My friends boss doesn't want to put her on the books which means she doesn't have to pay tax .?

Question

this means she dosn't pay tax on the mony she is given. can she get in to trouble for this if the A.T.O find out??

Answer 1

I am an Australian answering your Australian tax question (why do so many non-Australian answer in this category???)

Your friend will not get in trouble as long as she declares the income in her tax return.

Your friend is legally obliged to declare the income in her tax return whether or not not the employer withholds PAYG and she must be assessed to pay tax on it with or without a PAYG withholding credit to offset against the gross tax levied on her taxable income.

The ATO are very busy cracking down on the cash economy and these days they have enormous funds and technology on their side. The ATO says to Treasury "For every $1 you give us we'll bring you back $3 in tax audit revenue" so they know it's a profitable venture to track you down.

How will they track you down? When they discover the boss who is evading his PAYG withholding obligations they will examine every book, email and scrap of paper to find out who his employees are and then they'll check the tax returns of those employees. So they'll reap in penalties and tax from both sources.

The penalties for not disclosing income not declared in a tax return BEFORE an audit are much less severe than AFTER the event. It's never too late to set things straight with an amended tax return and a humble admission

Remember - IGNORANCE of the tax law is NEVER AN EXCUSE and if you didn't do the return yourself you can't pass blame onto the tax agent who prepared your return because the tax agent relies on the info you give them and you signed that the info in the return is true and correct.

...when I write "you" I mean "your friend" - "you" was just faster to type :)

Answer 2

How big is mount Everest....... thats about the amount of trouble that is headed your friends and bosses way.

The ATO can and believe me DOES find out about this kind of thing and your friend will have to pay back taxes,
interest and penalties and possibly a Jail term.
I suggest your friend thinks long and hard for two reason not the least is their own self interest becasue if they are not on the books, they will have no work cover insurance or super annuation (both are legal obligations designed to protect workers). The second is obviously the tax impact.

I have dealt with these characters before and not met one happy employee as it appears that people willing to behave in such an unlawful/antisocial way tend to treat their "off book" employees pretty shabilly and often the employees go running to the ATO becasue they havent been paid or are being ripped off.

I would reccomend yu contact the tax evasion line at the ATO and save yourself a lot of trouble.

Answer 3

This is actually fairly common. The employer is going to get into more trouble than the employee. As an employee you can always say, but I signed the tax form, I don't know what happenned?

Jail time is not very likely for an individual in this position, but it could cause big problems if you are also collecting social security payouts while working.

The real problem is that this boss is simply the sort of person that likes to cheat people. He cheats the tax office, then he will cheat your friend. Generally I have found if someone wants to cheat on one thing, they want to cheat on everything.

The solution is actually simple. The employer puts her on the books, but pays he more than he declares. Then there is a record of the employment.

Answer 4

This is a very serious criminal offence, especially if your friend does not disclose her income to the ATO. Those that do this sort of activity usually get caught ..... people can't keep quiet and someone will dobb them in.

Even your friend has been unable to keep quiet by telling you. The more the people tell or brag the more likely they get caught.

Penalties can be very high (fines, criminal conviction and even gaol). Is it worth it in the end? Penalties apply to both the employer and the employee.

In addition, your friend loses out on superannuation payments, work cover entitlements, holiday benefits, sickness benefits, none of which can be claimed because she ain't on the books entitlements for such. The avoidance of those alone usually amounts to around 20%+, so she better be getting paid a hell of a lot more to make it worthwhile.

Answer 5

If you end up with o federal, that person will owe at the end of the year, now if he can find enough deductions, depending on if hes self employed or w2, depncdfing on hojuse interest, itemizing or not, kids, he can come out to o balance but you ca;nt beat taxes, either you pay them up front or at the end of the year, you can play a little bit with your w4 and change the exemptions, if you want a little more money during certain months change it to 4 or 5 but you have to put the changes back to 0 or 1 or you will owe big bucks at te end of the year, theres no winning

Answer 6

It does not mean that she won't have to pay tax. Her boss may give her a 1099-Misc. income statement at year end, claiming money he gave her for work she did. If he does that, she may well owe self employment tax and income tax.

Your friends boss is keeping her "off the books" for his own benefit, not hers. This way he doesn't have to pay social security tax, medicare tax, unemployment insurance, disability insurance, employment education tax or pay someone else to formulate those calculations and issue a W2. Additionally, her boss is saving money on not paying workman's compensation for her and not having to offer benefits to her; if there is a benefit plan in place for employees.

If your friend is okay with the arrangement the boss has come up with, the boss may be in trouble if found out and your friend should ask him for alot more money an hour based on what $$ she is saving him by being "off the books".

PS..her employer's share of tax would be 7.6% to Social Security tax, 1.45% to Medicare tax, .06% to Disability Insurance, .08% and up for the first 7,000 of wage to Unemployment insurance and countless other savings by not having to hire a bookkeeper or payroll company to compute the amounts he'd owe and to pay them out of earnings.

She should ask for a raise and get it in writing.

Answer 7

Yes she can my love, the tax peeps will catch up with her and she will end up with a BIG BIG bill that she will have to pay!

I thinks its very shady that her boss doesn't want to put her through the books!!!! Also in my neck of the woods this would mean that National Insurance wasn't being paid either which effects state pension etc!!!

Answer 8

Yeah...she will be charged with tax evasion if the ATO find out and she will forced to pay taxes on monies earnt. The boss will also be charged.

Answer 9

Tell her not to accept the job,
Not only will she get into trouble if she was found out, she will also have no work cover if she has an accident at work.
There's jail time involved.

Answer 10

BIG