In December 2016, the Black Economy Taskforce was established to develop a whole-of government policy framework involving new proposals to tackle black economy activity.
In the 2017-18 Budget, the Government responded to the Black Economy Taskforce’s Interim Report by announcing the following measures to address the growing economic and social problem of the black economy:
- Banning the manufacture, distribution, possession, use or sale of sales suppression technology. This technology allows businesses to understate their income, and has been identified as a threat to the integrity of the tax system in Australia and internationally.
- Extending the Taxable Payment Reporting System (TPRS) to two high-risk industries – cleaning and couriers – to ensure payments made to contractors in these sectors are reported to the Australian Taxation Office (ATO). The TPRS has already improved tax compliance in the building and construction industry.
The package of documents includes the exposure draft and explanatory material for each measure. Additionally, the measure extending the Taxable Payments Reporting System is supported by ATO draft guidance material to provide further detail on the operation of the measure.
The draft legislation and supporting materials are available on the Treasury website, and interested stakeholders are encouraged to provide their views. Submissions close on Friday 10 November 2017.
[Minister’s media release; Treasury website: consultation page, which has links to a draft Bill, draft Explanatory Materials and draft ATO Guidance; LTN 203, 24/10/17; TM Oct 2017]
Sales Suppression Tools – Schedule 1 to the Draft Bill
The draft legislation proposes to create offences relating to ‘sales suppression tools’ (as defined) in the Taxation Administration Act 1953 (new Subdiv BAA of Div 2 of Part III of the main Act).
In this Subdivision:
electronic sales suppression tool means a device, software program or other thing, a part of any such thing, or a combination of any such things or parts, that meets the following conditions:
(a) it is capable of falsifying, manipulating, hiding, obfuscating, destroying, or preventing the creation of a record that:
(i) an entity is required to keep or make by a taxation law; and
(ii) is created by a system that is or includes an electronic point of sale system;
(b) a reasonable person would conclude that one of its principal functions is to falsify, manipulate, hide, obfuscate, destroy, or prevent the creation of, such records.
Various offences, relating to such ‘tools’ would then be created under the following provisions.
8WAC Producing or supplying electronic sales suppression tools
8WAD Possessing electronic sales suppression tools
8WAE Incorrectly keeping records using an electronic sales suppression tool
A parallel set of ‘administrative penalty’ provisions are inserted in Div 288 of Schedule 1 of the TAA (which is headed ‘Miscellaneous Administrative Penalties’). They would be s288-125, s288-150 & s288-155.
Consistent with other administrative penalties that overlap with criminal offences, section 8ZE applies to these administrative penalties and excludes any liability for the administrative penalty in the event of criminal prosecution being commenced.
Third Party Reporting – Engaging Cleaning and Courier services
Schedule 2 of this draft Bill, would insert new provisions in s396-55 of the Schedule 1 of the TAA – which is called “Reporting tax-related information about transactions to the Commissioner”. It would insert the following provisions about consideration paid for cleaning services or courier services.
1 Section 396‑55 in Schedule 1 (after table item 10)
Insert:
| 11 | an entity that *supplies cleaning services | the provision of consideration (within the meaning of the *GST Act) to the entity wholly or partly for the *supply by the entity of a cleaning service, unless:
(a) the entity and the provider of the consideration are *members of the same *consolidated group or *MEC group; or (b) Division 12 requires that an amount be withheld from the payment of the consideration |
| 12 | an entity that *supplies courier services | the provision of consideration (within the meaning of the *GST Act) to the entity wholly or partly for the *supply by the entity of a courier service, unless:
(a) the entity and the provider of the consideration are *members of the same *consolidated group or *MEC group; or (b) Division 12 requires that an amount be withheld from the payment of the consideration |