Aarrgghh! Crooked Tradies - So sick of them

[skater]

I am currently doing up the new PPOR. Got several quotes for built-in-robes and decided on one guy. He had to order the stock in for me and made an appointment to come another day to install.

All going well, until he asks if I have the money for him. Yes, no problem I say. He tells me the price, which is more than what I was quoted. I say you wrote it down for me and I have it here. He looks at it & says, well, if I wrote it down, then I'll have to do it for that price, but that is much less than what I charge. You will have to pay me cash.

I actually had that amount in cash on me, as we are doing quite a bit of work on this place, so I say that's fine, but I will need a receipt. Well, didn't the you-know-what hit the fan. He didn't want to give me a receipt because he's not going to be claiming it, nor is he going to be paying GST. I say I don't care what you are doing with your Accounting, but if you want to get paid, then you will give me a receipt.

He reluctantly scrawls the amount on a piece of paper and signs his name. He refused to write his name OR his Business Name because he might get caught. Stupid man forgot that he had given me his Business Card earlier, so I attached that to it.

Then I get quotes for some cement. Most of them give me two prices. The funniest one was a quote for around $6400k. I tell him that it was a bit expensive compared to other quotes I had been given, which it was. He graciously says he will knock the $400 off for cash as he won't have to pay the GST. Now, I might be a bit slow sometimes, but $400 doesn't come near to the GST component. If I am not mistaken the GST would be around $580 (I don't have my calculator on me, so can't work it out exactly), so he would profit by an additional $180 by doing a cash job as well as the income tax he wouldn't be paying on the profit.

The guy I eventually get to do the job gave a price. He didn't appear to be one of the dodgy ones as he didn't mention anything about cash jobs, avoiding the GST, etc. He comes, starts the job, then when he is nearly ready to pack up for the day asks how I intend to pay him. I tell him I will draw a cheque. "Oh, well I'll have to add 10% GST then" he says. I said that I was not told that, and he says that, yes, he always mentions that his price is cash, so he certainly did mention it.

By this time I am fuming. I ring Hubby & tell him he can deal with it. I've had enough! I am sick of people trying to rip me off!

Anyway, I get Hubby to deal with it. I don't know what he said, but apparently it is alright now. I still have to pay some in cash, but I will get a receipt for the full amount.

Are all self employed Tradies this bad. I am totally outraged that it is so rampant. How do they get away with it?

I've got the car-port guy coming next week. I hope that one goes smoothly.

 

[Jonathon]

I'm sure the ATO would be delighted to receive their details! I'm definitely not one for dobbing in tradies who are working in the cash economy, but the moment they try to rip me off is the moment I change and try to land them in it.

 

[BV]

Skater

I don't see what their problem is, they can have 2 invoice books
1 which they will show the ATO and a secret 1 for your renos...

Such guys deserve to be dobbed in and once that happens they are gone.... The ATO does not need evidence of foul play, they can see how much a person earns by how much he spends and from his assets (car, furniture, house etc).

An ATO audit will make them pay for all the GST they haven't paid so far and the fine will be so big they'll also pay the GST for all their future business transactions all in 1 go, upfront...

 

[skater]

Skater

I don't see what their problem is, they can have 2 invoice books
1 which they will show the ATO and a secret 1 for your renos...

Precisely! I know some that will do a portion of their work on the sly, so to speak. These ones do keep 2 sets of books. But what surprised me most of all, was that these guys appeared to do this with most (if not all) jobs. Not very bright either, as the wardrobe guy told me that he couldn't let me claim it, incase the ATO then went after him. As if the ATO, (even if I was audited) is going to check EVERY single place that I have receipts for. And since it is for a PPOR and I can't claim it anyway. I just want proof of it happening in case I need it at a later date, if something should go wrong.

 

[The Y-man]

You could say, "BTW, did I tell you I work at the ATO? I'm an auditor...." ...but then that would be lying wouldn't it.


Cheers,

The Y-man

 

[boods99]

Tradies can run a 100 different set of books, but their ABN will always tell the tale in the case of an audit.
Suppose that you were audited, the ATO will normally require all of your invoices to substantiate your claims for a small time period, usually 1 month. They can then check up on all of the ABN's that are on your invoices to check their validity. This is where a dodgy tradesperson can get caught. It's not necessary the tradepersons audit that catches them out, it can also be an audit on the person who they did work for.
Sneaky buggers hey!

