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Thursday, 13 September 2018
Page: 6341


Senator MARTIN (Tasmania) (13:27): The Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 is an important measure demonstrating this government's commitment to being responsible fiscal managers and ensuring level playing fields for those who are willing to have a go. The measures listed before us address the growing economic and social scourge created by the black economy. This black economy scourge unfairly disadvantages businesses doing the right thing, particularly small businesses across the country and in my home state of Tasmania. This includes family owned businesses that rural and regional communities rely on not just for jobs but also for the provision of products and services which support the community's way of life. How is this fair?

Not only does the black economy scourge unfairly impact business and the community in which it sits; the black economy goes further by denying the government tax revenue which could be used to pay down debt created by the Rudd-Gillard-Rudd government or spent on upgrading more roads of strategic importance in regional communities or on funding mobile black spot solutions, grassroots sports programs for our kids or training programs for our young people.

This is why the government has taken action and is responding to the Black Economy Taskforce interim report. The measures in schedules 1 and 2 of the bill seek to address the black economy scourge. Schedule 1 implements the banning of the manufacture, distribution, possession, sale and use of sales suppression technology. It is an important step in addressing participation in the black economy. Electronic sales suppression technology allows businesses to understate their taxable income and, as such, creates an uneven and unfair playing field for business. It fosters the exploitation of workers, erodes trust in the taxation system and results in loss of government revenue and unwarranted welfare expenses.

The schedule creates new offences for the manufacture, distribution, possession, sale and use of electronic sales suppression tools for the purpose of not disclosing business income. These offences are subject to strict liability and heavy penalties to deter the use of such a technology across the entire software supply chain. There is no legitimate reason for these tools. These tools remove transactions from electronic record-keeping systems, they change transactions to reduce the amount of each sale and they can modify GST taxable sales to GST non-taxable sales. In all instances, no audit trail of the changes made exists. Have no doubt that the sole purpose of this technology is to evade tax. The ATO has uncovered instances of this software in operation in Australia, and recent reports from the OECD have highlighted that this software is spreading globally and its use has been identified in a number of jurisdictions, including Canada, USA, Germany and Sweden, many of which have implemented measures to address this risk.

In relation to Schedule 2, the non-reporting of income by contractors and the use of technology to understate income are two activities that are targeted in this bill. The deployment of the taxable payments reporting system in the building and construction industry has been successful, both in terms of industry acceptance and revenue outcomes through improved contractor compliance. The expansion of the taxable payments reporting system initiative to contractors in the courier and cleaning industries is expected to yield similar benefits, by ensuring payments made by businesses to contractors in these industries are reported to the Australian Taxation Office. In fact, the measure is estimated to result in a gain in tax receipts of some $132 million over the forward estimates period.

From 1 July 2018, businesses in the courier and cleaning industries will be required to give an annual report to the ATO regarding the payments they've made to businesses who provide them with courier or cleaning services. The reporting obligation will apply from the 2018-19 income year, and reports will be required by 28 August 2019. To assist businesses in the courier and cleaning industries to comply with the reporting requirements, the ATO has prepared guidance material. The information reported to the ATO is used for the prefilling of tax returns or activity statements, which should make it easier for contractors to lodge their income tax returns, and for data-matching processes to ensure that contractors comply with their tax obligations, such as correctly lodging their income tax returns and BAS obligations.

I think we can all agree that hardworking Australian businesses deserve a level and fair playing field. I support the bill.