ATO bean counters launch café crackdown by monitoring coffee sales

The Australian Taxation Office has always had plenty of bean counters on its staff, but they’ve never taken their job literally – until now.

In the latest assault from the ATO on the cash economy, cafés who purchase more than 15kg of coffee a week will have their earning declarations cross-checked with information provided by their coffee suppliers to see if some coffee sales are going unreported.

The information will be taken retrospectively from the beginning of the 2009-2010 financial year in an attempt to weed out cafés that are underreporting their sales, or running part of their normal business activities off the books. 

However Betty Penna from Coffee Supreme, a specialty coffee supplier in Victoria, questioned whether measuring coffee supplies was a reliable measure of café income.

“We provide guidelines for how many shots of coffee baristas can expect from a one kilogram bag, but people don’t stick to them.”

She said there were between 50 to 70 shots of coffee per bag, which could account for around $100 in discrepancy, without taking into account wasted shots, staff coffees, and coffee training during the quieter periods of the day.

General manager of The Institute of Chartered Accountants Australia Yasser El-Ansary said small businesses should expect the inclusion of third party analysis to become the norm.

“The ATO is becoming smarter about how they match data with their statements,” Al-Ansary said.

“It’s a strategy they’ve been taking for the past few years, because it gives them the capacity to find those underreporting.

“I’m not sure that it’s the most reliable method, but we have to keep in mind the ATO is built around a suit of assessment. I suspect this is not the only measure they use.”

This will add to the stock-pile of information the tax office collates to audit over 500 million transactions each year.

The ATO is ratcheting up its attack on the cash economy, which began in earnest in 2009 with the introduction of Small Business Benchmarks.

The benchmarks are financial ratios set by the ATO for over 100 industries, covering more than 900,000 small businesses earning less than $15 million a year.

The ratios are developed to provide a performance indicator against which the ATO can measure similar businesses within each particular industry and target businesses that fall outside of their benchmarks and have unusually high profits.