 

[Project1080]

Skater,
Jonathon and Boods are both correct. The ATO would love to hear from you and they are gaining ever increasing powers and accesses to conduct data matching. It's not a matter of if they will be caught, but when.
To report tax fraud go to http://ato.gov.au/corporate/content.asp?doc=/content/00090701.htm.

They don't take a light hearted view of those ripping off the system. The courts are also upping the ante these days by providing more holidays at her majesty's pleasure. Have a look at the what's new page http://ato.gov.au/whatsnew.asp?tab=3.

What many people fail to realise is that ultimately, we all suffer. You beacause your taxes go up to compensate, the honest guy in opposition who can't compete so he goes broke, you again because the Govt can't cope with increased Govt handouts (sounds funny given the current payouts - teh debt that's gonna create is another thing altogether). If we were all as crooked it would mean no roads, no hospitals, no schools, no unemployment benefits, no pensions, no damn Murray river fix.

Whilst I'm all for paying as little tax as legally possible (RIP Kerry), ripping off the system, aka the taxpayer, aka ME!, is another thing altogether.

Love my country and what we have in comparison to many other countries (Zimbabwe comes to mind). The sooner the playing field is levelled, the better.

Geez, I'm on a grumpy roll this month. Next!

Project 1080

The project: 10 IPs in 80 mths.

 

[oasis1frog]

It's time we all dob in these scum tax cheats, no if, no but, period !!!! Lift the lid on these cockroaches. Surely those in the ATO with all the time in the world can think of something to catch these ...........

 

[Rockstar]

Are all self employed Tradies this bad. I am totally outraged that it is so rampant. How do they get away with it?

Hire me Skater. I make great rocks and I ALWAYS put every job through the books.

The worst thing for a self employed tradie rocker is a guilty conscience.

Saying this, you may need to make dealings very clear, particularly regarding gst, when these blokes give you the initial quote. Have the recorder going on the mobile hiding in your pocket while you verbally clarify the quote with them.

 

[Gee Cee]

I remember when GST came in it was supposed to clean up this sort of thing.

As soon as it appeared all the older tradeies could not understand it or be bothered with it.

Every time you wanted a quote it was like I Only do Cash Jobs,

No good to me mate.
I need a receipt to claim against the cost of this project.

Like you say it is pretty well rampant throughout the system.

 

[toylux95]

Myself as a tradie i find that most small jobs people are always just wanting to pay cash soo as they get the job done for cheaper. Sometimes paying in cash you will save some money but not all tradies like to accept cash but are forced to soo as we get some work in these times. That is another reason why some of these tradies are probably trying to cut corners.
Im not making excuses for them. because they are blatently trying to get money at the end when the jobs done.

 

[Propertunity]

I remember when GST came in it was supposed to clean up this sort of thing.

Well it does & it doesn't. I guess we can take heart that they have to pay GST when they spend on consumption. So even if the ATO only gets 1/2 the tax - it still gets 1/2. Better if they did the right thing in the first place though.

 

[RumpledElf]

We've had a few things done cash, some through 'mates', some from a local chap who advertises (and is very cheap). The cheap guy is really vocal and was fixing one of our windows singing "I hate my job I hate my job" at the top of his lungs because our windows weren't square ... although I guess it isn't really cash because we do it via bank transfer.

But we're primarily DIY so when we do get things done for us, they tend to be big enough that we need proper licensed folks and we need that COC more than the receipt, and we've never had any hassles with receipts and invoices and COCs and stuff.

 

[atti]

fixing a crooked window is bad had that experience today just trying to patch up the window, i used a square to cut all my pieces and it didnt came together as planned.

out comes standley knife now my gyprock looks crap and theres like a 3-4mm gap.. i wanted it to be flush so i didnt had to replaster too much =\

 

[boods99]

Having been a tradie (I suppose I will always be one by default) I know exactly what it is like to partake in a little bit of "cash money" It was something that I did when I was quite young (hopefully there is a statute of limitations that applies here - ATO )and got to be a bit of a problem as we would find that we had literally thousands of dollars in cash in the house, but were too afraid to put it in the bank in case we got sprung.
In hindsight, it was probably not the smartest thing to do. This was all before my romance with property investing had begun, and before I knew to keep every receipt so I can claim it against my income.
What I am trying to say is that, although it's a big no no, it is very easy to fall into the trap of doing cashies as it makes a tradie's life a whole lot simpler and profitable.
That all I got to say 'bout that.
Boods

 

[Perp]

skater, that's absolutely outrageous behaviour, and I'd have no compunction about providing the ATO with their details.

