July 15, 2017
In December 2016, the Turnbull government announced an official crackdown on taxpayers who intentionally misreport their tax and superannuation obligations. Officially called as the "Black Economy Taskforce", It commenced in January 2017 and released an interim report in May 2017. The Turnbull Government’s Black Economy Taskforce is expected to release its final report in October 2017.
The Taskforce made the following key initial recommendations:
1. Access to Australian Government procurement opportunities should be limited to firms which have a good tax record and do not engage in bribery or corruption.
2. The Taskforce should consult on the idea of providing tax and other incentives for small businesses who adopt a non‑cash business model.
3. The Taxable Payment Reporting System (TPRS), which currently only applies to the building and construction industry, should be expanded to the cleaning and courier sectors. The Taskforce will consider whether the TPRS should be applied more broadly in its Final Report.
4. Businesses should not be able to claim deductions on cash wage payment where they did not make or report Pay As You Go (PAYG) payments, issue payment summaries or statements of earnings, or make applicable superannuation contributions. Similarly, businesses should not be able to claim deductions for payments to contractors where a valid Australian Business Number (ABN) is not quoted and the payer has not withheld part of the payment under the ‘no‑ABN withholding’ requirements. These payments should not be included in cost bases for capital gains tax or depreciation purposes. The Taskforce will consult on this proposal before finalising its position.
5. A ban on sales suppression technology. This technology allows businesses to hide cash takings to avoid paying income tax.
6. Australia needs a robust, real-time business identification and verification system in order to reduce red tape, generate valuable data for government and businesses (for example simple verification of their counterparts) and improve delivery of relevant services. The Taskforce will work with relevant agencies on ways to rationalise business registries and strengthen business registration and verification arrangements (for example, to address the misuse of ABNs).
7. The Government should work cooperatively with state, territory and local governments, given their common interest in countering the black economy.
8. The Government should consult with the states and territories on the idea of including tax literacy modules in vocational education training (VET), small business courses and in new migrant communities. The Taskforce will work with the Department of Education and Training on this.
9. The provision of funding to the Australian Taxation Office audit and compliance programs to better target black economy activities, including by strengthening its use of technology, buttress its ABN monitoring and public education activities.