Paying tradespeople cash in hand

I recently acquired another IP and have been getting some quotes for various work (plumbing/electrical). One of the tradespeople asked me if I was able to pay cash. Sorry for the naivety of this question but does this imply that they will not be supplying a valid tax invoice?

I won't be able to claim deductions for this work as the property hasn't generated any income yet however I think these expenses can be treated as a capital expense for future CGT calculations?

Thanks,
PD
 
I recently acquired another IP and have been getting some quotes for various work (plumbing/electrical). One of the tradespeople asked me if I was able to pay cash. Sorry for the naivety of this question but does this imply that they will not be supplying a valid tax invoice?
Correct...and they wont charge you GST

I won't be able to claim deductions for this work as the property hasn't generated any income yet however I think these expenses can be treated as a capital expense for future CGT calculations?

Thanks,
PD
Hence you really need a tax invoice should you ever decide to sell.
 
I recently acquired another IP and have been getting some quotes for various work (plumbing/electrical). One of the tradespeople asked me if I was able to pay cash. Sorry for the naivety of this question but does this imply that they will not be supplying a valid tax invoice?
That is correct, he won't be supplying a tax invoice.

I won't be able to claim deductions for this work as the property hasn't generated any income yet however I think these expenses can be treated as a capital expense for future CGT calculations?
Yes, you won't be able to claim an immediate write-off of repairs since the property has not been available for rent since you acquired it. But the cost of what you are doing can be added to the cost base - yes. BUT you really need a tax invoice - although, when you get your depreciation schedule done by the QS I suppose you could get them to estimate the cost of what you're doing.
 
They are also trying to avoid paying tax.
I would never allow anyone onto any of our properties without the appropriate insurance, and an official tax invoice.

I would rather pay a bit more to an honest trades person that is not trying to fraud the system! Unbelievable!
 
I would rather pay a bit more to an honest trades person that is not trying to fraud the system!
I heartily agree and support your ethics, Xenia. I don't know why people think that paying tradesmen in cash, knowing that they don't intend to pay GST and/or income tax, is anything other than making yourself an accomplice to fraud.

(And yes, I know poordeveloper, that you're not intending to do this, so I'm not pointing the finger at you. But lots of other people do think it's OK to participate in the cash economy.)
 
as a "Tradie wife" and business partner....we get this ALL THE TIME :)

Our way around it is to say SURE we can do cash ....but you realise that have no reciept ...hence NO GUARENTEE.(no sorry never heard of you :D )
Usually makes them think twice :D and we get the job regardless.

We are happy to take "cash" but in reality all we are giving you is a total/11 discount (100 + gst (10) =$110 .......to get back to 100 you divide 110 by 11)...we allow margin :D for the occasional GST dodger :D

As an investor ....PAY the gst...because you don't ...it is a claimable expense. the warranty or guaranetee is worth MUCH more (BSA can be as long as 7 years)
 
They are also trying to avoid paying tax.
I would never allow anyone onto any of our properties without the appropriate insurance, and an official tax invoice.

I would rather pay a bit more to an honest trades person that is not trying to fraud the system! Unbelievable!

I'll 2nd that....OH wait 3rd that.

How are are poor politicians meant to get pay rises if tradies don't pay tax?
 
Wake up guys. Every country in the world has a secondary cash economy. And Australia's is smaller than most. And its absolute chicken feed compared to the 'rorts' in big business, politicians etc.

If a tradie offers you a cash price. Ask for 10% discount for no GST and another 10% off for the no invoice cash price.

Basically a 20% discount or forget it. If its not tax deductible go for it.

And if a tradie stuffs up he should come back and fix it. Its defective work and the method of payment doesn't alter that fact. Its part of his trade licencing, not how he's paid.

The regulations don't make allowance for no warranty regardless of payment. The tradesman has to guarantee the job regardless. Method of payment is not in the building code jurisdiction, but quality of work is. (unless your unlicenced and doing cash work that is, then all bets are off)

When i was on the tools years ago i had cash all over the house. Loved it.

