Just had some food at an Asian restaurant in the CBD, and they offered 5% off the bill on cash payment. Why?
As I remember, only Asian restaurants did that.
Why Are Some Restaurants Offering Discounts if The Bill Is Paid by Cash?
nignucial on 18/08/2019 - 18:26
Comments
OP post this as a bargain!
2 possible reasons:
1) They are honest and it's to avoid the credit card merchant fees
2) They are dishonest and avoiding tax by not reporting income if it's cashDid you get an official printed receipt if you paid by cash? If so, they were probably just trying to avoid the credit card merchant fees.
I've eaten at many Chinese restaurants in the Haymarket that refuse to accept credit cards, many are cash only anyway.
1) They are honest and it's to avoid the credit card merchant fees
But they are allowed to pass on the cost of this fee to customers. So if this was the reason, wouldn't they do that?
wouldn't they do that?
Possibly not, if credit card surcharge meant less customers returning to their restaurant
Isn’t it the same thing? I think they would just build it into their prices
If the restaurant wants $100 for the bill
If it’s a surcharge, bill = $100, cash price = $100, card price = $102
If it’s a discount, bill = $105, cash price = $100, card price = $105
They asked if I needed one but of course I didn't. Their POS was on tho.
They're fighting an unwinnable battle against changing times. I'm mid-20's and never carried cash in my life.
They are still happy to serve you and your preferred payment method (smartphone tab, phone tab, or credit card) is still accepted.
P.S. don't know why someone neg'ed you.
I've been to places that only accept cash…
Oh, I don't know.
My friends and I (in our early to late 20's) know if we're going to an Asian place, we're going to need cash. For every other place, it's card.
We all roll our eyes at the one who forgets cash and then, has to pay the person who has more cash than their portion.
I try to use card where I can, good for recordkeeping.
Yes mostly Asian places I carry cash and smaller local businesses have surcharge, so I pay cash then as well.
I'm carrying cash only to get these 5% discounts! Otherwise just churn my CCs or this for 2% cashback.
That's probably because you don't have much cash.
I call BS.
Mainly to avoid transaction processing fees. I go to a Japanese restaurant a lot and they charge credit card transaction fee so I pay cash (probably close to 5%).
It's not that easy to avoid tax nowadays for restaurants. ATO are not that gullible. ATO can send someone to audit (without the restaurant knowing) and calculate expected revenue. Also, from the raw materials purchased, ATO can derive the expected revenue. Restaurants cannot BS ATO saying they purchased a large bag of rice and a large bag of flour but only sold 2 bowls of rice and 5 bowls of udon/ramen.
They balance cash receipts and cash payments.
Let's say a business genuinely has $2,000 in receipts and $1,000 in expenses. Profit is $1,000 and tax is payable on that amount.
Let's now say that business is able to book $500 of receipts in cash. They apportion accordingly and the tax office will see $1,500 in receipts and $750 in expenses. Profit is now $750 and tax is paid on that (and the $250 profit on the other books is magically tax free).
Obviously a very simplified view, but that's the way it goes down in concept.
Not sure about faking sales therefore the question.
However, many shops, even in CBD, do pay staff just above a tenner.
Clearly, no one here runs a business
That's the amount they would pay on processing fees.
The incentive is that they don't pay the fees and pass on the savings
The government gets enough money from us, it doesn't phase me if they don't pay tax on cash transactions. Its a win win for all.
I bet if the merchant wrote, "we charge 5% more for payments via eftpos" the op would be calling ACA.
I hope you do realise that if someone commits a tax fraud, every honest tax payers is effectively made to foot the bill.
have you seen the useless crap the pollies spend your tax dollars on? This 5% discount is actual chump change compared to the governments spending
5% discount x 1000's of transactions at the restaurant x 100's if not 1000's of stores = not chump change.
Do you think that the government will spend less because someone decided they didn't wanna pay their share of tax, or do you think the government will just make everyone else pay more?
Spending is one side of the equation, they could afford to lower the tax rate more if more people were honest. They're not spending less because they get less tax.
Where does it hurt us 'honest' people?
Less tax is raised, so less funding for health, education, infrastructure, etc
@kiitos: But but but!
The government gets enough money from us, it doesn't phase me if they don't pay tax on cash transactions. Its a win win for all.
/s
@kiitos: Most of our tax dollars are spent on social security and welfare.
As far as I can see the spending needs to be cut on welfare.
