| The other day I received a quote for some work to | | | | better off, but no way. The worker can be sacked at |
| be done in the office. | | | | a moments notice; there is no cover for workers |
| Business Owners | | | | compensation in the event of an accident at work, or |
| The price quoted was $489.50 including GST or $445 | | | | even on the way to or from work. There are no paid |
| cash. Now for some people this may seem like a | | | | holidays and no superannuation. The other point is that |
| good deal but for a business it could not be worse. | | | | on $200.00 per week there is no tax payable. |
| Problem 1, there is no receipt therefore no tax | | | | Home Owners |
| deduction. This means I have to earn $635.71 in order | | | | For the home owner if you are given two quotes, one |
| to pay $445 cash to someone, so why would I bother. | | | | for say $2,000 and the other for $2,400 including GST, |
| Problem 2, there is no warranty and if the work is sub | | | | then take the $2,400 job. You get a receipt and have |
| standard you have no come back on the tradesman. | | | | some peace of mind regarding follow up if something |
| Employers | | | | goes wrong. If, in this case the materials cost $1,000, |
| The same applies to people in business that pay their | | | | the tradesman receives $1,400 after expenses. He |
| staff cash in hand, without putting them through the | | | | pays $127 GST and, on 30% tax, pays around $382 |
| books. You pay young Johnny $200.00 per week. For | | | | tax, giving him a net profit of $891.00. |
| this there is no tax deduction. If your tax rate is 30% | | | | If you paid the cash price the tradesman would have |
| then you have to earn $285.71 in order to cover | | | | made a profit of around $1,090.00 some $200 more. |
| Johnny's wages. | | | | So unless the tradie wishes to share this with you, get |
| If you put the $200.00 through the books then you | | | | a receipt. |
| would only need to earn $230.00 to cover the wages, | | | | In the same example, if the materials only cost $500 |
| meaning you are around $55.00 per week better off. | | | | the two profit figures would have been $1,209 in the |
| Where does the $230.00 come from, you pay 9% | | | | case of a receipt and $1,945 in the cash instance. So, if |
| super = $18.00 and about 6% workers compensation | | | | the Tradie is making an extra $700 out of you |
| insurance = $12.00. | | | | because you paid cash, then he needs to cut his price |
| Employees | | | | by a lot more. |
| From an employee point of view, he may think he is | | | | |