Australian Government Targets Small Businesses In Cash Economy Crackdown

by Mary Swire, Tax-News.com, Hong Kong

21 May 2002

The Australian government announced at the weekend that the 'honeymoon period' for small businesses which followed the introduction of the Goods and Services tax is now over.

Speaking on Australian television on Saturday, Finance Minister, Nick Minchin signalled a crackdown on the country's cash economy, although he attempted to reassure small businesses that part of the $300 million boost in ATO financing announced in the recent budget was to allow the tax office to offer support to small businesses in calculating and paying taxes due.

'We were very generous, I think, in the period in which we introduced the GST, the transition period, in relation to enforcement of the law,' Senator Minchin told Network Ten, explaining that: 'We appreciate that small business had the biggest transition to make to the new tax system.'

However, he added that: 'It is now time to enforce the law properly and ensure the tax burden is shared fairly...within the law and within the bounds of normal circumstances (we will) try to reduce the extent to which there is a cash economy.'

The Opposition Labor party has condemned the clampdown, arguing that ATO resources would be better spent ensuring big business compliance with tax laws.

Speaking on Sunday, Opposition Treasury spokesman, Bob McMullan said that the Howard government had 'gone very soft' on many areas of tax administration, adding: 'It's welcome that they are putting more resources in. I just think they should be putting more focus on the large corporate tax options. Not because big businesses behave worse than others...but that's where the big money is.'

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