Cafés being targeted by Australian Tax Office in major crackdown

Posted by AFN Staff Writers on 19th July 2012

Cafés will face audits on unreported and unrecorded cash transactions in 2012–13 as part of a major new compliance program announced by the Australia Taxation Office (ATO).

The ATO has noted in its ‘Compliance Program 2012–13’ that “Some industries use cash more regularly than others, and for these we apply more intensive strategies.”

In 2011–12 the ATO obtained third-party data about supplies of coffee beans to cafés, which enabled the ATO to identify businesses that appeared to be purchasing more raw materials than would be reflected in the level of sales. The ATO uses this type of computer-based analysis and intends to select more cases for review.

“We are expanding our program of comparing information from coffee-supplier trade accounts against their customers’ purchasing records to detect cases where café businesses are skimming cash or are outside the system,” the ATO stated.

Where the ATO finds discrepancies that suggest under-reporting of transactions, the taxpayer is required to substantiate the relevant elements of their tax return and, if necessary, follow this up audits. These can result in adjustments to tax liabilities, penalties and, in more severe cases, prosecution.

The full ATO Compliance Program 2012–13 Report can be read here.