The Australian Taxation Office (ATO) is warning businesses across the country over the dangers of tax avoidance amid the push towards being a cashless society. While many have hopped on the trend to ditch cash, others have gone the other way and are only accepting physical money for payment.
Stephen, who runs the South Australian ice cream shop Zeppole & Co, told Yahoo Finance his cash-only business was brought about because the EFTPOS machine kept malfunctioning. Similarly, Richy Marchandise, who owns the Mimolette Café in Melbourne, introduced a 10 per cent discount for customers who paid with cash.
“EFTPOS does not work as well as they claim. People get impatient when the system is down and we lose sales constantly. In 11 years, I have changed EFTPOS providers five times,” he told Yahoo Finance.
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While these moves towards cash and away from digital payments have been spawned by dodgy hardware, the ATO is worried other businesses are jumping on the bandwagon to avoid paying tax.
It has received more than 47,000 tip-offs for the 2023–24 financial year alone and the way businesses handle or accept cash was a major issue.
“The number of reports we have received tells us that Aussies have had enough,” ATO assistant commissioner Tony Goding said.
“Dodging your tax obligations clearly no longer passes the ‘pub test’. We’re receiving tip-offs from other businesses, customers, members of the community, employees, and even family and friends.”
The ATO gave an example of a hair salon owner who only accepted cash payments from customers and also paid her staff in cash.
To avoid paying taxes, she also didn’t register her business, was operating without an ABN, didn’t report her business income in her tax returns, and advertised solely through local Facebook groups.
This meant there was no breadcrumb trail, which would normally have been picked up through digital payments from customers.
In that example, the salon owner faced owing the ATO more than $1 million in penalties alone for not declaring her income.
But it’s not just cash that’s falling through the cracks
Goding said it’s not just “cash only” or “EFTPOS out of order” signs that have been called out from anonymous tip-offs.
The ATO estimates there is around $16 billion in stolen taxes because of dodgy business behaviour to avoid paying tax.
“These businesses are deliberately undercutting their competitors and gaining an unfair advantage in their industry,” Goding added.
“People who cheat their competitors and the community will likely try to cheat their customers too.”
The ATO receives around 1,000 tip-offs per week, which the office said is one of the best tools in tackling the “shadow economy”.
Roughly 90 per cent of tip-offs analysed by the ATO in 2023–24 were deemed as being suitable for further investigation.
NSW had the highest number of tip-offs for 2023-24 with 15,516, followed by Victoria (11,256 tip-offs) and Queensland (10,629 tip-offs).
Regional Queensland occupied the top five spots for non-metro tip-offs, with Southport, Bundaberg, Toowoomba, Mackay and Caboolture all registering thousands of dob-ins each.
Not all cash is bad: Cafe owner hits back at unfair stereotype
Marchandise hit back against the idea that businesses must be dodgy if they’re asking for cash.
“It has that stigma,” he explained to Yahoo Finance. “We’re not doing anything dodgy, we’re just trying to pay our suppliers on time by doing this.”
He suffered numerous issues with his EFTPOS machine terminals and providers, which not only turned customers away but left him scrambling to afford his overheads to keep his Melbourne cafe running.
While cashless payment methods like using your card or smartphone at the checkout are convenient, it does come with a cost.
Some shoppers will be hit with a surcharge to go down this avenue, while some businesses will cop the charge to keep costs down for customers.
A poll of more than 5,500 Yahoo Finance readers revealed that 68 per cent of people have started using cash more regularly to avoid these annoying surcharges.
Home Or Away Mechanical in Queensland recently installed a notice urging customers to pay for services using cash if possible and to support “hard-working people” rather than the “big banks”.
The Queensland mechanic said the annual cost to provide digital payments was in the thousands each year.
“[We’re] just sick of the bank fees. We pay between $4,000 and $5,000 a year in bank fees for the EFTPOS machine to hire it and a percentage on every transaction,” owner Michelle Guilford told Yahoo Finance.
“As well as everything else going up in price, it’s just ridiculous. We decided to put the sign up and it’s been a great success.”
Plenty of Aussie businesses have been seen on social media trying to encourage customers to pay with cash.
A Yahoo Finance investigation has found offers of up to 50 per cent off, while others might give away a free drink or other item.
“Cash is our preferred method of payment. With cash, we retain 100 per cent of its value. The Big Banks receive 0 per cent. The card processing companies receive 0 per cent,” said one sign.
Marchandise told Yahoo Finance that his 10 per cent discount for cash would obviously mean he’s taking an initial loss, but he said he’s willing to take that gamble because he can always rely on cash.
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