THE Australian Taxation Office (ATO) has reminded employers that any ‘cash in hand’ payments made to workers from July 1, 2019 will not be tax deductible.

‘Cash in hand’ refers to cash payments to employees that do not comply with pay as you go (PAYG) withholding obligations. Payments made to contractors where the contractor does not provide an ABN and the business does not withhold any tax will also not be tax deductible from July 1.

Assistant Commissioner Peter Holt said the new rules have a dual purpose of levelling the playing field for honest businesses that are doing the right thing by their workers as well as tackling the black economy.

“It’s fairly straight-forward: do the right thing and you can claim a deduction. Deliberately do the wrong thing and you’ll miss out on a deduction and risk being penalised," Mr Holt said.

This new measure will take effect for payments made to workers from July 1, 2019 for income tax returns lodged for the 2020 income year onwards and is part of the government’s response to recommendations from the Black Economy Taskforce.

“The Black Economy Taskforce estimates that the black economy is costing the community as much as $50 billion, which is approximately three percent of Gross Domestic Product (GDP). This is money that the community is missing out on for vital public services like schools and roads.” Mr Holt said.

“Businesses that operate in the black economy are undercutting competitors and gaining a competitive advantage by not competing on an even footing."

In addition to the loss of a tax deduction, employers caught not complying with their PAYG withholding obligations may be penalised for failing to withhold and report amounts under the PAYG withholding system.

“This new measure is just one of the many ways we’re tackling the black economy," Mr Holt said.

Mr Holt said “transacting in cash is a legitimate way of doing business, and we recognise that some industries do tend to take more cash than others”.

“But when cash is used to deliberately hide income to avoid paying the correct amount of tax or superannuation it’s not only unfair, it’s illegal," Mr Holt said.

Employers who mistakenly classify their employee as a contractor will not lose their deduction where their worker provides them with an ABN. 

Mr Holt said that payers who attempt to do the right thing but make a mistake do not need to worry; they will not lose their deduction.

“Our objective is to support small business to help them get it right. But anyone caught deliberately doing the wrong thing will lose their deduction."

Mr Holt said employers that failed to withhold or report their PAYG obligations can come forward and voluntarily disclose this to the ATO before we take any compliance action. If they do they will not lose their deduction and may be entitled to reduced penalties.

If a member of the community has any knowledge or concerns about an employer paying their workers cash in hand, they can report it to the ATO online at ato.gov.au/ReportAConcern or by phone on 1800 060 062. Reports can be made anonymously. One in five of the reports we received in 2017-18 were about the black economy.

More information is available at ato.gov.au/paygwdeductions

About the Black Economy Taskforce

The Black Economy Taskforce was established to provide a whole-of-government approach to combat the black economy in Australia. It was established in December 2016 to develop a policy framework involving new proposals to tackle black economy activity. The Black Economy Taskforce's Final Report was released in October 2017.

The ATO plays a significant role in leading and delivering on the Black Economy Taskforce recommendations accepted by the Government. Since July 1, 2018, the ATO has coordinated an extensive program of work to tackle the black economy. This program of work includes a multi-faceted approach.

The ATO is responsible for addressing the following aspects of the black economy:

• · under-reporting income and over-claiming expenses
• · ensuring businesses meet their employer obligations – so they don’t pay employees or contractors cash in hand, underpay wages, fail to withhold tax or not contribute to super
• · addressing illegal phoenixing (together with Phoenix Taskforce partner agencies) – liquidating and reforming businesses to avoid obligations
• · preventing tax fraud
• · dealing with illicit tobacco, duty and excise evasion
• · targeting intermediaries and agents who enable black economy behaviour.

www.ato.gov.au

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MORE THAN 400 global business leaders and senior officials from 36 countries will converge in Sydney for the 2019 World Forum for Foreign Direct Investment from today, June 17.

NSW Minister for Jobs, Investment, Tourism and Western Sydney, Stuart Ayres said the three-day forum funded by the NSW Government would provide an opportunity to attract global investment to key industry precincts being developed across the State.

