The Australian Taxation Office (ATO) is intensifying enforcement against businesses using cash to evade tax, superannuation, and employer obligations, warning deliberate non-compliance will trigger audits, penalties, and prosecutions.
The compliance push targets operators, including those who own international businesses, who under-report cash income, pay suppliers and staff in cash, and keep transactions off the books to avoid GST registration and other liabilities. Authorities state that such conduct is intentional and undermines the integrity of the tax system.
Businesses engaging in these practices commonly fail to issue receipts, avoid paying GST, income tax, PAYG withholding, superannuation guarantee, insurance, and WorkCover premiums, and deliberately report turnover below the $75,000 GST registration threshold. The regulator says the conduct allows rogue operators to undercut compliant competitors and distort fair market competition.
The ATO warns the hidden cost falls heavily on workers paid cash-in-hand. Employees frequently miss out on paid leave, receive less than award wages, incur unexpected end-of-year tax bills where no withholding occurs, and lose superannuation contributions that affect retirement savings. Without proper WorkCover coverage, injured workers may face significant out-of-pocket medical expenses.
According to the ATO, they are using advanced data-matching and analytics, alongside joint operations with other government agencies, to identify cash-only businesses operating outside the system. Community tip-offs are also feeding investigations through the Tax Integrity Centre.
In one recent case, a Brisbane pizza shop operating largely on cash and PayID payments failed to report approximately $140,000 in income and claimed around $80,000 in unsupported expenses during the 2024 income year. The audit followed an earlier 2023 review that had already imposed a 50% penalty for reckless behaviour.
The ATO determined the conduct was intentional. The business received GST adjustments creating a shortfall exceeding $17,400, penalties of more than $11,500 after a 75% base penalty and 20% uplift, and an additional shortfall penalty exceeding $38,000 for making false and misleading statements.
The tax office urged small businesses to report all income, including cash, meet employer and superannuation obligations, maintain accurate records, use digital tools where possible, and register for GST once turnover reaches $75,000.
ATO officials emphasised that small businesses rely on tax professionals to manage their tax and superannuation obligations, noting that these professionals play a critical role in ensuring accurate reporting and maintaining confidence in the system.
Last updated: 18th Feb 2026
About the Author
Ro Elvinia is ABN Australia's Customer Success and Marketing Manager. She holds a bachelor’s degree in mass communication, majoring in journalism, and also has an academic background in civil engineering. With over a decade of experience in professional writing and a background spanning journalism, Australian immigration, and business services, Ro brings a unique mix of communication and analytical expertise. She works closely with international clients and contributes to ABN Australia's content strategy, helping global businesses stay informed and confident as they navigate the Australian market.
Ro Elvinia
Customer Success and Marketing Manager