The black economy has been the subject of focus for the government in recent times, with a number of measures announced following a raft of recommendations by the black economy taskforce last year.
Most recently, legislation to extend the taxable payments reporting system (TPRS) to the cleaning and courier industries secured passage in the Senate. The ATO has also received an additional $318.5 million in funding to implement measures to combat the black economy.
The Institute of Public Accountants general manager of technical policy, Tony Greco, believes that the renewed focus on the black economy will ultimately benefit the entire economy.
“We’ve got tax cuts of $144 billion over the next 10 years, where is the money going to come from? It is going to come from the fact that there are more people in employment, multinationals are paying more money because of all those anti-avoidance measures and the last one is that the government expects over time, that all their measures that they will introduce in relation to the black economy are going to start to reap some rewards,” said Mr Greco at MYOB Partner Connect 2018.
“It is in everyone’s interest to make sure more money goes through the federal government because ultimately this is what is going to drive reduction in our high personal tax rates.
However, Mr Greco said the government should have considered an amnesty period for businesses operating in the black economy.
“The one we wanted was an amnesty to bring forward all those businesses who have been operating in the black economy, get them to come forward, dangle the carrot and say time to come clean, we’re not going to hit you too hard with penalties. The government flatly refused that recommendation,” he said.
“They’re trying to get the SG amnesty up, they’ve done it for people with excessive assets overseas, and why not do it for this sector? The government on principle says no and we’re still going to push this one.”
While Mr Greco conceded that any measure to curb the black economy could inadvertently affect businesses doing the right thing, it was necessary to ensure a level playing field.
“We’re not trying to overlay a lot of compliance into the environment but ultimately it will involve some more checks and balances but the aim is not to burden a business with more red tape,” said Mr Greco.
“We saw [with TPRS] in the building and construction industry in its first year of operation in 2012, an extra $2.3 billion of income happened to go through returns purely because of that tracking system so that tells you in a lot of industries how the ABN system is being abused. You could drive a truck through it.”
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.