Inland Revenue has notified tax agents that they will be conducting a ‘construction industry education campaign’. This focuses mainly around cash jobs. It’s not illegal to do cashies, but you need to declare the income and pay tax on it.
They’ve devoted a new section on their website which provides more information, but as a summary for you:
- They can track cash jobs – one contractor may claim the cash as an expense. Inland Revenue would expect to see the cash received by the other party as income. If not, they may investigate further – they can go back seven years and may look further into other tax areas. You don’t want that.
- If cash income (or any other income for that matter) hasn’t been declared in your tax returns, you should let them know via a voluntary disclosure. By voluntarily disclosing this information, Inland Revenue may not charge penalties or go through a prosecution process, which they would do if they found out in some other way.
- People are being encouraged to inform Inland Revenue when they see cashies which may not be declared as income. This can be done confidentially.
- When your annual turnover (including cash jobs) is higher than $60,000, you must register for GST.
- If you’re employing staff, the business must register as an employer and follow employment law. Don’t pay them ‘under the table’.
Paying your fair share of tax is the law, but paying too much is not.
If you’re interested in learning more about the Beany approach, you can read our blog here.
If you’re unsure about what should be declared as income or whether it’s been included in your tax return, the best thing is to chat to one of our friendly team. We can also help you through the Voluntary Disclosure process, if necessary.
Ultimately the decision rests with you, the taxpayer, but we’re here to provide you with all the information to make the best decision.