The Australian Tax Office is continuing to target the cash economy this year – and beauty salons are firmly in its sights.
ATO assistant commissioner Matthew Bambrick said the office has been focusing on improving compliance among high risk industries for several years, and beauty salons were one of those focus industries as the office has “observed a high incidence of risk factors such as advertising as cash-only”.
Other focus industries include hair salons, restaurants, cafés, takeaways, food retail outlets, clothing retail outlets and hotels.
The “cash and hidden economy” is, according to Bambrick, “primarily present” in around 1.6 million small businesses operating across 234 cash exposed industries.
The ATO reports that it has also been conducting location specific visits where it has “observed a high incidence of cash economy risk factors” across the country.
“These visits have included Werribee and Glen Waverley in 2017, and a number of other locations are planned in 2018,” he said.
Bambrick said “businesses that are of a concern” are given help if needed and/or are audited.
In 2016-17, seven out of every ten of the 11,000 audits carried out by the ATO “resulted in an adjustment being made, with total liabilities of $197 million in tax and penalties assessed”.
In the first six months of 2017-2018, the ATO conducted 5020 reviews and audits “resulting in approximately $143 million in tax and penalties”.
This year the ATO is planning to target beauty salons and other businesses that:
- operate and advertise as ‘cash only’ or mainly deal in cash
- ATO data matching suggests they don’t take electronic payments
- are part of an industry where cash payments are common
- indicate unrealistic income relative to the assets and lifestyle of the business and its owner
- fail to register for GST or lodge activity statements or tax returns
- under-report transactions and income, according to third-party data
- fail to meet super or employer obligations
- operate outside the normal small business benchmarks for their industry
- are reported to the ATO by the community for potential tax evasion