We've all encountered it and quite a few of us have
succumbed to temptation and taken part in it. After all, it's
been around forever, doesn't hurt anyone, and those who take
part afterwards feel they've had a small victory.
You know it's naughty, even illegal. And there is a good
chance someone in authority will want to punish you for it.
It's part of the thrill.
We're talking about the cash economy, aka black, hidden or
It's the tradesman who chops a bit off the bill if you pay
in cash saying: "You don't want a receipt do
There's the restaurant, café or shop owner who slips
a cash payment under the till rather than ring it up.
It's the gardener, driver and labourer who's paid
cash-in-hand instead of a cheque or electronically transferred into
their bank account.
It isn't only small time workers who take part in the cash
economy. Transactions between businesses big and small have known
to be paid in briefcases of cash. Not just crooks. Big legit
businesses have been caught.
The supposed benefit of the cash economy is that there is no
trace for the taxman. No ten per cent GST to be paid. No record for
It's booming. The Australia Institute reported recently that
five per cent of workers – 575,000 people – are paid
cash-in-hand, especially young people.
Government coffers miss out on $5 billion a year. GST alone
misses out on $2.7 billion.
Not everyone wants to be part of the cash economy. Some
employers force workers to take cash so they are off the books and
outside work regulations, including the minimum wage and super. The
ATO receives an average 164 tip-offs a week about this. If
you're in this bind it would be wise to seek legal help.
But those who willingly take part in the cash economy should
know what they are doing is illegal and there can be harsh
consequences. Last year the ATO prosecuted 41 people and nine firms
for $3.2 million worth of cash economy offences. A Perth tiler was
fined $64,000 for making cash deals.
The ATO sets benchmarks for more than 100 industries to
calculate how much income they should be reporting. If a tradesman,
small business or micro trader falls short, they'll want to
If this happens you should seek legal advice as there have been
challenges to the benchmarks the ATO uses. But it may be best to
beat the taxman to the punch and confess your sins early to reduce
the penalty. Go armed with legal and financial advice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The income tax treatment of any property lease incentive will vary, depending on the nature of the inducement provided.
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