Nicholas Jones is a New Zealand Herald political reporter.

Tax-gatherers crack down on cash jobs

Attitudes to under-the-table payments are hardening, the tax department believes. Photo / Getty Images
Attitudes to under-the-table payments are hardening, the tax department believes. Photo / Getty Images

Inland Revenue is cracking down on the black economy after many tradies admitted knowing of cash jobs worth more than $20,000.

The scale of tax-dodging work is such that in Auckland, one in five tradies believe that more than 25 per cent of construction work is paid under the table.

The head of a builders' group has applauded the IRD initiative and said a research project backed his concerns about large jobs being undeclared by cowboy operators.

Grant Florence of the Certified Builders Association said his members and most builders paid proper tax, and it was not a level playing field when others didn't.

"It is for the larger jobs that I have a real concern around, where there are jobs running into the tens of thousands [of dollars] where there is no tax being paid. There has been a sense in the community that it is probably growing in the Auckland area."

The IRD said that despite its belief that attitudes to cash jobs were changing, undeclared cash jobs remained a significant problem.

"We know it is big, because when we focus on it we receive tens of millions of dollars of extra income," said spokesman Andrew Stott. "We also know that individually the size of it is big. The research said that 11 per cent of tradies say they know of a cash job of more than $20,000.

"That is a job being done where someone has received $20,000 in cash, put it in their pocket, and not paid any tax on it. And that is not fair to any of us who do pay tax, or to other tradies."

Last year, a two-month, $450,000 marketing campaign targeted sub-contractors on residential property projects in the Auckland suburbs of Flat Bush, Takanini, Silverdale and Albany.

A similar campaign will begin on Monday, and in future could broaden to include hospitality workers and independent contractors.

A Research NZ survey of 420 Auckland tradies - mostly builders but also electricians, painters, plasterers and plumbers - showed that two-thirds were aware of last year's campaign.

Results, which were not publicised but released to the Herald under the Official Information Act, revealed:

One in five respondents believed that more than 25 per cent of construction work in Auckland is paid under the table.

Of those aware of recent under-the-table jobs, 11 per cent were aware of cash jobs of more than $20,000.

Fifty-seven per cent of tradies said under-the-table activity was initiated by homeowners, and 17 per cent mentioned family and friends. An Auckland roofer told the Herald that he regularly used weekends to do under-the-table jobs, initiated by homeowners. The 25-year-old does a "cashie" roughly every fortnight, picking up about $600 to $700 cash for a Saturday's work.

"I do them regularly, a lot of the times through a friend of a friend, and most people who are looking for cash work aren't going to be causing any problems anyway. They want a deal, and I want to make more money, so away it goes."

Comparing the results to a 2012 survey, the IRD said there was evidence that such attitudes were changing.

Asked if it was okay to do under-the-table jobs if they are done outside of work hours, 53 per cent strongly disagreed (up from 27 per cent in 2012).

Half of tradies strongly agreed it was very likely they would be caught if they cheated on taxes (compared to 37 per cent in 2012). Only one in five would tell IRD if they knew someone who was cheating on tax (up from 9 per cent).

Mr Stott said Inland Revenue wouldn't know if more people accurately declared income until returns were made later this year, but initial signs were positive.

"From the first day of the campaign, we had one of the major tax agents give us a call to say, 'I've had over 1000 phone calls today with people asking to make sure that their cash income is being declared appropriately'."

Inland Revenue was not singling out tradies and ignoring other tax crime, Mr Stott said, and significant resources were devoted to corporate and white-collar tax avoidance.

25% of Auckland construction jobs are paid 'under the table', many tradies say
$20,000 Contractors who know of tax-free jobs say some are worth more than $20,000
57% of tradies say it's homeowners who ask about cash jobs.
Source: Inland Revenue

- NZ Herald

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