Black economy recommendations will impact day-to-day business
Editor: Recently issued draft legislation has focused on introducing new measures to manage the growing cash economy (i.e., the ‘black economy’) in light of the Black Economy Taskforce recommendations and recent Federal Budget announcements.
Two of these key recommendations are outlined below.
Removing tax deductions for PAYG failure
The Government is currently considering removing tax deductions where businesses fail to comply with their PAYG withholding obligations for payments to employees and contractors from 1 July 2019.
Specifically, deductions are proposed to be denied for these types of payments where the payer has failed to either:
- comply with their obligations in relation to withholding from these payments; or
- notify the ATO of the withholding amount (i.e., via their BAS).
Interestingly, deductions will only be denied if no withholding took place or no notification has been made.
That is, incorrect amounts withheld or reported to the ATO will not impact a taxpayer’s entitlement to deductions.