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Australia Legislates To Target 'Black Economy'

Wednesday, February 7, 2018

The Australian Government has introduced legislation to crack down on the use of electronic sales suppression tools and to extend the Taxable Payments Reporting System.

The Treasury Laws Amendment (Black Economy Taskforce No.1) Bill was introduced on February 7.

Revenue Minister Kelly O'Dwyer said that the new law "will restrict the avenues for people participating in the black economy, whether by engaging in tax evasion or by deliberately underreporting their income."

The legislation will create new offenses to ban the use of electronic sales suppression tools at each stage of the supply chain. It also includes new penalties to discourage the use of such software.

It will become an offense to produce or supply an electronic sales suppression tool, and an offense for entities that are required to keep or make records under the tax law to possess one of these tools. It will also become an offense to the use of a sales suppression tool to incorrectly make or keep records.

According to explanatory documents released alongside the legislation, "electronic sales suppression tools serve no legitimate function as they are specifically designed to understate income and assist in avoiding tax obligations. Such behavior undermines the integrity of the tax system."

The legislation will also extend the current Taxable Payments Reporting System to the courier and cleaning industries – areas deemed to be of high risk. It will require the annual reporting to the Australian Taxation Office (ATO) of payments made by businesses to contractors operating in these industries.

The Taxable Payments Reporting System currently requires businesses in the building and construction industry to report payments they make to contractors to the ATO.

The black economy in Australia is thought to be as large as 1.5 percent of the county's GDP, or around AUD25bn (USD19.7bn).