180 billion on welfare vs 81 billion in health.
You see the issue here? Do you actually know where your tax dollars go?
@lltravel: Most of the welfare is the aged pension…. Also most of the money that goes into welfare almost immediately makes its way back to a business, where it gets taxed and the government takes their cut again (repeat)…
5% is too high hence the RBA surcharge stuff that came out;
here's the ACCC site on surcharges https://www.accc.gov.au/consumers/prices-surcharges-receipts…
Typical surcharge costs
The RBA standard allows businesses to charge their customers a cost-based surcharge on card payments, but any surcharge will be limited to the amount it costs the business to accept that type of card for that transaction. Businesses incur costs when they accept a payment from a customer using a credit card, a debit card or a prepaid card. The level of those costs can vary according to the size of the business and which payment method is used.
The RBA has said that as a guide, payments through the domestic eftpos system (used to process payments from debit cards) are usually quite low, mostly below 0.5 per cent. Accepting a Visa or MasterCard debit transaction may cost a business around 0.5 -1 per cent of the transaction value.
Credit cards usually have a higher cost for businesses, and may cost the business up to 1-1.5 per cent for Visa and MasterCard, and between 1.5-2 per cent for an American Express card payment.
It is important to note that different businesses have different costs of acceptance. In general, smaller merchants' costs may be higher than these indicative figures.
Finally here's a real world example of charges ("AVERAGE MONTHLY COST OF ACCEPTING CARD PAYMENTS") from a Westpac merchant statement that I have access to and as it was GST exclusive I've included a gross up in brackets
Card Type Master Card Credit Visa Credit Mastercard Debit Visa Debit eftpos UnionPay Average Cost GST ex (bracketed is GST inc x1.1) 1.35% (1.49%) 1.38% (1.52%) 1.04% (1.14%) 0.92% (1.01%) 0.50% (0.55%) 1.68% (1.85%) Tax pays for our roads, hospitals and schools.
Then why do I pay rego?
The cost of rego doesn't even come near the overall expense for transportation infrastructure, let alone the negative externalities it causes. The revenue raised by registration fees is pocket change that is thrown to the state governments to keep them satisfied. The average two lane road costs 10m+ per kilometre, and maintenance costs are shocking.
@Tyrx: So the tax money is for them to keep patching up the same pothole near my roundabout, 5 times in the past 3 months??
1.5% surcharge vs almost 30% tax. Its a no brainer!
They're also not paying their workers super, which will (profanity) you, me and future generations when these workers need pensions.
Every cent matters.
To put it into perspective, 1.5% merchant fees on $100,000 sales is $1,500.
So give a discount of 5.0%, $5,000 in order to avoid $1,500 in fees.
Seems legit.
Yeah, not 5000.
This is tax, super and possibly work cover dodging.
I walk away when I see discounts like this (unless I've already eaten).
Maybe I should start reporting these scummy businesses as well…
If anyone believess it is to avoid tax - then pay card. If you pay cash, then you are just as guilty as the restaurant, which may or may be doing it to avoid tax.
Instant cashback onsite. Bargain.
Can anyone here who operates a credit card facility let me know how easy it is to get one? And what kind of fees do they charge?
I dont have a business but would not mind generating hundreds of thousands of frequent flyer points …. or has someone already thought of that? :D
If you are thinking of using a merchant facility to generate credit card rewards points then that’s a bad idea
Hw does it work
Can you explain why?
If I swipe my visa credit card and charge $1,000 How much merchant fees and ongoing costs do I pay?
The value of points you get is about 1/3 to 1/10th the merchant fees, so getting a merchant facility to generate points is a great way of turning money into less money. Banks pay for rewards schemes from their cut of the fees (some of the fees go to Mastercard/Visa etc), so rewards are a fraction of a fraction.
30% tax on all that revenue to begin with.
I pay .71% Inc GST fixed for visa and MasterCard. No other account fees.
Have a highly rated fish n chip shop nearby . Cash only and if you don't have it the store provides a ATM for only $2.80 fee to withdraw from it .
With the t/o they do it probably to save the 1-2% on CC fees but I would be confident if strictly monitored the books are going to be out by what they decide .
As strange as it sounds, small cash-based businesses aren't required to keep exact records for GST purposes. Instead they are allowed to assume X% of their sales (the amount depends on the type of business) included GST and pay an amount based on that.
That's not true either.
