ATO clamps down on GST fraud and cash income

A key part of the ATO's Compliance Program is increasing their focus on non-complying taxpayers in the GST system, as well as those who fail to report some or all cash transactions.

To this end, the ATO has increased its scrutiny of businesses deliberately not reporting cash income, with over 1.4 million small businesses evaluated against the ATO's "sophisticated risk detection systems". The ATO also states: "While it is not illegal to trade in cash, it is illegal to not report it".

As an example of their compliance activity, a director in Western Australia has been sentenced to three years jail, with a non-parole period of 20 months, for understating cash business sales by over $5.6 million and for the intent to underpay GST obligations by around $514,000.

The ATO also reported that they received over 44,000 'contacts' last year, including calls, letters, faxes and emails from the community relating to those who may be doing the wrong thing in relation to their obligations (via the ATO's Tax Evasion Referral Centre).

Another successful prosecution resulted in a New South Wales solicitor being sentenced to six years jail for claiming $1.6 million in fraudulent rental deductions for a property over a period of 12 years.

The property had been declared as an investment property during this time, but evidence proved that the defendant and his family were actually living in the property, and that the property was not being used to produce assessable income.

If you are concerned about your GST obligations please call one of the team at Baker Affleck Moffrey to discuss your situation.