Paying workers cash-in-hand or outside normal Payroll systems can create significant consequences for both employees and employers. The guidance was published on 1 October 2026 and outlines the tax, Superannuation and employment issues that can arise when wages are paid “off the books”.

Workers paid in cash without proper reporting can miss out on superannuation, annual leave, long service leave, public holiday entitlements and other workplace protections. If the income is not declared and is later identified, workers may also face additional tax liabilities, penalties and interest.

Workers Can Lose Important Entitlements

Cash-in-hand arrangements can affect more than current wages.

Workers may discover that superannuation contributions have not been made, reducing the amount available for retirement. They can also face difficulty proving their income when applying for loans, mortgages or rental properties.

Where income has not been correctly reported, additional tax obligations can also arise later.

Employers Can Face Significant Liabilities

Employers are required to correctly pay workers, withhold and remit PAYG Withholding amounts, pay super guarantee contributions and maintain appropriate payroll records.

Businesses that deliberately avoid these obligations can face audits, tax liabilities, interest charges and penalties of up to 100%. Serious cases can also result in prosecution.

Company directors can also be personally liable for unpaid PAYG withholding and superannuation debts. Recovery measures may include garnishee action against personal bank accounts, and in some circumstances directors may be prevented from leaving Australia while debts remain outstanding.

Perth Restaurant Group Case Study

A case study involved a group of fast-food restaurants operating across Perth. Although each Business had its own ABN, the entities shared directors, employees and financial arrangements.

An audit found that the group had failed to report significant cash sales, paid employees in cash instead of through payroll systems, failed to withhold and remit PAYG amounts, did not pay workers’ super guarantee entitlements and maintained inadequate payroll records.

The businesses were issued with liabilities of more than A$2.8 million covering income tax, GST and super guarantee obligations. More than A$1 million in penalties and interest was also imposed.

After the directors failed to address the growing debts, recovery action was taken, including garnishee notices on bank accounts and merchant facilities.

How Employers Can Meet Their Obligations

Employers should report all income, including cash payments, and correctly withhold, report and pay PAYG amounts.

Super guarantee contributions should be paid in full, on time and to the appropriate fund for eligible workers.

Businesses should also maintain accurate records covering employee details, hours worked, wages, super payments and other transactions.

Where a business is having difficulty meeting its obligations, early engagement with the ATO or a registered tax practitioner can help address outstanding requirements.