cash economy - ato

The cash economy occurs when businesses use cash transactions to hide income to avoid paying tax

Participating in the cash economy is a deliberate attempt to under-report or omit income.

Cash economy activities include businesses:

  • paying wages 'cash-in-hand'
  • skimming some or all of the cash takings
  • running a part of their normal business activities 'off-the-books'
  • not reporting the value of goods and services provided in exchange for other goods and services
  • operating underground - that is, avoiding their obligations by not registering or lodging returns.

The cash economy is also referred to as the 'black', 'hidden' or 'underground' economy. The essential characteristic is that transactions go unrecorded and unreported.

The majority of taxpayers do the right thing; however some people deliberately engage in cash economy activity to evade tax obligations and to seek an unfair business advantage.

We are committed to detecting and deterring cash economy activity by taking firm action against those seeking an unfair business advantage. In doing so we are helping to ensure that there is a level playing field and that businesses doing the right thing are not disadvantaged.