The Turnbull Government is taking decisive action in the fight against the black economy.
The black economy undermines community trust in the tax system, gives some businesses an unfair competitive advantage, puts pressure on the margins of honest businesses and often includes the exploitation of vulnerable employees through the underpayment of wages and the loss of entitlements.
Today's reforms follow recommendations made by the Black Economy Taskforce in their final report to Government and will be complemented by a comprehensive suite of supporting measures which build on our significant tax integrity measures. The Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP, established the Taskforce in December 2016 to examine how to best crack down on illegal black economy activity.
Boosting capabilities to tackle the black economy
The Government will establish a multi-agency Black Economy Standing Taskforce to undertake a cross agency approach to combatting the black economy, with more effective exchange of information to develop increased intelligence, and be equipped to identify and prosecute the most egregious cases of black economy activity.
Additional funding for the Australian Taxation Office (ATO) will expand its data analytics and data-matching capabilities and allow greater leveraging of community information through the introduction of a hotline for the reporting of black economy and illegal phoenixing activity.
This new capability will be supported by an enhanced enforcement strategy including mobile strike teams to break-up illegal behaviour as it is identified.
Together, this new approach will deliver targeted, stronger and more visible enforcement which will demonstrate the very real consequences for participating in the black economy.
New measures to tackle illicit tobacco
The Government will introduce new measures to strike at the illicit tobacco market and prevent the flow of funds to organised crime syndicates.
A new multi-agency Illicit Tobacco Taskforce, comprising members of law enforcement, border security agencies, and the ATO will deliver a multi-faceted approach that leverages whole of-government capabilities and powers to proactively target, disrupt and prosecute organised crime groups at the centre of the illicit tobacco trade.
From 1 July 2019, importers will be required to pay duty and tax liabilities when tobacco enters the country, rather than when it leaves a licensed warehouse and enters the domestic market. This will reduce the potential for leakage from warehouses to the black market.
From 1 July 2019 it will also be illegal to import tobacco without a permit.
The Government will also provide the ATO with additional resources to fight domestic illicit tobacco and upgrade their excise systems, strengthening their ability to tackle domestic illegal tobacco crops.
An economy-wide cash payment limit
The Government will introduce an economy-wide cash payment limit of $10,000, applying to payments made to businesses for goods and services from 1 July 2019.
This cash payment limit will capture high-value transactions and help stamp out opportunities for criminals to launder the proceeds of crime into goods and services, or for businesses to hide transactions to reduce their tax liabilities.
The Government will consult on the implementation of this measure.
Stronger Commonwealth procurement processes
The Government will ensure that it is a leader in best practice procurement and promotes supply chain integrity by introducing changes to Commonwealth procurement processes. From 1 July 2019, businesses tendering for Commonwealth contracts over $4 million (inclusive of GST) will be required to provide evidence of a satisfactory tax record.
These measures build on important initiatives already announced by the Government following the release of the Black Economy Taskforce's Interim Report, including the extension of the taxable payments reporting system to at-risk courier and cleaning industries, and banning the manufacture, distribution, possession, use or sale of sales suppression technology.
The Government has established a dedicated team to drive implementation of the extensive work program arising from its response to the Black Economy Taskforce Final Report. The Minister for Revenue and Financial Services will shortly be releasing consultation papers on a number of work streams being progressed by the Implementation Team.
The Government's response to the Black Economy Taskforce Final Report will improve fairness for businesses, level the playing field and continue to strengthen the integrity of our tax system.
The Government thanks the Taskforce, led by Michael Andrew AO, as well as all stakeholders who participated in the consultation.
The Black Economy Taskforce Final Report and the Government's response are available on the Treasury website.