Author: Steve Ryan – this article appeared in the May 2018 newsletter
The ATO is targeting employers paying wages in the form of cash.
While this is not illegal, some businesses deliberately pay wages in cash to avoid tax and employee obligations.
If an employee receives cash for work, they need to:
- Be paid at least the correct award wage
- Ensure their employer is taking tax out from their wages for PAYG tax withheld. Otherwise, the employee will end up with a large tax bill at the end of the financial year
- Ensure they are receiving the benefit of superannuation. It is illegal for an employer to avoid paying super.
- Be covered by your employer’s worker’s compensation.
Employees who are paid ”cash in hand” need to declare their income when lodging an income tax return.
An employee should still receive a payslip with their earnings and the amount of tax taken out.
They should receive a payment summary at the end of the financial year, setting out their earnings and tax deducted.
Lastly, employees should check with their employer that super contributions are made on the their behalf.