Just be honest mate and pay your tax

This blog post was written by James McMillan, a partner at Kensington Swan specialising in commercial litigation, insolvency and restructuring.

This was one of the comments from over 400 tradespeople surveyed last year after the IRD ran a campaign with the message that tradespeople needed to declare all their income ‘or risk everything.’ The IRD reported a fast reaction to that campaign, with raised awareness of the issue and a number of people looking to add cash jobs to their returns.

This month the IRD has renewed its focus on tradespeople doing cash jobs and not declaring income for tax purposes. The new campaign, which is aimed at Auckland and Christchurch, carries the message ‘We’re black and white about undeclared cash jobs. It’s a tax crime.’

Undeclared income – and the resulting unpaid tax  – has a real impact on our economy. In its 2015 annual report, the IRD identified a  ‘hidden economy’ of cash jobs that had a value of at least $146 million, with construction being one of the high-risk sectors for undeclared income. The Herald reports that a July 2016 survey of 500 tradespeople showed that a quarter thought that cash jobs were common in the building industry, with nearly 80% recognising that avoiding tax obligations was a crime.

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