I used to love pulling my 'wad' of fifties and hundreds out and watch peoples reactions at shops and markets etc and peeling off a fifty. Great fun. Used to embarrass my wife a bit tho. :D
 
Wake up guys. Every country in the world has a secondary cash economy.
Something being commonplace and/or accepted doesn't make it right, though, evand. If the benefits of the cash economy were shared by everybody, I'd agree, but it's only a small number of people who are able to benefit from it, meaning that it has the effect of shifting the tax burden from tradies to PAYG earners (who really get screwed).

If one thinks the tax laws are ridiculous, the appropriate remedy is to campaign for change, not commit fraud.

But hey, I'll admit that my own parents don't agree with me. I remember as a teenager I declared my babysitting and tutoring income - which was all cash - and they used to shake their heads and tell me I was crazy. :D
 
And if a tradie stuffs up he should come back and fix it. Its defective work and the method of payment doesn't alter that fact. Its part of his trade licencing, not how he's paid.

The regulations don't make allowance for no warranty regardless of payment. The tradesman has to guarantee the job regardless. Method of payment is not in the building code jurisdiction, but quality of work is. (unless your unlicenced and doing cash work that is, then all bets are off)

While I agree with you evand. I was just pointing out that with no paperwork, I have seen tradies refuse to acknowledge they have done a job.
How do you PROOVE to BSA (or your states governing body) that the particular tradesman has done the job?
 
I'm an ethical person but i don't agree that accepting cash is fraud. Well, i suppose it is technically. Just that i think the existing tax system is unnecessarily punitive.

While your point is correct about the cash economy passing the burden to taxpayers - including tradies. Every industry has its rorts and the small amount of cash tradies accept is much, much smaller than most rorts or illegalities.

Hence my point about big business, politicians rorts etc. Legal, illegal, ethical and unethical....whatever. They are everywhere, every day in society. You cant really point the finger at tradies. unless you're Mother Theresa that is. ;)

They all pass the burden on, especially centrelink and insurance rorting. We all pay for this stuff.

But while i'm not saying its right. I just accept it as just part of life and society.

Something being commonplace and/or accepted doesn't make it right, though, evand. If the benefits of the cash economy were shared by everybody, I'd agree, but it's only a small number of people who are able to benefit from it, meaning that it has the effect of shifting the tax burden from tradies to PAYG earners (who really get screwed).

If one thinks the tax laws are ridiculous, the appropriate remedy is to campaign for change, not commit fraud.

But hey, I'll admit that my own parents don't agree with me. I remember as a teenager I declared my babysitting and tutoring income - which was all cash - and they used to shake their heads and tell me I was crazy. :D
 
You cant really point the finger at tradies. unless you're Mother Theresa that is. ;)
I try very hard not to be judgemental, because I'm definitely not Mother Theresa ;) and because I firmly believe that it's not my job to judge others. When I make these comments, I'm talking about my own thought process and how I come to my positions. But how other people choose to act is their business. :)
 
I don't see the big deal. I'm sure they already pay enough tax. We would be naive to think cash based businesses don't keep 2 books.

I always ask if it's cheaper for cash. The more I save the more profit I make. Ofcourse, I will decide whether I pay cash or not once the work is done. What's not honest? the proof is in the job itself. Even licensed tradies perfer cash.

For honesty, it's more important that the tradie quotes correctly rather than accepting cash. I can't stand tradies that try to rip ppl off. Especially concreters and landscapers...the price can vary by thousands. We've had concreters measure the exat same area by 15sqm too much!
 
Forget about the guarantee and them coming back to fix a job. Generally I have had no problems getting tradies to return to fix minor problems.

But --- what happens if you employ a electrician and 2 years down the track your house burns down due to a short in the work that the electrician did. Do you think that he will in anyway honor the original arrangement!!!! Its all fine and good 2 weeks later, maybe even 2 months later but beyond that unless you have proof forget it.

Cheers
 
But --- what happens if you employ a electrician and 2 years down the track your house burns down due to a short in the work that the electrician did.
Yes, and your insurer asks for the paperwork demonstrating that the work was done by a licenced electrician.
 
If you ever get done for income tax fraud Evand, make sure you include as your defence "its ok because all politicians are crooks".
 
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