ATO-led taskforce promises “full force of the law” against small businesses using tech to avoid tax

Small businesses using software to digitally cook the books have been put on alert, as investigators led by the Australian Taxation Office crack down on the use of electronic sales suppression tools (ESSTs).

The Serious Financial Crimes Taskforce (SFCT) says it is aware of businesses using advanced programs to alter sales records and provide false statements to the tax office, with the ultimate goal of paying less tax.

Some ESSTs connect to point of sales systems to delete, re-sequence, or fudge transactions, and have the capacity to artificially lower sales volumes and churn out false tax records.

Others operate through the cloud, enabling access to offshore payment platforms to skirt Australian tax rules.

Australian authorities fear ESSTs are pushed towards small business operators, particularly in the retail and hospitality sectors.

“We understand there are sophisticated networks of operators actively developing and marketing these tools to small business owners,” the SFCT said in a new briefing document.

“They often package them as an ‘all‑in‑one complete business solution’ with low commissions, website presence and an online ordering tool.”

The ATO can analyse bank information, evidence about a taxpayer’s lifestyle, and small business benchmarks to determine if an enterprise may be using an ESST to dodge its tax responsibilities.

The SFCT said businesses found to have been using an ESST, or engaged in their promotion, “will be dealt with the full force of the law”.

Voluntarily admitting the use of an ESST, and presenting the ATO with a correct set of financial records, may result in more lenient treatment.

“If you are a business using ESSTs, we strongly encourage you to come forward and make a voluntarily disclosure rather than wait for us to contact you,” the taskforce continued.

“We may be able to reduce your penalties.”

The renewed focus on ESSTs comes nearly a year after an international crackdown led to raids on 35 Australian operations suspected of either using ESSTs or promoting them to other businesses.

Addressing the raids in December last year, ATO deputy commissioner John Ford said the tax office would have little tolerance for businesses trying to obscure their obligations.

“Adding ESST to your point-of-sale system is a deliberate and underhanded act designed purely to under-report income and avoid tax obligations,” he stressed.

“It’s illegal and it will not be tolerated here in Australia. Businesses using or promoting this technology are effectively stealing from the Australian community, and that’s simply not on.”