Why should tradies be prosecuted for doing “cashies” and not paying tax?





"My name is Mr Smith. I am from Inland Revenue and I am here to help."
“My name is Mr Smith. I am from Inland Revenue and Bill English sent me to help.”


Before we go any further, just to remove all doubt from certain quarters, as the IRD points out with crystal clarity;

“New Zealand does not have a capital gains tax.”


IRD - capital gains tax - investor - speculator


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IRD - new zealand does not have a capital gains tax



Meanwhile, the IRD today (5 May) announced a crack-down on ‘tradies’ and other businesses who  do “cashie” (cash) jobs whilst not declaring that income with Inland Revenue and subsequently not paying their full measure of tax.


IRD - crackdown on cashies jobs


First of all, let me state that  everyone should pay their taxes. Without a comprehensive taxation system, our infra-structure would never have been built and our social services would be non-existent.

We need taxes for our education system; our public healthcare; judiciary; housing; police; DoC; border controls; public transportation, et al. As Inland Revenue’s marketing and communications group manager, Andrew Stott, stated in a NZ Herald report;

“Tax in New Zealand pays for many of the things that we enjoy about this country and so it’s important to encourage everyone to do that.”

But it’s a bit “rich” (excuse the pun) for the IRD to be clamping down on an underground “cash” economy  when we have – in broad view of the entire nation – a massive tax loop-hole costing society billions in lost tax-revenue.

I refer to a lack of Capital Gains Tax (CGT).

A tradesman is expected to pay tax on thousands or tens of thousands of dollars received for sub-contracting jobs.

An investor/speculator can pocket hundreds of thousands (perhaps millions)  of dollars in Auckland’s over-heated property market – and not pay one dollar in tax on profit;


People making more on their homes than they earn at work - nz herald - auckland property market - daily blog - capital gains tax


In effect, the current taxation system rewards doing very little work. For “Jonathan”, a property investor/speculator, he will just sit back in his Italian-leather recliner-rocker; and watch property inflation increase values. Then cash-up and make a tax-free windfall.

Meanwhile, “Gazza”, a tradesman living across town  to the property investor/speculator, gets up at 6am; goes to work in cold or shine; rain or fine; puts up with the risk of workplace injuries (or worse); goes home; and repeats the next day. For his efforts, he is taxed. And if he dares pocket a dollar without paying a percentage to the Taxman – he can be fined 150% plus interest; taken to Court; perhaps even bankrupted.

The latter is called “a mug’s game”.

Let me demonstrate this  with a highly complex, detailed,  financial diagramme;


Taxpayer and Speculator
(L-R) “Gazza; works six days a week; earns $150,000 p.a.; pays income tax on earnings plus GST on any new home he builds – “Jonathan”; works in his garden tending to his geraniums; made $1 million selling three houses in Auckland he bought a few years ago; paid nil tax.


“Gazza” then gets a letter from IRD saying he’s being audited because he  may have done a few “cashies” sometime in the last few years when things were a bit lean after the GFC. Seems he forgot to pay tax on a few thousand dollars.

Meanwhile, “Jonathan” thinks he and his wife will enjoy a round-the-world cruise with their tax-free gain.

“Gazza”, who built the houses, paid tax on every cent he earned (except for the “cashies” he  may or may not have done elsewhere).

“Jonathan”, who has lifted a hammer only to put a picture up on the wall, who built nothing, and simply bought and sold existing houses – paid nothing in tax.

Only in New Zealand do we have a law going after the battlers like “Gazza” – who actually get up each morning to build new houses. National and ACT think this is a perfectly sane state of affairs.

“Mr Smith” from the IRD is knocking on “Gazza’s” door.

“Gazza” wonders why he bothers getting up in the mornings.

“Jonathan’s” geraniums are  doing very well.


Stuart Duncan sold his 1982 fibre-cement home at 116 Oaktree Ave in Browns Bay in November 2013 for $751,000.

Now the new owners have on-sold for $1,205,000 – despite doing little work on the property – giving them a 16-month profit of $454,000 – about $940 a day.

“I’m still in shock,” Mr Duncan said after learning how much his old property fetched. “It’s just disbelief.

“It was an 80s house, three-bedroom do-up. Where is the market going? God help New Zealand.”

NZ Herald

I doubt if we’ll be receiving much assistance from an invisible supernatural deity. Not when New Zealanders seem unwilling to help themselves sort out this crazy mess. And not when we, as a nation, keep re-electing a government hell-bent on doing nothing about a crisis that has spiralled out of control.

We have only ourselves to blame.




