Cash jobs: Will you pay cash to people for odd jobs and thus help them avoid tax?

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

Forums › Finance and wealth management › Cash jobs: Will you pay cash to people for odd jobs and thus help them avoid tax?

1 | 2 | 3 | 4 | 5

2710 posts

Uber Geek

ID Verified

Lifetime subscriber

#2139698 5-Dec-2018 11:18

I don't pay cash for my morning flat white. I'm not going to pay a tradie cash for job worth $100's or even $1,000's of dollars done around my home.

hsvhel

1237 posts

Uber Geek

ID Verified

#2139702 5-Dec-2018 11:21

No issues with a few cash jobs at all

Referral Link Quic

Free Setup use R502152EQH6OK on check out

Coil

6614 posts

Uber Geek
Inactive user

#2139754 5-Dec-2018 11:58

Is this thread more aimed at trades people who offer "cash" deals to the general public rather than mates trading skills?

frednz

1467 posts

Uber Geek
Inactive user

#2139757 5-Dec-2018 12:07

afe66: No.

Sugar coat it as much as you want but I would consider that to be facilitating tax fraud.

If a tradesman tried to do that to me I'd get different tradesman. No invoices, no backup. Might drop a note to ird too.

$50 isn't much to you but then 50,000 isn't much to a multimillionaire, Slippery slope.

Yes, that's the question, if you pay cash are you in effect a party to helping a tradie defraud the IRD?

But, as some people have said here, usually you don't know for sure whether the tradie is avoiding tax and there is no law against paying somebody cash for services rendered.

Should you feel obliged to let IRD know about a tradie who insists on payment in cash and doesn't issue an invoice? Has anybody ever done that? Does IRD act on such tip-offs - surely they have bigger fish to fry?

I think a lot depends on the amounts involved. If, for example, a person is listed in the yellow pages as a painter, and they give you a quote of $1,000 for a job and say "if you pay cash we'll share the GST saving", then if you accept this I think you are a party to a fraud because you have specifically been told that tax is being avoided. I wonder if IRD has ever prosecuted a person who has paid cash for a job, on the grounds that they must have known they were a party to a tax fraud?

frednz

1467 posts

Uber Geek
Inactive user

#2139759 5-Dec-2018 12:09

Coil:

Is this thread more aimed at trades people who offer "cash" deals to the general public rather than mates trading skills?

I wasn't really thinking of mates trading between each other, particularly when the amounts involved are quite small. The question is definitely aimed at trades people who offer cash deals to the public.

Lias

5589 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#2139771 5-Dec-2018 12:40

Depends on the work, and how much I care about a warranty, but no I generally have no issue with paying cash. If anything I'm a bit jealous of people who work in fields where they can avoid income tax, because I truly hate paying it.

I'm a geek, a gamer, a dad, a Quic user, and an IT Professional. I have a full rack home lab, size 15 feet, an epic beard and Asperger's. I'm a bit of a Cypherpunk, who believes information wants to be free and the Net interprets censorship as damage and routes around it. If you use my Quic signup you can also use the code R570394EKGIZ8 for free setup.

Bung

6477 posts

Uber Geek

Subscriber

#2139777 5-Dec-2018 12:53

Unless you know that the person is self employed there's always the likelihood that screwing the IRD is secondary to screwing the employer especially if it's a weekend job. I have a memory of a reroofing job gone wrong reported recently where the "foreman" turned out to be a labourer using the company for materials. When the customer complained about delay that was the first the company knew of them. The worker had already been sacked.

Equinox IT

Cloud spending continues to surge globally, but most organisations haven’t made the changes necessary to maximise the value and cost-efficiency benefits of their cloud investments. Download the whitepaper From Overspend to Advantage now.

Rikkitic

Awrrr
18657 posts

Uber Geek

Lifetime subscriber

#2139782 5-Dec-2018 12:58

I don't have a problem in principle with cash payments. It would depend on the circumstances. If the IRD wants me to act as an enforcement agent for them, I expect to be paid.

Plesse igmore amd axxept applogies in adbance fir anu typos

frankv

5680 posts

Uber Geek

Lifetime subscriber

#2139785 5-Dec-2018 13:07

frednz:

Coil:

Is this thread more aimed at trades people who offer "cash" deals to the general public rather than mates trading skills?

