Some cash payments could land pensioners in trouble

Don’t forget to tell the taxman about your cash-in-hand bonus.

Some cash payments could land pensioners in trouble

Failing to declare some cash payments can land part-time pensioners in hot water with the taxman. While receiving remuneration in hard currency for a completed job is not always illegal, some cash-in-hand payments are positively frowned upon by the law.

What distinguishes the two is any attempt by the paying person or organisation to avoid  declaring the sum and failing to take out the right amount of tax to forward to the Australian Taxation Office (ATO).

The ATO recognises that some employers will pay cash-in-hand in a bid to dodge their taxation and employee responsibilities. The office advises that if you are paid in cash you need to:

  • be paid the correct award wages
  • ensure you don't end up with a large tax bill because your employer hasn't taken tax out of your pay
  • get the benefit of super contributions
  • be covered by your employer's workers compensation insurance
  • declare the cash as income when you lodge your tax return

  • receive a pay slip showing all your earnings and the amount of tax taken out
  • receive a payment summary at the end of the year setting out your full earnings for the year and the amount of tax deducted
  • check that your employer is making super contributions on your behalf.

In addition, any tips or gratuities you receive, whether from a customer or a boss, must also be declared as income for taxation purposes. Gambling wins do not need to be declared, unless you are a professional punter.

If you are supplementing your retirement income with cash earnings from the ‘sharing economy’ or selling items or services online, these payments, in most cases, will also have to be declared.

The good news is that, if you are single, you can earn up to $82 a week before your Age Pension is reduced. If you are a couple receiving the Age Pension, it will be reduced only once your combined earnings exceed $146 a week.

Receiving cash that is not related to employment also has to be declared to the Department of Human Services (DHS) if you are receiving a government payment. Generally, a rare gift of cash or prize winnings do not have to be disclosed.

For more details on whether you need to declare a lump sum payment in an income test for welfare, visit the DHS website.

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    COMMENTS

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    Cowboy Jim
    17th Jan 2018
    10:38am
    Should I mow the neighbor's yard every two weeks I would take cash; if having to declare it I would take it in beer or some such. Stupid losing some of your pension just to do someone a
    favor now and then.
    KSS
    17th Jan 2018
    1:41pm
    Except payment in kind is still payment!
    Anonymous
    17th Jan 2018
    5:01pm
    Yes - but one could claim that the booze was a gift.
    Pass the Ductape
    17th Jan 2018
    11:05am
    Never ends does it! Here we go again - attempting to grab every single lousy dollar off some poor pensioner, when people in business are ripping off the tax man for hundreds every week utilizing tax breaks and creative accounting. When is the common working person going to be allowed tax relief on fuel for travelling to work to earn a crust?
    Anonymous
    17th Jan 2018
    5:03pm
    "When is the common working person going to be allowed tax relief on fuel for travelling to work to earn a crust?"

    You can already, if you're transporting equipment necessary for the job.

    I totally agree with the rest of what you write.
    caporal
    17th Jan 2018
    11:30am
    yes , some public servants , were given a massive pay rise !!! Who cares about pensioners . they will not be around for long !!
    Triss
    17th Jan 2018
    3:06pm
    I think that's the Idea, caporal, getting pensioners to topple off the twig leaves money that can be used to raise politicians' and public servants' salaries.
    Anonymous
    17th Jan 2018
    5:04pm
    Cynical - but totally true.
    Charlie
    17th Jan 2018
    11:43am
    Why is this about pensioners, when pensioners are permitted to earn more than a person on unemployment benefits, without their benefits being affected.

