Black economy crack down
When we talk about the black economy, we are essentially talking about people who operate outside the tax and regulatory system or do not correctly report their tax obligations.
The black economy is also sometimes referred to as the ‘cash economy’, as it can include paying people off the books or understating sales and takings. This can allow for a business to reduce a range of expenses such as GST, payroll tax, superannuation and employee leave liability.
The black economy, and how to address it, has been under scrutiny at a federal level. The Government is introducing laws which make operating outside the law more difficult. The Commonwealth Government has recently issued its response to the final Black Economy Taskforce report.
One of the key recommendations of the report, which has been supported by the Government, is to extend the Taxable Payments Reporting System (TPRS) to include the road freight industry. The building and construction industry already has detailed reporting requirements about contractor payments and the courier industry will be covered by new reporting requirements from 1 July 2018.
The system of reporting all contractor payments is known as the Taxable Payments Reporting System. Businesses will need to report to the Australian Taxation Office (ATO) all payments made to contractors. The ATO will then check that contractors are complying with their tax obligations.
The Taskforce identified the road freight industry as posing a significant compliance risk.
From 1 July 2019, this reporting system will apply to road freight businesses, with the first report due for lodgement in August 2020.
NatRoad strongly opposes people operating outside of the regulatory system because it creates an uneven playing field. This puts pressure on the margins of honest businesses and affects their profitability. But NatRoad is concerned that this is an additional red tape burden for road freight businesses.
NatRoad is working with Treasury to tailor the law to the road transport industry but, unfortunately, the industry will be burdened by extensive reporting requirements because of the activities of an unscrupulous few. Once the draft legislation is available, the industry will be able to more clearly see and understand their obligations. NatRoad will also be able to offer advice and assistance as businesses begin implementing the new reporting system.