Police and the Australian Taxation Office have raided 35 businesses across five states as part of an international crackdown on the use of software to avoid paying tax.

The ATO said the raids, conducted with the Australian Federal Police, targeted  businesses suspected of supplying and using illegal electronic sales suppression tools (ESST) in Victoria, NSW, Queensland, Western Australia and Tasmania.

The investigations were timed to coincide with search and seizure operations in the United Kingdom and the United States.

ATO Deputy Commissioner John Ford said it has been illegal to produce, supply, possess, use or promote ESS tools or software in Australia since October 2018.

“These dodgy sales suppression tools allow retailers to keep a separate set of books and launder the money in one transaction. They conceal and transfer this income anonymously, sometimes offshore,” he said.

The ATO said its officers worked closely with counterparts in His Majesty’s Revenue and Customs (HMRC) in the UK and the Internal Revenue Service (IRS) in the US as part of a probe into the use of the tax avoidance technology.

Mr Ford said a point-of-sale system with ESST enabled may permanently delete transactions, re-sequence transactions, reduce sales values and misrepresent transactions to produce fake records.

“So what might happen is that the customer orders a $60 steak and a $100 bottle of wine and the ESS tool then puts it through the point-of-sale system as a $10 bowl of chips and a $4 bottle of soft drink,” he said.

“Adding ESST to your point-of-sale system is a deliberate and underhanded act designed purely to under-report income and avoid tax obligations. It’s illegal and it will not be tolerated here in Australia.

Businesses using or promoting this technology are effectively stealing from the Australian community, and that’s simply not on.”