‘Ban cash payments over $10k’

The accounting firm has recommended the Federal Government use the upcoming budget allocate up to $400 million a year to the Australian Taxation Office for additional enforcement activity, estimating that for every extra $1 spent, the ATO could bring in around $14.

In addition to legislating to remove the benefit of the “cash discount” by denying income tax deductions relating to cash expenses, KPMG recommends a two-stage amnesty for incorrect reporting, with higher penalties for those who do not take the opportunity.

“Adopting these measures would increase the fairness of the tax system and level the playing field between dishonest and honest businesses and individuals,” KPMG partner Grant Wardell-Johnson said in a statement.

“It would also support community ethics and rebuild trust, as honest taxpayers witnessed the reduced incidence of others cheating the system at their expense.

“At a time when other revenue measures are struggling for bipartisan support, the proposed crackdown on the black economy is more likely to gain passage through the Senate, generating much-needed additional revenue for budget repair.”

The Australian Bureau of Statistics estimates the size of Australia’s so-called black economy, including illegal activity such as drug trafficking, to be $32 billion a year. KPMG said the states and territories would also gain large amounts of extra revenue from the proposed crackdown through GST and state taxes and charges.

Other proposed changes include strengthening the requirements to obtain an Australian Business Number to stamp out sham contracting, and making a clean tax history a requirement for obtaining government work.

The Turnbull Government’s Black Economy Taskforce delivered its interim report last year, making a number of recommendations including the use of consumer penalties for failing to get a receipt when paying in cash, and the use of biometric data such as “fingerprints, palm prints, iris and facial structure” to monitor the black economy.

A recent study by the Bank for International Settlements found despite the increased use of electronic payments around the world, the demand for cash in most economies has actually increased since the GFC.

frank.chung@news.com.au

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