The Australian Taxation Office has conducted raids on business suspected of using, manufacturing or supplying electronic sales suppression tools to avoid paying tax, and it has issued a warning to businesses to take care when choosing a point of sale system.
ESSTs attached to point of sale systems alter transaction records to reduce taxable income. They were banned in 2018, along with software that performs the same function, and the ATO has been issuing warnings since then.
In recent weeks it has stepped up its campaign against the use of ESSTs, raiding 17 premises associated with three businesses suspected of supplying or manufacturing the tools and eight businesses suspected of using them.
The ATO has issued assessments for more than A$23 million in relation to the raids and has commenced recovery action.
The raids were conducted with New South Wales Police, which seized suspected proceeds of crime and money laundering.
An ESST is classified as any functionality that permanently deletes or re-sequences transactions; changes transactions to reduce the amount of the sale; misrepresents records by re-categorising a product to avoid GST; or produces fake records.
The tools appear in multiple forms: hardware connected to the point of sale system; cloud-based software; and inbuilt software.
In one case study reported by the ATO, a cafe owner used the ESST function to delete cash transactions from the business sales records.
In another, a shop owner ran a script each month to reduce high-value transactions by substituting them for cheaper items.
ATO deputy commissioner Will Day said business owners must exercise care when choosing a point of sale system to ensure it complies with the law.
Businesses that are found to have been using an ESST are being required to review their past tax returns and activity statements and amend them.