Bob. Is. Back. This month, Bob sets a young bloke straight about working after hours.
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.
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 aunty slips you a few pineapples for doing couple of Mr. Fix Its around the house, that’s not.
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 if doing extra work on the side is not breaching the agreement you made with your boss. Secondly, you should never, ever do work that you are not qualified or licensed to do, even if it’s just a small job for a friend. 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 don’t have employees), it’s free, and the 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 aunty 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 audited once tax time comes.
The government recently introduced a whole lot of new tax breaks that benefit tradies but at the same time, every year the ATO warns tradies against tax evasion, too. The penalties can be harsh, so it’s always a good idea to keep all your business dealings above board – even if you’re just doing a quick job for a mate.
Best of luck with the extra work,