Are you ready for IRD if they come knocking on your door? Inland Revenue is currently cracking down on specific industries in search of overclaimed expenditure and undeclared revenue. After the recent crackdown on real estate agents, the construction industry is expected to be next on the list. It’s no surprise that the likely target would be ‘cashies’ undertaken by some tradies, along with home office claims, motor vehicle expenses, entertainment and gross margins (income minus expenses).
The Outside team has extensive knowledge in the property and construction industry, and while we make sure our clients maximise all deductions available to them without attracting the ire of IRD, it’s up to you to declare your cash jobs. If you’re a tradie or trade business owner, we encourage you to make sure your record-keeping is always up to date and that you record every job carried out and material used. Remember, you need to advise your accountant of any cash jobs you’ve undertaken by the end of the financial year.
It’s best to get your tax obligations right from the start, especially if you undertake cash transactions. All jobs must be recorded, regardless of how big or small. Make sure you register as an employer if you’re employing staff and register for GST if your annual turnover is more than$60,000 (and charge it if already registered).
IRD can be pretty tricky when it comes to random audits. If you’re wondering if cash jobs can really be tracked—the short answer is yes. IRD can see when tradies purchase supplies such as timber, carpet or paint but declare no corresponding job. They can access information from government departments, banks and other organisations to check if all income is declared.
Remember, doing cashies is legal, you just have to sing them out on your tax return. Simple as!
If in the past you’ve left some income off your annual tax return, it’s better to beat IRD to it and make a full voluntary disclosure before they even find out. Your penalty could be reduced by 100% and you may avoid prosecution—if that’s not incentive enough!
The Government supports the trade and construction sector through Covid-19 initiatives such as the Small Business Cashflow Scheme, Wage Subsidy and Working for Families. If you fail to declare your cashies it might hurt our economy—and you in the long run.
It’s never too late to do it right! Let us know if you need some help and we will do our best to get your books up to date. Give us a bell or flick us a message and your favourite Outside go-to will give you a hand!
Your Outside Team
Address: Level 2, 182 Vivian Street, Te Aro, Wellington 6011, New Zealand
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