I wasn't really thinking of mates trading between each other, particularly when the amounts involved are quite small. The question is definitely aimed at trades people who offer cash deals to the public.

You are still legally required to pay tax, even if no money changes hands. So, if a plumber does $1,000 worth of work for an electrician in exchange for the electrician doing $1,000 worth of work for him, both are liable to pay income tax on that $1,000.

macuser

2120 posts

Uber Geek

#2139791 5-Dec-2018 13:11

This might be a good link to share... How many of us give thousands to these business' who pay ZERO or close to zero tax due to creative accounting.

Apple pays zero tax in NZ despite sales of $4.2 billion

Click here if you want to see the Tax other companies pay vs their revenue

IRD doesn't care about cashies because

A) They cost too much to research and enforce

B) That money will likely be taxed somewhere else in the chain (for example, retail spending of the money acquired by cashies) - unlike international corporations who move all of their non taxed revenue offshore - with no chance of any of it being taxed down the chain.

MileHighKiwi

782 posts

Ultimate Geek

ID Verified

Lifetime subscriber

#2139800 5-Dec-2018 13:22

I've had many jobs done at my place for cash. Always from mates in the trades. Except for one time, a guy said "here's my price, on the books, and here's the price for cash". But he was referred by a mate, so not a complete stranger.

I would never ask someone I don't know for a 'cash' price as it puts them in an awkward position.

Hammerer

2476 posts

Uber Geek

Lifetime subscriber

#2139869 5-Dec-2018 13:41

I'm against letting anybody evade paying taxes and there are many types of avoidance that I would close. But I actually find myself agreeing that government and the IRD don't want to pursue the tax on these small jobs.

One example is that they don't have a low enough threshold on GST registration. The current threshold is $60,000 of annual turnover which is well above the average wage for the many cash jobs where tradies mainly provide labour and get their customers to pay for materials.

Batman

Mad Scientist
29760 posts

Uber Geek

Trusted

Lifetime subscriber

#2139912 5-Dec-2018 14:54

macuser:

This might be a good link to share... How many of us give thousands to these business' who pay ZERO or close to zero tax due to creative accounting.

Apple pays zero tax in NZ despite sales of $4.2 billion

Click here if you want to see the Tax other companies pay vs their revenue

IRD doesn't care about cashies because

A) They cost too much to research and enforce

B) That money will likely be taxed somewhere else in the chain (for example, retail spending of the money acquired by cashies) - unlike international corporations who move all of their non taxed revenue offshore - with no chance of any of it being taxed down the chain.

Ah yes, the big elephant in the room.

Also the other big elephant of all the wasted tax payer money ... for example, I pay rates and so do you.

Our street was dug up and resealed no less than 5 times in 2 years.

1 - to install some pipes - took about 1 month

2 - exactly 2 months later to fix stormwater drains - asked why they didn't do both at same time, was told they didn't think about it

this took about 9 months to complete. 9 months of full time paid work where every day people are actually paid to be around (doing what i don't know)

3 - exactly 1 month after that they dug it up again. i later discovered that they had did something incorrectly.

4 - 1 year later they dug it up because the "road has failed"

5 - signs are going up 1 year later for some work but I don't know what yet

all the poor planning but you know why? because they have your money. they have your money and they must spend it somehow, otherwise the budget will be cut next year, so just spend it. and if you get lucky and spend way too much you get more budgeted next time round.

(PS i feel for the teachers who see uni students getting drunk for free, and the american's cup getting money for free while they slog day and night just to be abused by spoilt kids)

MikeB4

18435 posts

Uber Geek

ID Verified

Trusted

#2139919 5-Dec-2018 15:03

I often hear folks complain about Welfare cheats but then happily assist an in trade person avoid paying tax.

Lastman

306 posts

Ultimate Geek

#2139920 5-Dec-2018 15:05

Aredwood: If we assume that the tradie is dodging tax, they will still have to pay GST on any business expenses.

Not necessarily, they may still claim the GST back on those inputs if they are GST registered for their business, as general stock purchases. Hard for the IRD to track.

1 | 2 | 3 | 4 | 5