ATO to contact 45,000 small businesses about cash transactions
The Tax Office wants SMEs to know "cash is no longer king".
Using data matching, the Australian Taxation Office (ATO) has identified approximately 45,000 small businesses that do not offer merchant payment facilities to customers and that it believes deal mainly in cash.
"We are contacting these businesses to explain the benefits of offering a variety of payment options," the ATO said in a statement to tax professionals.
Cash has seen a sharp decline in recent years, with research from East & Partners showing that the number of cash payments received by Australian businesses dropped by 46% between 2010 and 2016. Cash currently makes up less than 10% of all payments and this is expected to drop to 2% within the next five years.
Despite this, these small businesses identified by the ATO deal mainly in cash payments. The ATO says there are a number of benefits to businesses switching from cash and paper to electronic payments and record keeping, such as easier tax lodgement and meeting customer expectations of being able to pay electronically.
For businesses that are accepting cash payments, the ATO provided the following advice to protect your business:
- Deposit all cash payments into your business bank account. During business visits, the ATO found businesses didn't have a dedicated business bank account, used cash boxes or held business takings in their own wallets.
- Have evidence to support all of your income, expenses and lifestyles.
- Make sure you can account for stock you have used for private purposes.
- Use the ATO small business benchmark tool to calculate how your business is performing compared to similar businesses in the same industry.