Ask Bob: What’s the deal with cashies?

Every month, our resident expert Bob answers a question to solve an issue being faced by a real-life tradie, and sets them straight when it comes to life on the construction site. 

This month, Bob sets a young worker straight when it comes to working after hours as a tradie. 

G’day, Bob

G’day,

I work fulltime as a chippie and a few friends and family members have asked about doing work for them on the side. Nothing major, just repairs, building a deck, stuff like that. It’s not like I’d go off and build a house all on my own! Just wanting to know if it’s okay to do work like this, you know, in the eyes of the law, especially since they’re all offering to pay in cash.

Cheers Bobbo,
Sammy

Bob Says:

Sammy, good to hear from you mate.

Well, this is a bit of a complex issue, but one part is pretty straightforward: in Australia, across all the states and territories, it is illegal for someone to pay you in cash with the intention of avoiding paying tax. 

So, if your boss pays you in cash but they are paying tax on your behalf, that’s okay. But, if your auntie slips you a few pineapples for doing couple of Mr. Fix-Its around the house, that’s not.

But before we start on the money side of things, I need to get a few things out of the way. 

First off, it’s a good idea to check your employment contract at work to see whether or not doing extra work on the side is breaching the agreement you made with your boss. This should be your first priority, since your job is your main source of income and you don’t want to cause any issues in the workplace you have to be at every day of the week. 

Secondly, you should never, ever do work that you are not qualified for or licensed to do, even if it’s just a small job for a friend. Too many people overlook this point, and it’s dangerous for everyone involved. Got it? Good. 

Tax wise, something you can do to ensure everything is kosher when doing jobs outside your normal duties is register for an Australian Business Number or ABN. If you register as a sole trader (that means it’s just you working and you generally don’t have employees), it’s free. 

An ABN is attached to your Tax File Number, so it makes tax returns straightforward (although I recommend always using an accountant for tax stuff — but that’s a story for another time).

If you have an ABN, when your auntie pays you in cash, you can deduct the tax from that amount and pay it yourself. Then everyone is happy, especially the Tax Office… which means you won’t get any nasty surprises if you get audited once tax time comes.

Another thing to consider is that the government recently introduced a whole lot of new tax breaks that benefit tradies, which is great news for us in the construction sector. But at the same time, every year the ATO also warns tradies against tax evasion. The penalties for evading tax or completing your tax returns incorrectly can be harsh, so it’s always a good idea to keep all of your business dealings above board — even if you’re just doing a quick job for a mate.

Best of luck with the extra work,

Bob

This article has been updated and republished on 25 December 2022.