Demonetisation in Australia?

By Vijay Kumar

IS Australia going to follow India in its fight against black money. The Australian Minister for Revenue in a media release yesterday said,

Australians need to have confidence in our tax system.

Nothing makes fair minded Australians angrier than having to pay more tax as a result of someone else not paying the tax that they are supposed to pay.

That is why Government has already acted to close loopholes for multinational tax avoidance, strengthened the powers of the Australian Taxation Office and doubled penalties on large companies that are ripping off the Australian taxpayer. In addition to our thin capitalisation changes and our announced new diverted profits tax, these changes make Australia one of the toughest countries in the world on multinational tax avoidance.

Our next efforts need to focus on the 'black economy'.

While there is no single, internationally-agreed definition, typically, the black economy refers to people who operate entirely outside the tax system or who are known to tax authorities but deliberately misreport their tax obligations. The black economy can also include those engaged in organised crime, including those who engage in the production and sale of prohibited goods.

According to the ABS, it is estimated that the black economy in Australia could be as large as 1.5 per cent of our gross domestic product or around $24 billion dollars.

Black economy activities are both unfair for honest taxpayers and undermine our tax and welfare systems.

Tackling the black economy requires a whole of government approach and participants will include the Reserve Bank of Australia, the Australian Federal Police, ASIC, APRA, AUSTRAC, and the Departments of Human Services and Immigration.

An Australian newspaper commented:

Presumably, the government was not inspired by the chaos triggered in India in recent weeks by Prime Minister Narendra Modi's snap decision to retire all 500 and 1000 rupee notes.

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