IRD: International

IRD: Residential Property

Fairfax media: Cash jobs crackdown by IRD

TV3 News: IRD launches campaign to crack down on cash jobs

NZ Herald: IRD chases down tradies’ cashies

NZ Herald: People making more on their homes than they earn at work




= fs =


  1. That FAQ on residential property investors is useful to know. However, are there similar FAQs covering the speculator and dealer in the same manner as investor has been described? It would be interesting to see how the issue of capital gains has been dealt with for speculators….

  2. Most of these traders would be classed as small businesses, right? Well then, just another example of how National treats small business owners like dirt whilst letting the big fellas get away with million dollar tax dodges. And before the Nationalphiles start bleating that it is only IRD administrative policy, not government policy, if you imagine IRD doesn’t do exactly what the government tells it to do, then you are naïve fools.

  3. Yep more miserable neo-liberal stinginness that makes little sense. Taxing productive enterprise, while letting unproductive speculation run rampant.

  4. That was exactly my scream when I saw the PATHETIC news item on NZ state propaganda TV.
    It’s as if I live in a different world to the NZ corporate Lame Street Media.
    The justification for the IRD was everyone should pay their taxes and the IRD make a good return on the money they invest-spend on catching ‘these people’.
    Well lets have an independent person comment on the relative ratios of chasing speculators in the housing market. And the speculators aren’t even tricky about hiding whats going on.
    It’s absolutely pathetic, how can JK get away with such ignorant replies (bar the compliant ‘brown nose LSM’) when he out right lies……’it won’t work’, it’s not working else where…..utter tosh that the LSM LET HIM GET AWAY WITH. i.e. they’re complicit with the rorting of the IRD tax collection and the ruining of this lovely country.
    Welcome to the new NZ where 99% of Kiwis will be serfs in their own country to wealthy overseas people who were offered a MASSIVE tax break (thanks to JK and the morons in the National party) to take over the running-control of NZ.
    Oh yes I forgot to mention, a FEW Kiwis will make some money en-route, but it’s CRUMBS from the table with the mega rich (invariably foreigners) making the killing, eating the cake on the table.
    And people wonder how other countries can fail and ALLOW bad things to happen in their country……….

    p.s. your ‘Gotcha anti spam’ DOESN’T work properly !!!!

  5. We just sold two properties we’ve had as rentals. Paid not one cent in tax. Netted a cool half million. We have three more to sell, closer to retirement. All tax free.

    This is one of the reasons we moved here to NZ, no capital gains tax. Lovely jubbly.

    Its also why we’ll continue to vote for John Key. No tax payable.

    Your right about one thing Frank, working for a living is a mugs game.

    • You are evading tax then. If you were not living in these houses and you sold them at a profit that profit forms part of your income for that year and as such you need to pay tax on it. I’d agree with Frank in that the IRD needs to crack down on tax evaders such as yourself Bee and I urge you to abide by the law.

      • For once I agree with Gosman, he’s correct. Also, I wouldn’t have said that in a public place if I were you (Bee).

      • Hey Frank – Gosman agrees with you. Should he tithe you some of his troll money for being enlightened by you and the TDB?

      • [You are evading tax then.]

        Not necessarily. It looks as though they were purchased for the purpose of earning rental income.

        • So what? Why should income gained from selling properties be tax free? That’s the entire point of what is being discussed here.

          Just because someone gets $100,000 from working and $500,000 from selling sometime doesn’t make a blind bit of difference. In the end, you ended up with money you didn’t have before.

          Wouldn’t it be nice if I could tell Bill English; “Sorry mate, I don’t feel like paying tax. The money was put into my account on Monday instead of Friday, and that makes a big difference.”

          Yea, nah.-+

    • I hope you retain your smug disposition when the torches and pitchforks are amassing in your driveway. Tick tock, tick tock.

    • I will give you the benefit of doubt – you are playing the devils advocate to get reaction that might achieve a change – once you have completed your profit taking. And how much did you say you were donating to charity for those less fortunate?

  6. Gazza’s predicament is not really an argument in favour of CGT’s, but rather an argument for abolishing income tax. Perhaps we should do just that and have the government find some other source of revenue, though I doubt a CGT would fit the bill.

  7. We sold our late parent’s property in 2006 for $600,000. The purchaser, who was an investor, has just sold it, my brother tells me, for $350,000. Would he be entitled, if a CGT was in place, for a tax rebate on the $250,000 capital loss? He would already have paid tax on the 8 years’ rent he has received from it.

    The property was in one of the regional cities.

    • I suspect that if the investor had maintained the property rather than treating it like a Tranz Rail investment, then it may have held onto more of its purchase value.

    • Mikesh – The property went from $600,000 in 2006 to $350,000 this year?! And it was in a regional city?!

      Unless a bunch of crims were cooking ‘P’ throughout the property, how on earth does a house devalue by almost 50% in nine years?!

      Even Dunedin’s property values have been rising.

