Have you ever had a customer ask you for a special price if they pay cash? It can be tempting and sometimes there is still benefit in receiving cash payments upfront for job completion purposes. It is important to always record the job and declare the income for tax purposes, irrespective of whether you provide the customer with a discount or not.
While the IRD recognises that tradies’ attitudes towards tax compliance are more positive and most people are doing the right thing, they have announced that they are taking a hard look at tax crime in the construction industry. Undeclared cash jobs can have negative consequences for your business. They can have the effect of making the profit in your financial statements appear to be less than what it should be which could be looked upon negatively by the bank when you are wanting to take out a loan. It can also result in tax penalties, a criminal conviction that can affect your ability to continue to work, and even prison time.
To avoid these issues please ensure sure that you:
If you’ve received cash before and left it out of your tax return tell us now so that we can assist in putting your returns right, it’s not too late.
Should you require assistance with any of the above please don’t hesitate to get in touch with us.
For more information from the IRD check out: www.ird.govt.nz/getitright