The Indian Government has taken the boldest action, with its shock move in late 2016 to take all 5 rupee notes out of circulation.It was a hugely disruptive undertaking, intended to root out vast stashes of cash the government suspected sat outside the financial system – and therefore beyond the taxman’s grasp. Bank of India figures show that of the 15.4 trillion rupees (US1 billion) withdrawn from circulation, all but one per cent has been accounted for, suggesting hoarders found a way to convert their stashes without detection or the informal economy was far smaller than expected. The experience also shows that setting a use-by date on A and A0 bills may not, by itself, be enough to drag shadow economy transactions into the light.Jiao identified herself to Nguyen by handing over a A note with a particular serial number on it.The pair then went to the casino carpark where Nguyen gave Jiao a backpack containing A4,340 in cash.In 2012, the Australian Bureau of Statistics estimated the informal economy to be 1.5 per cent of GDP, about A billion per annum in today’s money.With so much potential revenue at stake, it’s little wonder the Australian Government is dreaming up ways to bring such transactions within the tax system’s orbit.Of A billion in cash spent by overseas visitors last year, less than A.5 billion was withdrawn from domestic ATMs, making it likely that “a large share of it is obtained prior to arrival in Australia”, according to the RBA.
In the 2016 financial year, the ATO raised almost A0 million in taxes and penalties from firms and individuals using cash in an attempt to dodge their tax obligations.Accountants should advise their clients that they should declare all income, be it cash or electronic,” the spokesman says.Crime tends to be a cash-only business, and when criminals try spending the large stashes of banknotes they accumulate it arouses suspicion.By November 2016, there were 339 million A0 notes issued (14 for every Australian) and 670 million As (see Figure 1).The RBA reckons a lot of these banknotes are being held offshore by institutions and individuals doing business in Australia.The ATO’s recommendation to businesses, and the accountants who advise them, is not to try it.“Our increased use of data and analytics means that, sooner or later, we will catch up with those businesses seeking to avoid their obligations.High-denomination Australian banknotes could soon be stamped with a use-by date – just like a carton of milk – in a bid to end people sitting on large piles of loot.Michael Andrew, who heads the Australian Government’s Black Economy Taskforce, has suggested the novel, but decidedly low-tech, idea as part of a broader strategy to stem the loss of tax revenue through the informal economy.It’s a way to target individuals and enterprises who conduct all or part of their business in cash to avoid tax, retain welfare entitlements, or for more nefarious purposes such as money laundering.Part of tackling the problem is tracking where the banknotes go. As at June 2017, there were 1.5 billion Australian banknotes worth A.6 billion on issue, according to the Reserve Bank of Australia (RBA).