‘Cashies’ in construction industry targeted by IRD

Date: 7th January 2016

The IRD has made it clear that they will be targeting tax fraud, namely ‘cashies’, non-declared cash jobs, and businesses in the construction, trades, hospitality industries and other cash-based industries, will be in the spotlight for at least the next 12 months.

construction worker

The IRD reports that a survey of Auckland tradespeople shows that their campaign highlighting cash jobs has hit home, with four in five believing they’ll get caught if they cheat on their taxes. The survey of nearly 420 tradies followed an advertising campaign in Auckland during April and May, with the message that tradespeople need to declare all their income, including cash, “or risk everything”.

“Just be honest mate and pay your tax”

Inland Revenue’s Group Manager Investigations and Advice, Patrick Goggin, said the survey results show that the message that doing under-the-table jobs is a tax crime is getting through. Mr Goggin said while the majority of tradespeople “do the right thing” by paying their taxes, there’s a minority who are cheating the system and ripping off taxpayers.

“Unfortunately our survey found that in the Auckland region, there’s anecdotal evidence that up to a quarter of building and construction involves under the table work. If that’s true, that’s a lot of tax not being paid and that would have funded vital services we all benefit from such as schools, hospitals and social services.

“I think what’s encouraging though is that tradies are talking about their tax obligations with their mates in the industry and with their customers. And most are saying it’s no longer okay to do work for cash and not declaring it.

Do the right thing

If you want to stay on the right side of the law, try the following strategies in regards to declaring tax, suggested by Build Magazine:

  • If there are skeletons in your closet, there are concessions available for voluntary disclosures. If the disclosures are made before the IRD begins an audit, shortfall penalties can be remitted completely in some situations.
  • Maintain records. IRD investigations are a fact of business life. The best way to prepare is to ensure that your records are tidy, correct and up to date. If the IRD can quickly find that your records are in order and that you are complying with the tax rules, expect the investigation to be over and done with quickly. Where there is something to investigate, expect more digging.
  • Accountancy insurance covers the costs of a professional advisor to undertake the audit or review on your behalf, up to a pre-agreed level. This levels the playing field with tax investigations. We have previously seen taxpayers concede their statutory rights or enter an agreement they do not believe is correct because of the cost of challenging the IRD. With insurance, taxpayers can stand their ground knowing their advisor costs will be covered.

Tax advisors have tools that can help with an IRD investigation. It’s often not the time for a DIY approach.

Need help?

If you need help getting your tax records up to scratch, give us a call or send us an email.

Posted in: Alexandra, Christchurch, Latest News, Queenstown, Wanaka