AUSTRALIA'S cafe culture is in the sights of the taxman.
Concerned that operators are skimming off cash from coffee sales instead of properly reporting their income, the Tax Office has warned the sector it will be watching it closely in the coming year.
In its compliance program released today, the ATO has also added plasterers to its traditional list of targets: the rich, big business and construction contractors.
The ATO will put baristas under the microscope by stepping up a surveillance program in which it compares bulk coffee sales with purchasing records maintained by cafes.
"We're actually working with the industry to better understand what their processes are and their controls of the various franchises and individual cafes have in place," the second commissioner Bruce Quigley said.
For big business, transfer pricing between Australian companies and their overseas associates remains an area of dispute with the ATO.
At the microbusiness end of the scale, the Tax Office is also cracking down on plasterers amid concerns about rorting of the Queensland flood reconstruction effort and a several complaints from the public.
"The nature of the work lends itself to a lot of cash transactions," Mr Quigley said. "We're stressing the need for people to have good records."
Unpaid superannuation is also on the hit list, with new laws on phoenix companies that came into effect on July 1 making it possible for the ATO to go after the personal assets of company directors to recover the money.
"It was too easy for them to have a company set up, walk away from that company with all the debts that are owed, not only to the Tax Office but to others, and start again," Mr Quigley said.
The ATO plans to engage with more of the 2600 people who control assets of more than $30 million and will increase audits this year of the more than 70,000 people with wealth of between $5 million and $30 million.
"A lot of them are into what you would call fairly aggressive [tax] schemes," Mr Quigley said.
He said co-operation with other state and federal agencies, including access to yacht registrations and land transfer records, meant the ATO was able to build a detailed portrait of highly wealthy individuals.
The senior tax counsel for the Tax Institute, Robert Jeremenko, said the ATO appeared keen to continue the work of Project Wickenby, its flagship operation targeting tax evasion using offshore vehicles.
"Maybe its a case of the ATO and their new computer system, which caused them a lot of problems a few years ago, starting to pay off," Mr Jeremenko said.
Frequently Asked Questions about this Article…
Why is the ATO targeting coffee shops and cafes in its latest compliance program?
The ATO is concerned some cafes may be skimming cash from coffee sales instead of properly reporting income. It has warned the sector it will watch cafes closely over the coming year and is stepping up surveillance to detect under‑reported sales.
How will the ATO detect cash skimming or under‑reported sales at cafes and coffee shops?
The ATO plans a surveillance program that compares bulk coffee sales with purchasing records kept by cafes. It is also working with the industry to better understand franchise and individual cafe processes and controls.
Are small trades like plasterers being targeted by the ATO, and why?
Yes. Plasterers have been added to the ATO’s target list amid concerns about cash transactions, complaints from the public and possible rorting of Queensland flood reconstruction work. The ATO is stressing the need for good records among tradespeople.
What is the ATO doing about unpaid superannuation and phoenix companies?
New laws that came into effect on July 1 let the ATO pursue personal assets of company directors to recover unpaid superannuation and other debts. The change is intended to stop directors setting up companies, walking away from debts and starting again.
How is the ATO increasing scrutiny of wealthy individuals and big business?
The ATO plans to engage with more of the roughly 2,600 people who control assets over $30 million and increase audits of the more than 70,000 people with wealth between $5 million and $30 million. For big business, transfer pricing between Australian firms and overseas associates remains a focus.
What role do data and inter‑agency cooperation play in the ATO’s enforcement efforts?
The ATO is cooperating with state and federal agencies and using records such as yacht registrations and land transfer data to build detailed portraits of wealthy individuals. Improved data capabilities appear to be supporting expanded enforcement efforts.
Is the ATO continuing efforts similar to Project Wickenby to target offshore tax evasion?
According to the Tax Institute’s senior tax counsel, the ATO appears keen to continue the work of Project Wickenby — its flagship operation targeting tax evasion using offshore vehicles — as part of ongoing compliance activity.
What practical steps does the ATO expect businesses and individuals to take to avoid compliance issues?
The ATO emphasises the importance of keeping good records, especially where cash transactions are common, properly reporting income, meeting superannuation obligations, and being cautious about aggressive tax schemes. These measures reduce the risk of audits and enforcement action.
Call 1300 880 160
Start a chat
Schedule a call