“The World Forum for Foreign Direct Investment has been secured for Sydney for the first time and brings global business leaders and government officials together to discuss international investment issues and opportunities,” Mr Ayres said.

Delegates will tour key investment precincts, including the Western Parkland City, Westmead Health, Education and Research Super Precinct and Sydney Innovation and Technology Precinct to promote business opportunities in defence, aerospace, startup and tech, health and medtech, manufacturing, agribusiness, and education sectors.

“The investment appeal of our regions will also be championed including the Special Activation Precincts being developed in centres like Parkes and Wagga Wagga,” Mr Ayres said.

“Sydney is the ideal host for this important forum as Australia’s business capital. NSW has the  lowest unemployment rate of any state and a flourishing economy that has seen 28 years of consecutive growth.”

Lyn Lewis-Smith, CEO of BESydney, which secured the world forum for Sydney, said such global gatherings provide “long tail benefits” above the expenditure of delegates. 

“Forums like these help deliver on economic development goals, attract investment and talent, creating a focused time and place to form vital relationships for cross-border investment," Ms Lewis-Smith said.

The World Forum on Foreign Direct Investment is taking place from June 17-19 in Sydney. 

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REPORTS that the NSW Government has cut the budget of its tourism agency is a kick to the tourism industry and the success it has delivered the state’s economy over the past decade.

“Despite the success of our export tourism sector, which has seen international visitation to NSW more than double in the past decade, the Berejiklian Government has seen fit to make a 20 percent cut to the budget of the very organisation which supports this success,” ATEC managing director, Peter Shelley said today.

“In a fiercely competitive international tourism marketplace it is vital Australia maintains its profile and Destination NSW has been very successful in promoting NSW as a highly desirable destination.

“This is not the time to be cutting the budgets of our tourism marketing agencies and ATEC is highly concerned about how this cut will affect Destination NSW’s ability to continue to engage effective advertising campaigns in market.

“We are seeking more information from the Minister’s office on what this will mean to the industry and what impacts we should expect to roll out of this concerning move.”

www.tourismdrivesgrowth.com.au

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THE QUEENSLAND Government’s 25 percent gas royalty hike will translate into a slug of more than $13 million a year on Queensland industry and households through higher energy costs, the Queensland Resources Council (QRC) said today.

 QRC chief executive Ian Macfarlane said it was likely the cost of the tax hike would be passed on directly to consumers.

“When you put up taxes someone has to pay, and in this case unfortunately that means that domestic gas users will have to reach further into their pockets,” Mr Macfarlane said.

“Domestic industry and manufacturers have been struggling under the weight of higher gas bills, which can run into the millions of dollars already.

"An extra tax hit of more than $13 million a year will make Queensland manufacturers less competitive and it will have a bigger flow-on effect for other Australian businesses that rely on Queensland gas.

“Up until now the Palaszczuk Government has been taking sensible measures to supply domestic industry with affordable and reliable gas, including through domestic gas only acreage releases.

“A 25 percent gas royalty tax increase could prove to be self-inflicted economic damage.

“QRC has urged the Queensland Government to exclude domestic gas from the royalty tax increase and to delay the introduction of any gas royalty increase until January 1 2020 to address confusion about the legislation," Mr Macfarlane said.

“Under the new legislation, the tax increase is applied retrospectively to January 2019.

 “Queensland’s resources sector pays its fair share of tax and we are ready to work in close consultation with the State Government on its plan for a longer term gas royalty review.

“We are also seeking a meeting with the Treasurer to discuss a longer term freeze on coal and mineral royalty taxes.

"Queensland’s reputation as a safe place to invest depends upon stable and transparent laws and regulations and a commitment to open and good faith consultation.”

 Queensland’s oil and gas industry supports more than 39,000 full time jobs, both directly and in supporting industries, according to the QRC

www.qrc.org.au

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