The Tax Office has collaborated with tax practitioners and small businesses to develop a new ‘Cash and hidden economy review and audits guide’.
Use the guide to assist your business in cash economy reviews or audits.
Contact us if you require any clarification or advice.
The cash economy (also known as the black, hidden or underground economy) is where a business deliberately hides income to avoid paying tax.
The Tax Office uses a variety of risk factors to identify potential businesses that are suspected of engaging in the cash economy. Businesses that have been isolated will undergo a review or audit process.
The guide was created in collaboration with tax practitioners and small businesses in order to provide a very comprehensive but valuable, easy to read information source. It details the review and audit process and other expectations such as the types of documentation that may be required as evidence.
Types of cash economy activities include:
Paying wages by way of cash-in-hand;
Skimming some or all of the cash takings; and
Running a part of normal business activities off the books.
Engaging in cash economy activities is deemed to be tax avoidance.
This article was published on 20/01/2014 and is current as at that date
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