ATO’s $16 billion warning as Australian businesses push back on cashless trend: ‘Had enough’

The Australian Taxation Office (ATO) is warning businesses across the country about the dangers of tax avoidance as they strive for a cashless society. While many have followed the trend of foregoing cash, others have gone the other way and only accept physical money as payment.

Stephen, who runs South Australian ice cream shop Zeppole & Co, said Yahoo Finance His cash-only business came about because the EFTPOS machine kept not working. Similarly, Richy Marchandise, owner of Mimolette Cafe in Melbourne, introduced a 10 percent discount for customers who paid with cash.

“EFTPOS doesn’t work as well as they claim. People get impatient when the system goes down and we keep losing sales. In 11 years I have changed EFTPOS providers five times,” he said Yahoo Finance.

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While this trend towards cash and away from digital payments was sparked by questionable hardware, the ATO fears other companies are jumping on the bandwagon to avoid taxes.

More than 47,000 tips were received for the 2023-24 financial year alone, and the way businesses handle or accept cash was a major concern.

“The number of reports we have received tells us Australians have had enough,” ATO deputy commissioner Tony Goding said.

“Avoiding your tax obligations clearly no longer passes the bar test. We receive tips from other businesses, customers, community members, employees and even family and friends.”

The ATO gave the example of a hair salon owner who only accepted cash payments from customers and also paid her employees in cash.

To avoid paying taxes, she also did not register her business, operated without an ABN, did not report her business income on her tax returns, and advertised exclusively through local Facebook groups.

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This meant there was no breadcrumb trail that would normally have been captured through digital payments from customers.

In this example, because the salon owner owed the ATO more than $1 million, she had to pay penalties solely for not declaring her income.

But it’s not just cash that’s falling through the cracks

Goding said it wasn’t just “cash only” or “EFTPOS out of service” signs that had been called out based on anonymous tips.

The ATO estimates that around $16 billion in taxes have been stolen due to rogue business behavior to avoid paying taxes.

“These companies intentionally undercut their competitors and gain an unfair advantage in their industry,” Goding added.

“People who defraud their competitors and the community are also likely to try to defraud their customers.”

The ATO receives around 1,000 tips a week, which the office says is one of its best tools for combating the “shadow economy”.

Around 90 per cent of leads analyzed by the ATO in 2023-24 were deemed suitable for further investigation.

NSW had the highest number of advisories for 2023-24 with 15,516, followed by Victoria (11,256 advisories) and Queensland (10,629 advisories).

The Queensland region took the top five spots for non-metro tips, with Southport, Bundaberg, Toowoomba, Mackay and Caboolture each registering thousands of dob-ins.

Not all money is bad: Café owner defends himself against unfair stereotypes

Marchandise challenged the idea that companies must be shady to demand cash.

“It has this stigma,” he explained Yahoo Finance. “We’re not doing anything shady, we’re just trying to use it to pay our suppliers on time.”

He suffered numerous problems with his EFTPOS ATM terminals and providers, which not only turned away customers but also forced him to raise the overhead costs of running his Melbourne cafe.

Cashless payment methods such as using your card or smartphone at the checkout are convenient, but come with a cost.

Some buyers are charged a surcharge when using this route, while other companies waive the fee to keep costs down for customers.

A survey of more than 5,500 people Yahoo Finance Readers revealed that 68 percent of people have started using cash more regularly to avoid these annoying surcharges.

Home Or Away Mechanical in Queensland recently posted a notice urging customers to pay for services with cash where possible and to support “hard working people” rather than the “big banks”.

The Queensland mechanic said the annual cost of providing digital payments runs into the thousands each year.

“[We’re] I’m just tired of bank fees. “We pay between $4,000 and $5,000 a year in bank fees to rent the EFTPOS machine and a percentage on each transaction,” said owner Michelle Guilford Yahoo Finance.

“Apart from the fact that prices are rising in other ways, this is just ridiculous. We decided to put up the sign and it was a huge success.”

Many Australian businesses are taking to social media to encourage customers to pay with cash.

A Yahoo Finance Research has shown that there are offers of up to 50 percent off, while others may give away a free drink or other item.

“Cash is our preferred means of payment. When it comes to cash, we keep 100 percent of its value. The big banks receive 0 percent. The card processing companies get 0 percent,” one sign said.

Marchandise told Yahoo Finance that his 10 percent cash discount would of course mean taking an initial loss, but he said he was willing to take that risk because he could always rely on cash.

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