Everyone loves a bargain
I’m well aware everyone loves a bargain, especially with tradies giving cash discounts. We all understand household budgets are being stretched to the limit by ever-increasing state government charges on electricity, car registration and water charges.
In the 41 years I’ve been in business, nothing has changed in one area, and that is so many people expect substantial cash discounts if they pay tradies in cash.
The Australian economy’s trade services sector is notorious for undercutting and giving cash discounts to clients who pay in cash.
Tradies who offer substantial cash discounts are tax cheats
Generally, tradies who offer substantial cash discounts are solo operators who pocket the cash and not pay for critical business expenses to protect clients such as public liability insurance. As a rule, they are also tax cheats which cost us all more in tax ultimately.
Cash discounts rip everyone off, including yourself when you have no invoice to prove who did the work, which means no guarantees if anything goes wrong.
Paying cash frequently means you have no guarantee
I have lost count of the number of times I have been out to defective and non-compliant plumbing jobs where the client cannot get hold of the original plumber who did the work. Frequently this is because they have no record of who did the work as they paid in cash for the work to be done cheaply. This results in the client paying twice to have the same job undertaken and often costs much more to rectify and make legally compliant.
The ATO and the Tax Commissioner, Chris Jordon are 100% correct in saying cash discounts were ripping “billions of dollars” out of the economy that would otherwise be going to services such as schools and hospitals.
Like most other business owners I am 100% supportive of Chris Jordon when he recently issued a passionate plea to Australians to stop paying tradies in cash as the ATO confronts a host of black-economy rorts that include the fraudulent misuse of ABN’s.
Stop paying cash for a discount
“Stop paying cash for a discount,” he has told taxpayers.“Because you are effectively cheating the system or helping someone else to. This is not a victimless crime. If you pay cash for a discount, in many cases you are effectively ripping off yourself as an Australian taxpayer, because this type of behaviour is what sees billions flow out of the tax system and into the cash economy.”
The Australian Government’s Black Economy Taskforce has estimated that the cash economy is now in excess of $25 billion a year. Simply this is $25 billion of cash transactions where no tax is paid in GST or PAYG or superannuation or company tax.
Always demand a legitimate tax invoice
I’m well aware some people like to pay in cash but don’t rip yourself off by not getting an invoice from the tradie who has done your work if you pay him in cash. As a precaution, you should always ensure that you are getting a legitimate ‘Tax Invoice’ with all the tradies details on it, including a legitimate ABN and their QBCC contractor licence number.
It’s effortless to check an ABN to ensure it’s not a fictitious ABN. All you need to do is go the ABN Lookup and type in the ABN. It is quick and easy to do but gives you the assurance that you are dealing with a legitimate business that is paying their fair share of tax.
Every tradie must have a QBCC contractors licence, and once again it’s very easy to check at the QBCC Online Licence Search. Remember if they don’t have a contractor licence, then you do not have to pay them.
The old cliche that you get what you pay for will always be true
Scarily the Black Economic Taskforce found 40% of ABN’s quoted where cash was paid to tradies, were false and were the Bunnings ABN. There is no suggestion Bunnings has done anything wrong.
The old cliche that you get what you pay for will always be true. There is no need to ever pay cash despite what some tradies will try and force you to do. It would help if you never let a tradie take you to an ATM where they sit with you, watching you take out cash.
In today’s world of instant payments, it pays to protect yourself and create a digital trail.
At Whywait Plumbing we will happily take payment in cash or cheque or credit card. But we will not give you a discount for paying in cash ever as every job is invoiced correctly and paid into our bank account.
Remember at Whywait we ensure you always know the cost of your job before we start the job.