Date: 18th November 2019
Inland Revenue has declared its intention to get tough on undeclared earnings, aka, cashies or under the table payments. Recently the IRD has made a number of high profile visits and prosecutions in the hospitality sector, including a visit to Queenstown, now they’re homing in on the construction industry.
The IRD say: “Tradies who do undeclared cash jobs can be hit with tax penalties, or criminal convictions that could lead to prison – costing them their business and their income. Doing jobs for cash or for your mates is okay – as long as you record them and declare the income when you’re filing your annual tax return.”
Cash jobs leave a trail that Inland Revenue can trace. Whether it’s through one party declaring the job and the other party not, or unaccounted supplies, or investigation of bank records, the IRD has many ways of tracking undeclared cash income.
But it’s not just the legal implications of getting caught if you’re caught not declaring income, it’s the possible impact on your reputation. If you own a construction business, your reputation is key. Doing cash jobs has the potential to undermine your reputation because it often comes with the word ‘cheap’ and ‘cheap’ is not usually associated with ‘good’.
Other disadvantages of not declaring income and paying a fair share include:
To stay above the law, make sure that you:
If you’ve left some income off your previous returns, it’s best to get on top of it now. You can make a full voluntary disclosure and have your shortfall penalty reduced by up to 100% and avoid prosecution.