ATO now runs a set of Small Business Benchmarks, where depending on your revenue, the ATO will estimate your sales figures based on the rent you pay your landlord.
eg. If you report your annual sales are sub $500k, the ATO will estimate that rent will take up approx. 30% of your total sales.
So someone on a lease of $60,000 pa will be required to report at least $200k in sales and pay GST on that figure.
Someone on a $80,000 pa lease will be required to report at least $266k in sales and so on.Not every business pays rent…
@BewareOfThe Dog: I was thinking more along the lines of take-aways and milk-bars that are attached to the owner's house.
How do they get away with this kind of tax evasion? If they're audited, wouldn't the auditor be able to figure out how much ingredients you're buying, and see how much you're selling and conclude that it doesn't add up? You'd be throwing away a lot of food because you're not selling it all. You're ordering way more than you need. You'd think they'd have experience dealing with tax evaders and know all the tricks.
The smart ones probably don't record all of the ingredient costs as expenses. Most of the costs (e.g. rent, utilities, staff costs) are pretty much fixed anyway
Based on these costs (rent, utilities, staff costs), an experienced auditor should be able to figure out whether the restaurant is making enough sales to pay for all this, and how many staff you employ, whether it's too much for the amount of sales you are doing. Unless the staff are also off the books.
They should also be visiting during peak hour to witness first hand the kind of traffic they are doing, and count up how many staff they see, to check if it matches what is being claimed in the books, and whether the volume of food they are buying is enough to serve this amount of people.
I'm pretty sure they are aware of the tricks being used. It's a question of whether they have enough manpower to actually go out and investigate. If they can bust or deter more tax evaders, it would be worth the added cost of auditing dodgy businesses.
@lostn: Obviously, most of them are hoping they won't get caught.
In terms of the ratio thing, I believe the ATO publishes some sort of benchmark % so as long as you're in the ballpark, you're less likely to be flagged.
The matter of the fact is that the compliance cost would be too high if the ATO starts to investigate every business. It's more efficient to act on tip-offs.
@Love a bargain: Make it known to all businesses you will be doing it at random. That should deter some of them.
If you catch someone at random, the fine and lost taxes to extract should cover personnel costs of investigating them.
Deterrence through policy and threat should be cheaper than physically going out there. Obviously you can't check on everyone. You do it at random, and if the problem is widespread enough, you'll catch someone sooner or later.
You'd be throwing away a lot of food because you're not selling it all. You're ordering way more than you need.
It's not illegal to be bad at business though.
I think the preferred way to catch these fraudsters is to observe their shop for a certain time and then check that the books line up with what was observed.
Maybe they love counterfeit notes. Better value than terminal fees ;-)
5% discount is still a 5% discount
Remember Credit Card payments don't settle instantly and are bound by VISA/MC chargeback rules.
If you were offered by a random person on the street $95 cash now or $100 in two/three days time via bank deposit which would you take?
Most banks offer same day settlement to the bank account held with same bank, otherwise next day.
Westpac does offer instant settlement -
Westpac used to take 2 days for me, that was during the week.
I don't think settling is the issue here.
Card Payments are tracked by AUSTRAK and matched against the Merchant's account.
I.e if they made $5,000 that day in CC payments, they can't declare $2,000 as there's a paper trailWith Cash, you can make $20,000 / week and declare your income was $5,000.
That's all stopping now with the Cashless payments
There is a barber in Charlestown square where their eftpos machine is 'always our of order'.
I'm sure their menu have included extra price of cards fee. Yet they try to earn more if you are to pay with cash
Wouldn’t it be more prudent to dob in Apple,Google or any of the other MNCs that funnel revenue generated in Australia to overseas tax havens before dobbing in your local sushi joint.
At least those companies pay their workers minimum wage and super. No, these small businesses are so much worse.
But, but then I couldn't get cheap food from them anymore?
Hey you made the thread :P
Pay by cash, but ask for an invoice or receipt :)
Why?
No problem for the business tbh.
Say you asked for receipt for a $50 cash payment at a restaurant.Say the business makes $2000 a day, $1000 each in cash and cards.
$1000 in card income can not be hidden in the books (bank records).$1000 in cash can written as $500 in the accounting books. Of that $500, not every customer would've asked for a receipt.
It wouldn't matter anyway, if that $500 on record was ever audited, and the ATO some how got your receipt, they would see $50(your cash receipt) + $450 (no receipts) makes $500 in the books.