      • “Unless a bunch of crims were cooking ‘P’ throughout the property, how on earth does a house devalue by almost 50% in nine years?!”

        Search me.

  8. Going after cashies has a range of upsides, the least of which is hitting lower paid earners in the pocket.

    Another flag diversion, whip up a storm where there is none. Diverting attention away from the real tax dodgers – the rich. (you only have to look at Bee’s comments above “lovely jubbly”). How much “social responsibility” does the country get with attitudes like that?

    We’ll get the books back in nearly surplus if we shut that loophole (like paying GST on goods bought overseas). What’s the point of having a high value NZ dollar? Petrol’s not cheaper? Bill English is scrambling around trying to find coins down the back of the settee because the election’s coming soon and the books haven’t shown a surplus yet.

    VNZ’s debt clock When you go to this link you’ll note it’s the nationaldebtclock – there’s some irony there.

    Cashies will take care of ponytails. It gets the public thinking about another issue other than ponytail pullers. The smear will be out soon that some waitresses are doing cash under the table shifts?

  9. All these taxes and suggestions have one thing in common: they’re a boon to lawyers, accountants, enforcers, politicians and lobbyists, with their complexities and exceptions and enforcement overhead. Just another cost of government, a burden on the rest of us. The complexities are a distraction to keep us arguing and prevent us from really thinking globally about the overall tax structure.

    Go for a simple and universal financial transaction tax and kill these overcomplicated others. It can be administered by a few lines of computer code, like the present tax on bank interest, and done within the same computer for practically zero cost. Save social and dollar expenditures on the financial complexities and hit the wealthy for their fair share, both at the same time.

    • @MAD TOM (btw loved your work in King Lear)

      There would have to be an ACT neoliberal algorithm that the rich pay less of a financial transaction tax because erm… erm… their shit doesn’t stink?

      The poor should pay more of a financial tax because erm…erm …um… oops the neoliberals won’t be able to justify that so just introduce it anyway and give it an acronym that no-one can decypher.

  10. Yes, you are right, Madtom, a GST is not the right answer to the problem. It only has validity when we have run-away house price inflation. As long as the government does not build enough houses, and as long as we allow non-Kiwis to buy up our real estate, the problem will persist.
    If all land was held in trust for all Kiwis by the government, and the land on which a house stands was simply rented out by the state on long term lease there would be nothing to speculate on since it is the land value, not the house value, that appreciates. If real estate was stabilised this way there would be no capital gain to tax. All this was explained over a hundred years ago by Henry George wasn’t it?

  11. Nice work DTB. We need comprehensive CGT especially for windfall gains acquired by sitting on assets and adding no value. We also need LVT and the removal of negative gearing (NG) that allows speculators to claim “losses” against their tax obligations.

    As a self employed contractor facing stiff ACC, GST and income tax I have had a gutsful of a tax system that bleeds workers while hardly touching the new gentry who hoard all the wealth.

    • Ropata, I kind of had battlers like you in mind when I penned this story. It can’t be much fun for you and your co-workers and colleagues to be working your guts out; paying an “alphabet soup” of taxes – and then seeing others making huge windfalls and not paying their share.

      This simply is not the fairness which we Kiwis once prided ourselves on.

      • That’s the nail’s head you hit, Frank. The complexities in that alphabet soup of taxes are the end result of the battles fought among those with money and power to shift the tax burden to someone else – anyone else. Of course there’s always a cover reason that sounds sensible or nice, but that doesn’t stand up to analysis. Is it any surprise who ends up benefiting and who suffers?

        That’s why the whole mess needs to be swept away and replaced with a simple and very difficult to evade tax that raises funds directly from those that actually have funds. Including corporations, which after all claim the rights of people and should also share the burdens.

        Surely fairness says that we don’t want to collect more taxes from those quietly living in a house whose price is rising due to excessive immigration, foreign purchases that should be outlawed, or other government or Reserve Bank actions, but whose income is not rising accordingly. So all the talk about CGT is a diversion, leading to exemptions and more complexity.

        Arguing over details of the multitude of taxes leads to exhaustion and confusion, which only serves those who now profit from the unfair system. Let’s apply some intelligent goodwill and do better than that.

    • The elephant that everyone seems to be ignoring is the income, in the form of free rent, enjoyed those who live in their own homes.Taxing this income would be fairer, and more lucrative for the IRD, than imposing capital gains taxes

  12. You can be for a CGT but please don’t forget that property investment is taking a risk, just like any investment, and the profits made are not undeserved.

    • The same could be said of any activity, Ben. No one has said why property investment is a “risk” – especially in Auckland where valus are rising by nearly $1000 per month.

      By all means, take risks. But that doesn’t mean you don’t pay your fair share when you make a profit. Just ask “Gazza”, who risks going to work every day.

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