As tradies across the country will already well know, their friends and families can be quick to capitalise on access to ‘mate’s rates’. It can be a great way to get small building or repair projects around the house done cheaply and by someone they know and trust to do a good job, while providing their friend or family member in trade with a little extra pocket money.
When the job is worth a bit more than a couple of 12-packs, often these jobs are paid for ‘under the table’ in cash. So what do tradies need to know about taking ‘cash jobs’?
The short answer provided by the IRD is clear – ‘under the table’ income is a tax crime. Penalties for tax evasion can reach up to $50,000 and can even result in prison time. It is okay to take cash jobs for your loved ones, but be mindful that all assessable income must be declared to the IRD in your annual tax return.
If your business or trade income exceeds $60,000 you will also be required to register for GST. GST also needs to be charged against any cash jobs.
It is important to keep thorough records of all jobs so that you know where you sit with the IRD in terms of your tax obligations. If you’re unsure of what you need to do or have concerns about undeclared income from the past, declaring it now in a voluntary disclosure may save you penalties and prosecution later. Be aware that the IRD do monitor these things!
The IRD has further information on what to do if you have concerns.