The Australian Taxation Office has executed raids across Australia, cracking down on businesses suspected of supplying and using illegal electronic sales suppression tools (ESST) or software to avoid paying tax.
The raids are part of Operation Flutter, a coordinated global crackdown by the Joint Chiefs of Global Tax Enforcement (J5). The crackdown is supported by Australian Federal Police (AFP) officers in Victoria, New South Wales, Queensland, Western Australia and Tasmania
Officers conducted raids at 35 separate premises suspected of supplying and using ESST. The production, supply, possession, use or promotion of ESST or software has been illegal in Australia since October 2018.
The Australian raids were timed to coordinate with search and seizure action undertaken by J5 partners in the United Kingdom and United States of America. ATO officers worked closely with His Majesty’s Revenue and Customs (HMRC) in the UK and the Internal Revenue Service (IRS) in the USA.
Globally, the crackdown involved the collection of evidence, intelligence gathering, search warrants, notices to produce, interviews, taxation assessments, and subpoenas.
ATO deputy commissioner and J5 chief John Ford said, “These dodgy sales suppression tools allow retailers to keep a separate set of books and launder the money in one transaction. They conceal and transfer this income anonymously, sometimes offshore.”
Ford said that point-of-sale systems with ESST can permanently delete transactions, re-sequence transactions, reduce sales values, misrepresent transactions, and produce fake records.
“So what might happen is that the customer orders a $60 steak and a $100 bottle of wine and the ESS tool then puts it through the point-of-sale system as a $10 bowl of chips and a $4 bottle of soft drink,” said Ford.
“Adding ESST to your point-of-sale system is a deliberate and underhanded act designed purely to under-report income and avoid tax obligations. It’s illegal and it will not be tolerated here in Australia. Businesses using or promoting this technology are effectively stealing from the Australian community, and that’s simply not on.”
The ATO said that investigators have gathered a significant cache of information, however no charges have been laid.
Ford said that ESSTs can be included in hardware connected to point of sales systems, cloud-based software, and can also be built directly into software.
The ATO is recommending businesses to come forward voluntarily, stating they may be provided with an opportunity to receive a reduction in penalties. Businesses that have used ESS tools or software will need to review their past tax returns and activity statements to amend or correct them.
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