Businesses raided in point-of-sale tax fraud crackdown

Mobile phone being used to make EFTPOS purchase. Newsreel
Businesses are being urged to ensure EFTPOS devices are legal. | Pexels: Supplied

The Australian Taxation Office has raided a number of businesses suspected of using electronic sales suppression tools (ESSTs) to avoid paying tax.

ESSTs or software attached to a point-of-sale system are designed to alter transaction records and avoid paying tax. It has been illegal to manufacture, supply, possess, use or promote ESSTs in Australia since October 2018.

Over the past two weeks, ATO officers and police raided 17 premises associated with three businesses suspected of supplying or manufacturing ESSTs and eight businesses suspected of using ESSTs in Sydney.

They uncovered evidence of distribution and use of illegal ESSTs, as well as a significant amount of electronic and business records. Police seized, as proceeds of crime, cash from two properties totalling $269,800 suspected as money laundering.

The ATO has issued assessments for more than $23 million in relation to the raids, and recovery action has already commenced.

A point-of-sale system with an illegal ESST enabled may permanently delete transactions, re-sequence transactions, reduce sales values, or misrepresent transactions. No matter how a particular ESST works, it produces fake records and are used to under report taxable income.

Deputy Commissioner Will Day warned business owners to exercise reasonable care when choosing a point-of-sale and other business systems to ensure they comply with the law.

Businesses that have used ESSTs will need to review their past tax returns and activity statements and amend them. They may also wish to discuss next steps with their registered tax professional.

If you suspect a person or business is involved in manufacturing, supplying, possessing, using or promoting ESSTs, you can report it to the ATO or call 1800 060 062.

Learn more about ESSTs at the ATO website.