G’day,

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.

Cheers CWBTS,

Dan

CWBTS SAYS: 

Great question Dan, I’m sure you’re not the only one wondering about this mate. 

For starters, the most important thing is understanding what is illegal and what isn’t. In Australia, across all states and territories, it is illegal to be paid in cash with the intention of avoiding paying tax. For example, it’s okay to be paid in cash by your boss if they pay tax on your behalf. What’s not okay is if your friend slips you a couple of pineapples for finishing off their deck. That’s the straightforward part. 

There is a way you can make working extra (cash in hand) jobs on the side legal, but there are a few things you need to look into first. Firstly, before you do anything, it’s important to check your employment contract at work to make sure that doing extra work after hours isn’t breaching the agreement you made with your boss. Secondly, you should never, ever, do any work that you are not qualified or licensed to do, regardless of if it’s a small job for a mate or not. 

Now, if you’re still wanting to do work on the side and your employment contract gives you the all clear, here’s what you need to do. When it comes to tax, the best way to make sure everyone is happy when you complete jobs outside your normal duties is to register for an Australian Business Number, or ABN. It’s free to register as a sole trader (which means that you work by yourself without any employees) and the ABN you get is then attached to your Tax File Number. This means that doing your tax return is straightforward, and much less complicated than you might think (however I recommend always using an accountant for tax stuff, but that’s a story for another time.)

Once you have an ABN, next time you help your mate with his deck and he pays you in cash, you can deduct the tax from that amount and pay it yourself. This keeps the Tax Office happy, and means you can help out as many people as you want worry free. It also means you won’t get audited once tax time comes. 

While it may not seem like a big deal to help out a friend or family member for a little bit of cash, the penalties of tax evasion can be harsh. It’s always a good idea to keep your business dealings above board, no matter how small the job. 

Best of luck with the extra work,
CWBTS