They can't decide to "add GST". By law, their quote must include GST, unless they give you a written quote which explicitly states "excludes GST", so that you're well aware that the "real" price is higher.

They also must put their ABN on the receipt; it's a legal requirement.

As you point out, skater, if they're going to do a cash job, the discount has to be at least 30-35% for it to be worthwhile (though even then you shouldn't do it). You lose deductibility, and they're not paying income tax. It's absolutely not worth losing deductibility for the sake of a 10 or even 20% discount. People who are willing to pay cash for a 20% or less discount on work on an IP are crazy - you're making yourself a party to fraud, AND the work's costing you more than if it were deductible.

The losers are the ATO and yourself; the only winner from that transaction is the tradie. Why would you risk being on the wrong side of the law for the tradie's benefit?

 

[BV]

I remember when GST came in it was supposed to clean up this sort of thing.

How?

It made it better for a lot of people because now they can collect 10% more and by having multiple invoice books they don't need to pay it.

To clean up the industry the ATO needs to provide businesses with barcoded receipt and invoice books which cannot be easily duplicated.

They should also give penalties to people who agree to pay cash and don't ask or don't take their receipt. It's doable, it's a hassle for businesses in the beginning but it can work and for the ATO it will be very profitable.

Here is an idea mr Rudd.
Implement this and you'll get my vote.
You will get a lot of money from this and you'll be able to afford to situmate us a few more times...

 

[evand]

Not all tradies act in the way you are describing Skater. In fact a pretty small percentage, most are honest. I would like to ask which area you are sourcing the trdaies from? That might have something to do with it.

As a contractor working in Sydney for a long time in the building industry its funny to read so many opinions on here from people that havnt got a clue what they are talking about.

The ATO have trouble catching large white collar criminals, they wouldnt care if you reported a small one man tradie business dodging a couple hundred bucks in GST. They dont have the resources for that stuff and sort of turn a blind eye to it. (and i have a friend in the ATO audit department to verify this. He tells me most of it is bluff to keep people in line with very,very few being audited). Get with reality guys.

 

[BV]

Evand

Yes sleep well mate and one day you'll hear your door bell ringing.
It will be the ATO

A cousin of mine got audited by the ATO (someone dobbed him in for not issuing an invoice) and the fine was so big it took him a decade to stand up on his feet again.

I hear the low resources excuse a lot these days.
Rest assured, this issue can be fixed by employing more officers.
How long does it take to do this?
6 Months 1 year?

Until now the government didn't care to chase up tax cheats because there was plenty of surplus to go around.
Now that the budget is in deficit, they'll have to find juice somewhere and tax avoidance is an easy one to chase up.
If they need more auditors they'll get them.

 

[evand]

yawwwnnn....been there done that. No worries mate.

Of course they have always had limited resources so they go for the biggest bang for their buck. Always have, always will.

I had a one man painter friend that was audited, he had his accountant with him and the auditer picked up a few...lets say..anomolies.

He just arranged to pay them and good as gold. I'd say your cousin had more than one dodgy invoice to worry about if it took him 10 years to pay the fine/back payment. Or he was on the dole.

Very scary story tho, the type of BS i hear all the time.

Evand

Yes sleep well mate and one day you'll hear your door bell ringing.
It will be the ATO

A cousin of mine got audited by the ATO (someone dobbed him in for not issuing an invoice) and the fine was so big it took him a decade to stand up on his feet again.

I hear the low resources excuse a lot these days.
Rest assured, this issue can be fixed by employing more officers.
How long does it take to do this?
6 Months 1 year?

Until now the government didn't care to chase up tax cheats because there was plenty of surplus to go around.
Now that the budget is in deficit, they'll have to find juice somewhere and tax avoidance is an easy one to chase up.
If they need more auditors they'll get them.