Legal and accounting service providers and construction firms are among those facing scrutiny by the ATO, after it announced more business visits will be conducted in Sydney and the Yarra Valley.
Just days after announcing plans to send inspectors to businesses in Darwin and the far north Queensland towns of Port Douglas and Cooktown, the Tax Office revealed plans to also visit the Hornsby region on Sydney’s upper North Shore and Healesville north-east of Melbourne.
Hornsby employers allegedly withholding employee super, PAYG tax
ATO assistant commissioner Peter Holt said the Tax Office had received reports from the community about employers in the Hornsby area, which have prompted the decision to conduct site visits in September.
“We’re particularly concerned about businesses gaining an unfair edge over their honest competitors by not playing by the rules,” Mr Holt said.
The ATO is visiting these towns as a result of some tell-tale signs of black economy behaviour.
“The Hornsby community has told us that some businesses are not paying their employees their correct entitlements like super and PAYG withholding tax,” Mr Holt said.
He said the ATO had also detected other signs of non-compliance with tax rules, such as businesses not being registered for either GST or pay as you go withholding, failing to provide employees with payslips, operating as cash only and poor record-keeping practices.
Of particular interest to inspectors visiting the region are businesses within these service sectors:
- Legal and accounting
- Adult, community and other education
- Building cleaning, pest control and gardening
- Cafes, restaurants and takeaway food
- Computer system design and related services
The ATO will also be holding information sessions next Thursday, 29 August, at Magpies Waitara, with the sessions to be conducted in both English and Mandarin.
“We’re happy to help and support those who want to do the right thing and need help. However, if we think a business is deliberately doing the wrong thing, we also have an obligation to the community to investigate further,” Mr Holt said.
“These local visits give us an opportunity to talk to business owners and help them get things right. During the visits, we may discuss record-keeping and payment facilities, outstanding lodgements, tax debts, and managing employee entitlements such as superannuation.”
Healesville construction sector targeted
Some 400 businesses in Healesville will be visited by ATO inspectors between now and the end of September.
“We’re particularly concerned about businesses in certain industries in Healesville like building and construction gaining an unfair competitive edge over their honest competitors, so businesses in these industries are more likely than others to get a visit from us,” Mr Holt said.
“People from the Healesville area have told us about some building and construction businesses getting an unfair advantage over their honest competitors by not playing by the rules.
“Community reports from the area have alerted us about sham contracting, underpayments and paying wages in cash, all of which are signs of black economy activities.”
As well as the business visits, ATO inspectors also plan to drop in on small business tax practitioners in the area to “better understand the drivers behind agent behaviour and provide education and support to encourage willing participation of their clients in our tax systems”.
Black economy harms honest businesses: ATO
The ATO has positioned these site visits as a means of addressing the black economy and to “protect honest businesses from unfair competition”.
“We take non-compliance of employer obligations seriously and are committed to do the right thing for honest businesses... by identifying those who are engaging in black economy practices and ensure a level playing field,” Mr Holt said.
“Some business may use the cash payments to hide income and not meet other obligations; for example, paying cash wages without keeping records, not declaring cash sales, not recording some sales and other activities to avoid their tax and super obligations.”
Estimates from the Black Economy Taskforce suggest that the black economy is worth as much as $50 billion or 3 per cent of Australia’s GDP.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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