Many business owners still believe that they are ‘beating the tax man’ when taking payment in cash from customers and not declaring this as income. This is a big mistake, there will not only be tax implications and penalties if caught by the ATO but also the business is being devalued significantly by transacting this way with customers.
When a business is valued, it can only be assessed on what has been declared as income to the ATO. Business owners can sometime miss out on significant amounts when it comes time to sell. The business also seems less appealing to buyers when cash transactions are mentioned and even if a buyer accepts the cash transactions and agrees to a higher price on this basis.. a bank will not provide finance on any amounts not declared to the ATO.