Think twice before paying your staff cash
Paying your staff cash is perfectly legal, but it comes with a few strings attached that many business owners may not be aware of. Even if you pay your employee cash, businesses are still required to pay superannuation, payroll tax and withhold PAYG. In addition, they must retain accurate records and issue group certificates.
Whilst many workers enjoy the benefits and immediacy of cash not all of them are happy with businesses doing it. Last financial year more than 5,500 employees ‘dobbed in’ their employers for paying them cash, giving the ATO a long list of businesses to pursue.
The Turnbull government has recently set up a ‘black economy’ task force keen to crack down on the use of cash payments to avoid taxes (an estimated $15 billion in lost federal tax revenue ) by businesses, with a particular focus on the café, restaurant and hospitality industry in general.
Last financial year more than 5,500 employees 'dobbed in' their employers for paying them cash
In addition to risking civil and criminal penalties for not withholding taxes, businesses are also risking worker’s protection with exclusion from their worker’s compensation coverage if workers are officially ‘off the books’.
One of the main reasons that many hospitality businesses choose to pay cash for their casual workers is the time and cost of ‘on-boarding’ them in a compliant way. For a single shift or even a few, the time and effort required to recruit a worker and put them on the books in the traditional fashion makes bringing them on-board a real hassle. It is often simply ‘not worth it’ to incur all the on-boarding costs when you may only need them for a day or two.
The emergence of on-demand contractor platforms like Squaddle has made engaging a worker for a brief gig both easier and more compliant than ‘cashies’ where tax is not withheld. Instead of cash, EFT payments are made seamlessly within the app and business owners aren’t left counting out the change at the end of the night in order to pay a one-off worker. Invoicing and gig details are also retained within the app, making record keeping a lot easier.