Software fraud addressed in black economy laws

Under the Treasury Laws Amendment (Black Economy Taskforce No. 1) Bill 2018, penalties will be introduced for the production, supply, possession or use of software that understates sales and income, Treasurer Josh Frydenberg said in a statement.

The penalty for the production of such software is in excess of $1 million.

“Electronic sales suppression tools allow businesses to falsify electronic record keeping systems for the deliberate purpose of reducing their tax liability and dodging their tax obligations,” Mr Frydenberg said.

The new laws also extend the Taxable Payments Reporting System to the courier and cleaning industries, where businesses operating in those industries will need to annually report payments they make to contractors for cleaning and courier services to the ATO.

Further, from 1 July 2019 small businesses will also be required to report payments made to contractors providing services in the road freight, information technology and security industries.

The bill is the first part of a five-year implementation plan the government announced in this year’s budget to eliminate the black economy through measures including:

– providing additional funding to the Tax Practitioners Board to take action against tax agents facilitating activity in the black economy

– removing deductions for non-compliant payments

– changing the government’s procurement procedures to incentivise tax compliance in supply chains

– consulting on reforms to the Australian Business Number (ABN) system

– introducing an economy-wide cash payment limit for large cash transactions of $10,000 to reduce the ability of black economy operators to use cash to avoid their tax and reporting obligations and launder the proceeds of crime

– expanding the taxable payments reporting system to contractors in industries with higher identified risks of not reporting their income