The Australian Taxation Office (ATO) is cracking down on Aussie tradies using ‘cashies’ to avoid paying their taxes.
Cash-in-hand jobs – otherwise known to tradies as ‘cashies’ – are a popular way to charge for jobs ‘off the books.’ There are no invoicing or lengthy payment terms, and most importantly, no tax charged on these payments.
This ‘shadow economy’ – people and businesses who deliberately avoid paying the right amount of tax – is estimated to cost the Australian economy $12.4 billion every year in unpaid taxes.
But now, ATO assistant commissioner Tony Goding is warning tradies it’s they can no longer hide from the ATO, as the taxable payments annual report (TPAR) data is helping officials catch out dodgy behaviour.
“Dodgy businesses doing ‘cashies’ are being put on notice as the ATO continues to crack down on shadow economy behaviour,” Goding said.
“We know there are some who deliberately don’t report, or under-report, their income, making it unfair for honest businesses.
“If you are asking for cash and not declaring it to the ATO, you will receive a ‘please explain’ from the ATO and you will be penalised. It’s not a matter of if, it’s a matter of when.”
Goding said failure to meet the deadline could be seen as a “red flag and prompt closer scrutiny”.
“The Taxable payments reporting system is just one tool in the ATO’s toolbelt helping expose missing income and keeping things fair for businesses doing the right thing,” Goding said.
“We use a range of information in the TPAR to check for red flags, like not including income, not lodging tax returns or activity statements, overclaiming GST credits or misusing Australian business numbers.”
The ATO recently issued more than 16,000 penalties for businesses that didn’t lodge their TPARs for previous years, despite receiving reminders. The average penalty was $1,110.
Around $400 billion in payments made to almost 1.1 million contracts were reported in the taxable payments reporting system in the past financial year.
Master of Electricians CEO Malcolm Richards said that the rise of tradies charging cash as part of the shadow economy poses a real risk to ordinary Australians.
“It’s vital that Australians understand that paying cash to a tradesman may see you charged slightly less, but there’s a far higher price to pay if they perform dodgy work and there’s no paper trail,” Mr Richards said.
“If you pay an unlicensed tradie cash at a cheaper rate and the electrical work turns out to be faulty, you run the real risk of being left with a hefty bill to foot, not to mention the huge safety risk to you and your family.
Mr Richards said that tradies using cash jobs to dodge tax are often underqualified and unreliable.
“Not only does this leave the taxpayer to foot the bill, but it also poses a significant safety risk to all Australians,” he said.
“Always make sure you get a receipt for any electrical work undertaken so that you’re not left without a warranty and to guarantee that the job has been done by a fully accredited sparkie who knows what they’re doing.”
