In small business, cashflow is often the make or break factor, especially in the first three years of trading. It’s not uncommon to look for other ways to increase your cashflow, sometimes this can be through taking out business loans, finding a second job or completing a couple of cash-in-hand jobs over the weekend. Unfortunately, any unrecorded income or wages can leave you in a worse off financial situation if the Australian Taxation Office finds out.
Cash-in-hand jobs and other unrecorded income and wages makes up part of Australia’s Black Economy which is currently estimated to be worth around $50 billion. This term casts a wide net and includes areas in which small business owners not realise they are acting in, such as under-reporting income, under-paying wages and sham contracting. Worse still, if a small business owner is found guilty in one of these areas, there can be heavy fines associated for the individuals and company involved that can lead to a strained long-term financial situation.
With more serious offense, such as such as identity fraud, ABN and GST fraud, money launderings and phoenixing, also being included under The Black Economy terms, The Australian Government has taken actions to tackle this issue head on, creating the Black Economy Taskforce last year. Over the last 12 months, the Taskforce has made 80 recommendations, of which ten measures have been announced by the Government. These measures, as described by Deputy Commissioner Deborah Jenkins in a speech last week at the IPAs National Congress in Sydney, “…are designed to assist with encouraging taxpayers to do the right thing and make it more difficult for those involved in the black economy to continue their activities.”
One measure that has been rolled out is a mobile strike team, aimed at creating visibility and education to businesses doing the wrong thing, both unintentionally and deliberately. This financial year, the mobile strike force is aiming to visit around 10,000 small businesses in a combination of metro, reginal and remote locations across Australia. Aside from audits, this team is creating a strong presence with community engagement and are also aiming to provide help and education to small businesses who may not understand their obligations.
If you are in small businesses and are unsure of your tax obligations, now is a great time to find out. It is easiest to speak to a specialised taxation accountant, such as the team at Walker Hill, who will be able to explain your obligations in simple to understand terms and help to make sure you’re compliant. Contact us today to find out more.