    Why isn't this about welfare fraud.
    Blossom
    17th Jan 2018
    1:09pm
    I'm glad you mentioned unemployment benefits and amount you can earn. I know a guy, married with 2 young children (one only a newborn) who was retrenched when Fringe Benefits Tax was introduced and all the companies stopped buying new vehicles. He tried to find a job before going on the unemployment benefit. He managed to get 3 days casual work driving a concrete truck and declared it to Centrelink. With the wages he got and the amount Centrelink reduced his payment he got less than if he hadn't worked at all. Also he had to be at work before public transport started in their area so he had to drive the family car to work which meant some of his wage went in fuel, so he was even more out of pocket. No wonder people with families aren't keen to do part-time work. I believe New Start Allowance is less than some other benefits, you still have to search for jobs and pay fares to get there or drive your vehicle. It's rare you find one within good walking distance where you can actually safely see where you are in bad weather.
    KSS
    17th Jan 2018
    1:45pm
    Because Charlie, this is typical of the beat up 'reporting' on this site aimed at creating more outrage among those who need no encouragement. Veracity or applicability is irrelevant.
    Anonymous
    17th Jan 2018
    4:53pm
    Yes, Blossom, this is the system so many holier-than-though who have never experienced major disadvantage support so aggressively, and then they complain about a ''welfare mentality''. Well who wouldn't have a welfare mentality when it costs you heavily to get off welfare and staying on it is so much easier. Bash people down for trying, and then wonder why they don't! It's quite mind-boggling!
    Anonymous
    17th Jan 2018
    4:54pm
    It's also a very good reason for people taking cash illegally. If they declare it, they might as well not bother to work at all because they will be worse off than doing nothing. So of course there is a strong temptation to take cash and not declare it. Are the people who make these rules thoroughly STUPID, or just determined to ensure that the disadvantaged stay that way?
    Anonymous
    17th Jan 2018
    5:09pm
    @Blossom "With the wages he got and the amount Centrelink reduced his payment he got less than if he hadn't worked at all."

    It's ridiculous, isn't it: penalizing those willing to work (and finding some) while rewarding the lazy.

    @KSS. So true. But you left out YLC's bizarre feminist bias.

    @Rainey. "Well who wouldn't have a welfare mentality when it costs you heavily to get off welfare and staying on it is so much easier. ... it's also a very good reason for people taking cash illegally. If they declare it, they might as well not bother to work at all because they will be worse off than doing nothing."

    Amazing! Just this once, I agree with you!
    Charlie
    17th Jan 2018
    5:55pm
    I recall being on disability pension a few years back and I was allowed to make a clear $75 a week on top of the benefits, plus half of any other money I made in that week.

    17th Jan 2018
    5:00pm
    It's impossible for the ATO to be aware of most cash transactions. If I were to give somebody, say, $100, all the recipient has to do is keep their mouth shut about it, and I could say that the $100 was a cash withdrawal from my bank for purchasing groceries.
    Cowboy Jim
    17th Jan 2018
    5:58pm
    Most people around here still pay all their bills in cash, mostly at the post office. Why? I think it is a habit from the old days I use the
    post office as well but pay with Eftpos card. Using a credit card has
    become dearer the last year or so. Woolies and Coles no problem but
    Aldi slugs you.
    Pass the Ductape
    2nd Oct 2018
    6:37pm
    This is exactly why the system is forcing people into purchasing everything with a card Knows-a-lot! That way they can even keep an eye on where, when and what you spend every cent on. Be buggered if I use a card if I don't have to - I use cash where-ever I can! Talk about big brother. It's getting you can't go to the toilet without the swines knowing all about it.... Stuff em!
    caporal
    26th Jan 2018
    8:12am
    My wife and I are on the age pension . We did manage to save a few dollars that we kept at home . Now we would like to bank this money for save keeping . Should we notify Centerlink !!
    Bombers
    2nd Oct 2018
    10:12am
    Before I found full time work i worked in the disability sector. You could have a busy first week of the pay fortnight but because of the low cut off point of receiving the dole I was earning the high rate in the second week of $2 an hour! No one works for a measly $2 an hour. Pride does not pay the bills or get food on the table! Only when you can find full time work, when you can find it, is there the incentive to go off welfare.
    thommo
    24th Jan 2019
    5:07pm
    What a load of crap.. stop treating pensioners like scum and give them a universal pension and they then go into the tax system like everyone else....but perhaps that might be too hard for this govt to understand..