Stop paying tradies in cash, ATO boss pleads

THE Australian tradition of paying tradies in cash for a discount needs to stop, the ATO has warned, saying it rips “billions” from the economy.

THE head of the tax office has urged Australians to stop paying tradies in cash, claiming the “cash for a discount” mentality is ripping “billions” of dollars out of the economy.

Speaking to The Australian, Australian Taxation Office commissioner Chris Jordan said the practice was “effectively cheating the system or helping someone else to”. “This is not a victimless crime,” he said.

“If you pay cash for a discount, in many cases you are effectively ripping off yourself as an Australian taxpayer, because this type of behaviour is what sees ­billions flow out of the tax system and into the cash economy.”

Earlier this year, The Australian reported that thousands of tradies in the Northern Territory were scamming the ATO by listing the Bunnings ABN instead of their own on invoices.

The Federal Government’s Black Economy Taskforce, which has been investigating ways to crackdown on our “national sport”, estimated the size of the cash economy could be as large as $25 billion.

An interim report released in August contained a number of proposals, including an “economy-wide” limit on cash payments, the use of consumer penalties for failing to get a receipt when paying in cash, and the use of biometric data such as “fingerprints, palm prints, iris and facial structure” to monitor the black economy.

A subsequent consultation paper providing “additional policy ideas” went even further, floating expiry dates and “tracking technology” for banknotes, a ban on encrypted messaging phones and apps, and “scraping” internet traffic to identify “suspicious patterns of online activity”.

Consumer groups have previously warned some of the proposed measures could be heavy-handed and unfair, while Liberal Democrats Senator David Leyonhjelm has described the government’s war on cash as “probably the biggest threat to our liberty of all”.

“This idea that you’ve got to be more regulated otherwise the black economy will grow and therefore the government will miss out on its taxes, that worries me, because they seem to take the view that taxes are sacred and anything that protects [tax revenue] is legitimate,” he said earlier this year.

Senator Leyonhjelm said while “most people accept paying tax as a civic duty”, there was a limit. “We are past that limit, so avoiding taxes is much more likely,” he said.

“Getting rid of $100 notes, putting restrictions on cash payments, these are all directed at increasing taxation ... [when taxes] already exceed what people regard as a reasonable taxation level.”

Revenue and Financial Services Minister Kelly O’Dwyer, who flagged the crackdown late last year by announcing a review of the $100 note, has described the black economy as “an insidious and wideranging problem which impacts many Australians”.

“It not only harms those less able to protect themselves, it impacts and undermines those doing the right thing, who end up paying for those who don’t,” she said in a statement on the interim report. “Those contributing to our community and economy should not be subsidising those who aren’t.”

A Treasury spokeswoman said taskforce chair Michael Andrew had delivered the final report to Ms O’Dwyer. “The government is considering the recommendations in the report,” she said.

[e-mail]