Cash-in-hand wages expose businesses to major liabilities

Foreign-owned businesses operating in Australia face significant tax and superannuation liabilities if they pay workers off the books or fail to meet payroll obligations. 

The Australian Taxation Office (ATO) has warned that employers paying cash-in-hand wages can face audits, substantial tax liabilities, penalties of up to 100%, interest charges and, in serious cases, prosecution. Businesses must report all income, withhold and pay PAYG withholding correctly, make superannuation guarantee contributions for eligible workers and maintain accurate employment and payroll records. 

Company directors can also face personal liability for PAYG withholding and superannuation debts. In some cases, the ATO may restrict directors from leaving Australia until debts are paid or recover funds from personal bank accounts through garnishee action. 

The ATO highlighted the risks through a Perth fast-food restaurant group that operated several businesses with separate ABNs but shared directors, employees and financial arrangements. An audit found the group had failed to report significant cash sales, paid employees in cash rather than through payroll systems, failed to withhold and remit PAYG amounts, failed to pay superannuation and did not maintain adequate payroll records. 

The businesses were issued with more than $2.8 million in liabilities covering income tax, GST and superannuation obligations, along with more than $1 million in penalties and interest. The ATO subsequently began recovery action, including garnishee notices on bank accounts and merchant facilities. 

For foreign-owned businesses, the obligations apply to their Australian operations and employees. Employers must ensure their Australian payroll arrangements properly account for wages, PAYG withholding, superannuation and employment records. 

Foreign-owned businesses experiencing difficulty meeting their obligations are encouraged to seek advice from the ATO or a registered tax practitioner early.

Last updated: 9th Oct 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.