The list of Budget announcements on Black Economy policies is good in the long term but implementation will require patient and careful support for the small business community, says Chartered Accountants Australia and New Zealand.
The work of the Black Economy Taskforce – supported by members of the Chartered Accountants ANZ Tax Team – has finally seen the light of day, accompanied by a detailed government response.
Commenting on those measures to be implemented first, CA ANZ Australian Tax Leader Michael Croker acknowledged that honest small businesses would be impacted by policies designed to create a level playing field for everyone.
“Many recommendations envisage that businesses will operate using modern technology and transact online. A large number of small businesses have gone down this track already, but now others must follow,” said Mr Croker.
“Linking deductibility with PAYG withholding and superannuation Guarantee compliance, or ABN notification from contractor, is tough but necessary.”
“There are too many examples of businesses ignoring their tax obligations, effectively borrowing from the ATO and, by extension, the community.”
Another example is the expansion of taxable payments reporting to a range of new industries, such as road freight transport, from 1 July 2019.
“Some will see this as a burden, whilst others will use it as an opportunity to modernise their logistics.”
Wads of cash are less likely to be seen, particularly in the trades, because of the $10,000 cash payment limit payments to business.“That also means educating householders tempted to pay cash for renovations for example” Mr Croker said.
“Enforcement will be the big issue, and simply establishing another ATO hotline to report ‘banned’ transactions may not be enough.”
Businesses may bridle at the ‘tax compliance certificate’ pre-condition when they tender for big government contracts over $4 million after 1 July 2019, but this system works well overseas.
“The so-called tax clearance procedure can be automated relatively easy, with the tenderer granting online access to an ATO portal which hopefully shows ‘green lights’, confirming tax returns have been lodged and no tax is outstanding.”
“When you think about it, this isn’t just a tax policy, but also has elements of the ‘social licence’ concept. State and local government should embrace this policy in their procurement arrangements.”
“The key however is to ensure that start-up businesses are not disadvantaged by their more established rivals.”
Mr Croker said the proposed multi-agency Black Economy Standing Taskforce should include members from the business community with a feel for practical, day-to-day transactions.
“The Black Economy Taskforce has been led by Michael Andrew FCA, who spared no effort in engaging with the business community. That dialogue now needs to be maintained and expanded into discussions around implementation.
“The ATO and Treasury members of the Taskforce have also learned a great deal about the Black Economy during the consultation process, and their talents need to be put to good use in the next stage.”
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