Cash jobs = tax evasion

Inland Revenue are having another crack at discouraging cash jobs. Avoiding paying GST and income tax is blatant tax evasion, but there has been a general acceptance of it as fair game by many.

It’s not fair on businesses who do things by the book and can’t compete on price. And it’s not fair on those who ‘pay their fair share’.

One News has done a bit of investigating and reports Growing blackmarket in renovations sparks IRD crackdown on tradies doing cashies

A ONE News investigation has revealed a thriving blackmarket in the renovation trade, which is expanding in scale.

They haven’t revealed it, it is well known that it goes on, but they are helping highlight the problem.

We took one Auckland house badly in need of repair and we asked six tradesmen, chosen at random, to quote us for fitting a new bathroom and kitchen, re-painting and installing new carpet.

The work would be valued at between $10,000 and $20,000 depending on the scope of the work quoted by each tradesman.

Fifty per cent of tradesmen provided a cash price, without being asked – and their quotes ranged in value from $10,000 to $18,000.

Apart from cheating the system – and cheating those of us who pay all our income tax via PAYE and pay GST via our purchases – I think it’s very risky paying that amount of tax for that size of job. People who offer cash jobs are more likely to be shady and you are less likely to be protected if something goes wrong.

So who is breaking the law when a cash price is negotiated?

Andrew Stott from Inland Revenue says it’s “the tradesperson breaking the law – the tradesperson is responsible for paying taxes on their income,” while for the consumer “it’s not illegal to pay cash – it’s just silly”.

It’s more than silly. If you pay cash for goods or services knowing that tax evasion is likely then you are aiding and abetting it.

The Inland Revenue is today launching a crackdown on tradies doing cashies, their third campaign in Auckland and Christchurch.

Mr Stott’s advice to anyone doing work for cash and not paying tax is simple.

“Watch out. The holes you can hide this sort of money in are becoming smaller and smaller and we are constantly finding people.  A second piece of advice is just think about your part in New Zealand and your part in your industry, and play your part.”

If GST evasion was eliminated then for the same level of tax take the GST rate could be reduced.

From a few years ago: Cash jobs, crime drive black economy

Cash trade jobs, crimes, wages under the table and online trading are costing the Government more than $7 billion a year in lost tax.

That’s unpaid tax that us tax payers have to subsidise, about 10% of tax revenue.

How much do we pay? If we are on about an average income of $60,000:


You can check this for different incomes at My Tax Dollars.

That’s just income tax, add GST and it will be closer to $15,000 in tax per year for an average earner (that doesn’t get Working for Families accommodation subsidies).

Those who evade GST and income tax mean the average income earner pays perhaps 10% more than their fair share, or around $15,000 per year, or about $30 per week, because of dishonest people.

If tax evasion was reduced, and honest tax rates were reduced, there would be less need for WFF type subsidies.

Cash jobs = tax evasion

It costs a honest people a significant amount amount of money.