Read: Access full Federal Budget 2018-19 review here
Significant number of integrity measures to be introduced
The package includes a range of recommendations of the Black Economy Taskforce. As part of its Budget, the Government released its response to the Black Economy Taskforce Final Report ‘Tackling the black economy’, providing the first whole-of-government blueprint for tackling the issue.
Limiting cash payments to $10,000
From 1 July 2019 there will be a limit of $10,000 for cash payments made to businesses for goods and services. Currently, large undocumented cash payments can be used to avoid tax or to launder money from criminal activity. Transactions over the threshold will have to be made through an electronic payment system or cheque.
There is no quantifiable estimated impact from this measure but it will support the black economy and associated revenue measures. Notably, transactions with financial institutions or consumer-to- consumer non-business transactions will not be affected.
New and enhanced ATO enforcement
The ATO will receive $318.5 million over four years to implement new strategies to combat the black economy. The Black Economy Taskforce found low-level enforcement and visibility made existing laws ineffective, hence there is to be a focus on visibility and targeted ATO activity.
The enforcement strategy includes new mobile strike teams and an increased audit presence, a Black Economy Hotline to report black economy and illegal phoenix activities, improved government data analytics and educational activities. This will support the new multi-agency Black Economy Standing Taskforce and ensure a more coordinated approach to combatting black economy behaviours.
This measure is estimated to improve revenue by $3 billion over the forward estimates period.
Improved business identification
Following the recommendation of the Black Economy Taskforce to create a single business register, the 2018-19 Budget provides $19.3 million to develop a detailed business case to improve the way the existing Companies Register, Australian Business Register and the Business Names Register interact. While a single business register will be aimed at reducing regulatory burden for businesses and will help to provide real-time robust identification and verification of businesses, we are concerned the transition to the new register may involve significant red tape and compliance costs for entities in the middle market.
Reforms to combat illegal phoenixing
Amendments will be made to both the corporations and tax laws to give regulators further tools to help deter and disrupt illegal phoenix activity.
The proposed measures include targeting those who conduct or facilitate illegal phoenixing; measures to prevent directors improperly backdating resignations to avoid liability or prosecution; limits on the ability of directors to resign when this would leave the company with no directors; restrictions on the ability of related creditors to vote on the appointment, removal or replacement of an external administrator; extending the director penalty regime to cover GST, luxury car tax and wine equalisation payments; and an expansion to the ATO’s power to retain refunds where there are outstanding tax lodgements.