair of the Board of Taxation.
A final report by the taskforce is due to be released by the end of this month.