Cash in hand payments and tax fraud on the ATO
Before you make, or receive, cash in hand payments in Australia, you should understand the tax consequences under the law. If you do not comply with your tax obligations for cash in hand payments and you are caught by the ATO, you could end up with very heavy fines and penalties. If your matter is more serious, you could even go to jail.
The maximum administrative penalty for income tax matters is 90% of the tax shortfall.
The maximum criminal penalty for tax fraud on the ATO is 10 years imprisonment.
If you are making, or receiving, cash in hand payments in Australia, you should get legal advice from King Lawyers so you understand and comply with your legal obligations under the tax laws in Australia.
If you have already made a mistake and not complied with your tax obligations, you should act quickly, get legal advice and take urgent action to fix the problem as soon as possible. Generally, the penalties by the ATO will be much lower if you voluntarily go to the ATO before the ATO comes to you. However, to get the best result, you should always get legal advice before you say anything to the ATO.
ATO is cracking down on illegal cash in hand payments in Australia
The Australian Taxation Office is targeting Australians who use cash in hand payments to deliberately hide income and not pay tax on it to the ATO.
ATO audit of cash in hand payments
If you are audited by the ATO and you have made, or received, cash in hand payments, you should get legal advice on how you should deal with the ATO audit. If you get this wrong, you are looking at very heavy penalties by the ATO.
Unreported cash in hand payments to workers are no longer tax deductible
From 1 July 2019, unreported cash in hand payments made by employers to employees will not be tax deductible in Australia.
Making cash in hand payments and tax problems for employers
If you have made cash payments to your employees, you may not have properly complied with your income tax, superannuation or PAYG withholding obligations under the law.
If you are in that situation, you should act quickly and try your best to fix those problems as soon as possible. Ideally, this should be done before the ATO find you and audits you.
To get the best outcome, you should get legal advice from an experienced tax lawyer before you say anything to the ATO.
Receiving cash in hand payments and tax problems for employees
If you have received cash payments from your employer and not reported this to the ATO, you have not complied with your income tax obligations under the law.
If you are in that situation, you should get legal advice from an experienced tax lawyer and do your best to fix this problem as soon as possible.
Criminal penalties for a Melbourne employer who made illegal cash in hand payments to employees
In March 2020, a Melbourne employer who was paying his employees in cash and not meeting his tax obligations to the ATO was sentenced to 2.5 years imprisonment.
In that case, the judge said that if the employer had not pleaded guilty to the criminal offences, the Court would have sentenced him to 5 years’ imprisonment with a non-parole period of 3 years’ imprisonment.
What if you have made a mistake and done the wrong thing?
If you have made a mistake on your tax affairs and want to fix it, you should act quickly and get legal advice from King Lawyers.
Legal advice from King Lawyers on cash in hand payments and your tax obligations to the ATO
This article is offered as general information only and should not be relied on as specific legal advice on your personal or business tax obligations to the ATO.
To get legal advice from King Lawyers on your specific circumstances, please contact us to arrange an initial consultation with our expert tax lawyers.