<< previous story  |  next story: Camp Glenorchy digs up diamonds >>

A hard-hitting campaign from Inland Revenue is reminding tradespeople that cash jobs leave a trail

If you reckon cash jobs don’t leave a trail, think again

Inland Revenue is targeting tax crime in the building sector – and its latest message is raising a few eyebrows.

WEB EXCLUSIVE

Inland Revenue has been issuing the warning in a recent series of radio ads and billboards that ‘every undeclared cash job leaves a trail’. The message is part of a long-running programme to address tax crime in the building sector.

Inland Revenue marketing and communications group manager Andrew Stott says investigation work into the hidden economy uncovered $159 million worth of unpaid tax in the last year, and that although most tradespeople are doing the right thing, a large proportion of undeclared cash jobs are being paid for services like building, plumbing, painting and electrical work.

“There’s a misconception out there that this work flies under Inland Revenue’s radar, but undeclared income leaves a trail, which can be easily uncovered when looking for irregularities in a tradie’s books,” he says.

Investigations and advice manager Tony Morris says this claim has been met with a few unbelieving responses on social media and in some smoko rooms around the country. “I want to reassure people that the message is 100% true. Typically, with cash you have to spend it some time, so whether it goes on travel, living expenses, a new circular saw, gambling, the mortgage or anything else – we can find it,” he says.

Following the trail

Here are three examples of how Inland Revenue can track cash payments.

Internet banking

Undeclared cash payments that are deposited into a business account are particularly hard to explain, so sometimes the money might be directed to a family member’s account to hide the evidence. When money is moved to or between accounts, there is a trail.

“Everything’s traceable,” says Mr Morris. “Mortgage payments on a property and instalments on the work vehicle will still need to be made, and that money needs to come from somewhere. Our investigators often find this is funded from an account other than the main business one. Suddenly a trail that leads to a cash job appears.”

Asset purchases

When Inland Revenue investigators see that an asset, such as new equipment, hasn’t been purchased through the business accounts, they get suspicious. “We put the onus on the business owner to explain how they funded the purchase,” says Mr Morris.

“It’s easy for us to see when the asset purchases don’t align with their declared income. Often when we look at the accounts of a tradie we suspect has been doing undeclared cash jobs, we see plenty of evidence of supplies being bought, such as paint, carpet and timber, but no evidence of any work being done. Unless they can show us their stockpile of supplies, another undeclared cash job is usually uncovered.”

Lifestyle expenditure

Cash is often used to fund lifestyle spending on things like overseas holidays or gambling. Funding for these activities can be hard to explain to investigators when very little has been drawn down from the business account.

“Many people won’t be aware, but the Tax Administration Act gives us the power to access a wide variety of personal information,” says Mr Morris. “This includes, but is not limited to, any information held about you by other government departments, such as Customs, Land Information New Zealand and the NZ Transport Agency, as well as records from national and international banks, spending with loyalty cards from retailers and with commercial organisations like Trade Me, electricity companies, and casino or gambling accounts.”

Declare it all, or risk everything

Mr Morris says that if someone decides not to declare a cash job, Inland Revenue has plenty of means at its disposal to follow the trail – even simple internet searches can reveal plenty of incriminating information.

“Tradies and anyone else not declaring cash jobs should realise that it’s not worth the risk to their business and reputation. There are plenty more examples of how an undeclared cash job leaves a trail and our investigators are uncovering new leads every day. We will get better and better at finding these inconsistencies,” he adds.

“You place yourself in a difficult position when you accept these jobs, so the best advice is to record everything, declare every dollar and make sure you’re charging GST if required.


Go Back