a question on casual work paid by cash

[rodimus]

I am just wondering, for those people who work casual, say as a waiter or as a therapist, and gets paid by cash, do they have to pay tax on that?

Actually, if they don't, how can the ATO find out?

say a person works as a garderner/cleaner only on weekends. He goes to people's house and they pay him by cash.

[The Y-man]

I think they rely on a thing called "honesty".
See the ATO section regarding "running a business or hobby?"
http://www.ato.gov.au/businesses/content.asp?doc=/content/nat2598_COBusiness.htm

Cheers,

The Y-man

[The Y-man]

BTW, if the "employee" is working as a waiter etc, the "employer" is probably in breach of several acts - from a taxation and probably OH&S/Workcover perspective as well.

I know of many overseas students who suffer burns and injuries at their "workplace" and can't or won't lodge a claim.

Cheers,

The Y-man

[blossomoz]

Not declaring wages received in cash is not only illegal but it could come back to bite you. The ATO keeps an eye on people who have 'cash' jobs. If you get caught it's all bad.
Also if you wish to borrow money, the cash wages not include in your tax return doesn't then appear in your tax assessment & that could make it more difficult to obtain a loan other than a low docs loan which will cost you more.
Cheer
Blossomoz

[Mry]

I am just wondering, for those people who work casual, say as a waiter or as a therapist, and gets paid by cash, do they have to pay tax on that?

Yep.

Unless they can argue that their entire work there was in pursuit of a hobby. A very long and arduous hobby taking up a long time each week on a regular basis, rather than a short and intermittent basis as time and primary income earning activity allows. The fact they receive money, in line with industrial awards matters not, for it is not their sole reason for being there. They enjoy it and would do it even if there was no money. In fact, most of the times the money they receive is to help compensate them for the direct costs of their hobby which can be over and above the cost of the hobby itself.

In other words, snowball in hell's chance of this working out.

Actually, if they don't, how can the ATO find out?

If this was a genuine inquiry, you would not need to ask this question. I mean, would you like a response on a public forum from experienced investors and accountants such as "They can't find out 'cause its cash! Rort the system and enter the cash economy baby!"?

say a person works as a garderner/cleaner only on weekends. He goes to people's house and they pay him by cash.

If little Mrs Jones needed her garden mowed since she can't move around any more and paid someone say $20 or less to do it who didn't do it for a living, I assume the tax office would not have a problem.

But if a person does it to such an extent that they refer to themselves as a gardener or cleaner at a variety of locations and brought their own materials, that would be taxable.

The fact that someone is paid cash or cheque has nothing to do with it.

[Peter 14.7]

Yep.

If little Mrs Jones needed her garden mowed since she can't move around any more and paid someone say $20 or less to do it who didn't do it for a living, I assume the tax office would not have a problem.

But if a person does it to such an extent that they refer to themselves as a gardener or cleaner at a variety of locations and brought their own materials, that would be taxable.

The fact that someone is paid cash or cheque has nothing to do with it.

This is good interputation.

Many teenagers earn income via babysitting or gardening and pay no tax. Whilst illegal the cost and time spent in having legal docs is such that if it was all legal they probably would never get the work.

Anyone who purposely go out to cheat the ATO if very brave. With GST, electronic banking cheques, and greater cross checking of personal details the risk of getting caught is greater than ever.

Furthermore the legal liablity ( again) is a minefield. If you accept cash to climb a roof to fix a loose tile and fall over you have record of engagement so no insurance and no financial support.

If you spray weeds with roundup only to find them to be prize flowers the owners could sue you personally for the loss.

And again, you may not ever get paid on completions. What agreement??

Other than minor jobs by teenagers for trusted nieghbours and frinds I would steer well clear.

You have to account for the money anyhow. YOu cannot just have "found" the money to buy that new car. The recent crackdown on Low Docs Loans show cash is not always king.

Regards, peter 147