Date: 12th May 2021
Do you work in the construction industry? Do you often do small jobs for cash? As part of their education programme, the Inland Revenue have put together a useful guide on everything you need to know and understand in order to fulfil your tax obligations.
Below is a summary of the important points.
It’s a common misconception that small cash jobs can’t be tracked, but actually this is not true.
The Inland Revenue can see when supplies are being bought, such as paint or timber, and if there is no corresponding declared job. As a Government department they can also request information from banks, loyalty cards, casinos and many other organisations to make sure that all income is being declared.
If two tradies work on the same job and one declares the tax, but the other doesn’t, you can be dobbed in without realising it. There is also always the chance of a random audit, particularly if an audit of one company indicates that another should be audited.
It’s fine to do work for cash, but make sure that you record all the details, not matter how small the job is.
Like many sectors, the construction sector is supported by the government when required and has recently received lots of support due to COVID-19 through subsidies such as the Small Business Loan Scheme and the Wage Subsidy Scheme. Taxes go towards recouping some of these initiatives. Tradies therefore have a responsibility to declare all earnings and make the process fair for all.
There are also heavy penalties for not declaring all your earnings. Failure to meet your obligations can not only result in a hefty fine, it can also include criminal penalties. If you know someone who is not declaring all their income you have an important role in keeping everything fair for all and can let the Inland Revenue know confidentially.
It’s never too late to do the right thing. If you have left some income off your tax return you can declare it using the Inland Revenue’s voluntary disclosure form. By making a full disclosure voluntarily you can avoid the penalties.
Completing your tax return can be time consuming, especially if you have not kept clear records of all your income throughout the year. We are happy to advise on how to best keep your records and help with your end of year Income Tax Returns. Give us a call.