Yumcha restaurants are notorious for doing this. I think it is to avoid tax, and pay the middle aged Chinese lady pushing around the food trolleys below minimum wage.
I'm going to call it out. Sunny Harbour Seafood, Hurstville NSW offers 20% discount to pay cash. When you get the invoice, its has 20% cash discount automatically calculated.It's so they can cook the books.
You take 5 wun tons, then you have 5 right, then 3 wun tons go under the table, then the 2 wun tons get served to the ATO.
That's how to cook the books
Is this in Sydney? Sushi Hotaro? :)
Melbourne but I guess it's common in every state?
In the ~Thirld world~ developing country where I came from, government transactions are still cash only. Even on big projects. It is the main source of corruption. Once the money has been withdrawn, the trail ends.
I don't think merchant fee is the main reason. For restaurants, you might even need to hire Armored Security in case you need to deposit your money to the bank. I think tax and audit avoidance is the main reason along with underpayment of employees.
I report them to ATO
Remember to report these Asians for tax avoidance.
They are ruining this country!!
Do you report every tradie too?
As I remember, only Asian restaurants did that.
Lol 😂 .
I'm sure it is not only an Asian restaurant thing, maybe Asian restaurants do it more often though.
Most likely they are dodging tax to some extent.
They potentially have a fee for card payment, but I doubt that fee is anyway close to 5%. Maybe 0.5% credit card surcharge, sounds about right, and some places I think I have seen at highest 2$ credit card fee .
So at offering 5% off, there is just a few most likely scenarios that come to mind.
1. Avoiding tax?
2. Illegal worker whom the owner pays them in cash?
3. They're overcharging customers for card use? (Ie. It costs them much less in card fees, but then the premium they are charging customers to pay by card)
4. They are bad at math, and don't realize how much they are overcharging the customers for using card payment option? Ie. I'm sure the machine costs some monthly fees, and then maybe an extra 'per transaction' fee, and some retailers seem to overstate the cost to them, if customers pay by card. Eg. The retailers refusing to do eftpos for under $10-$20, it is probably more of a convenience thing, cash is convenient, rather than an actual fee because it costs them a lot of money.
That's the few things that come to mind, I cannot say for sure, but it is most likely 1 or a combination of factors above.
Where do employees store their cash stash? I assume a lot of them live in shared housing.
Just spend it and the problem's gone
Ozbargain.
People who want stuff cheap, but make stuff more expensive by their own doing.
VISA/MC 0.9% to 1.5%
AMEX 1.5-3% (I remember a time, an AMEX rep called, tried to do a verbal influence tactic by getting the associate to verbally agree to charge customers the same surcharge as they were charging VISA/MC, like as if it were law lol)
AfterPay/ZipPay 4-6%
Chargebacks $1000-$30k on SME minimum.When you're talking wages on any business is 10% at best / (rent is 10-15%), and mostly 15-20%, you're essentially asking the business to pay 10-15% of the wages/rent cost just so you can get points (you will never win with points).
That's not to even say the lower class or people who choose to use payday lenders who get slugged fees or 5-20% interest on late payments
FYI, the government is not going to take care of you.
I'll leave this thought with you, China has driven a significant amount of transactions via the WeChat app. I can tell you now, it's not for convenience.
I believe this is illegal under the Competition and Consumer Amendment (Payment Surcharges) Act 2016, where excessive payment surcharges were banned.
Under the definition of payment surcharges: "(b) an amount (however described) charged for using one payment method rather than another.", and from the ACCC website, "A business is not able to by-pass the new ban by introducing what is in effect a payment surcharge but calling it something else.".
5% surcharge is excessive and is way more than what they get charged to process any card transaction. You can report them to the ACCC, even if no action is taken there are records kept.
https://www.legislation.gov.au/Details/C2016A00009
ACCC: https://www.accc.gov.au/consumers/prices-surcharges-receipts…
How is 5% discount a surcharge when business advertise their price. is eBay's 15% discount a 15% surcharge if not paid via PayPa. Would I still get 15% if I pay via bank/wire transfer?
Wait till you go to Japan.
Cash is only accepted almost everywhere.
I think you mean the Wano Country.
All tax evaders should be deported to Benin so they can be Voodooed and never return to Australia.
Our shores must be kept pure and safe for us only.
At least they accept card. Some business only do cash. Talk about tax evasion.
Also it lets the restaurant under pay employees. If anyone audits (yeah right) they can say their turnover is so low they don't need anyone working there for $5/hr.