If you’re in the trades, you need to be very wary of Inland Revenue. IRD has a massive focus on cash jobs including publicity, education and audits. Not managing your tax could lead to significant tax, penalties and the time and stress that goes with a tax audit. Let’s deal with some aspects quickly:
– Not paying tax on cash jobs is absolutely a “tax crime” as IRD puts it. It’s not fair if most are paying tax while a few are not.
– Cash jobs are not illegal. You can do as many as you like – as long as they end up in your tax returns. However, you may have difficulty proving that all your tax has been paid if you don’t keep good records.
– It’s surprisingly easy for IRD to identify cash jobs if they have a good look at you. Once IRD asserts missing tax, you need to prove them wrong.
Maybe you’ve done a few cash jobs and want to come clean. While IRD would like you to make a voluntary disclosure we suggest caution. Disclosures need to be managed to preserve your rights and to minimise the chance of wider IRD audits.
If you don’t do cash jobs, you still need to be concerned. IRD may stumble across other problems with your tax while assessing your cash job tax risk. Common issues include FBT on vehicles, stock or work in progress and retentions.
If you have a trade business, make sure you’re comfortable that your tax returns are right. If you’re not, please seek advice. It’s easier to fix things before Inland Revenue knocks on your door.