How People Avoid Paying GST – The Cashie Method

‘So when was your roof completed, sir?’ the nice insurance lady asks. Gulp. ‘Um, um, just two or three years ago, I think’ you mumble. ‘Perfect, that should still be under warranty, so what was the name of the roofing company?

Sweat breaks out on your forehead. You know that insurance people are trained to sniff better than bloodhounds. ‘Oh, I’m sorry, I really can’t remember, I’ll have to get back to you’ you whine quietly.

The above could be a conversation someone who has avoided paying GST is having with his/her insurance company. Well, I presume being a taxpayer, you’d already know that GST is an acronym for Goods and Services Tax.

It’s known by various names in other countries and essentially it’s just another one of the many taxes a government collects to keep a country functioning.

In New Zealand, this tax is currently set at 15% and is applied additionally to the cost of any goods or services sold. With that out of the way, let’s explore how some people try and avoid paying this tax by being creative.

The Cashie Method

Paying for something using cold hard cash whist sneakingly avoiding GST is loosely called ‘doing a cashie.’ Yep, just roll out the folding notes in a dark alley, or broad daylight…nothing seen, nothing heard. No receipts, no invoices, no problem, right? Wrong!

Ok, So What’s The Big Deal with Cashies?

For starters, no paperwork. What this means is that there’s no comeback on either side. For anything. A-n-y-t-h-i-n-g. Imagine a drug dealer reporting his stolen drugs to the police. You get the picture?

Why Would There Be Any Comebacks Anyway?

Well, there’s not many products in this world that never ever fail. Or have a lifetime warranty. Even if it did, remember, no paperwork. Imagine if you did a cashie for the new roof of your home.

Stops the rain, keeps the home dry. Perfect. Now fast forward three years.

The roof starts leaking. Drip, drip, drip, from the ceiling. Needless to say, by this time the timber in your ceiling has also been having quite a wet experience.

You’re fuming. You call your cashie roofing contractor.

The authorities have finally caught up and he’s either wound up his business or enjoying bread and water in the comfort of his cell. No problem.

There’s always insurance to fall back on. Quick phonecall to the insurer. See the opening paragraph, you quickly retract from continuing your conversation for the fear of further investigation.

Ok, so there’s two options

Share bread and water with your ‘friend’ OR get the problem fixed at your own cost.

You opt for the latter and get a quote. Damage has been extensive, a large part of the roof needs to be taken off for access, temporary weather proofing, replacing and painting parts of the ceiling, all up cost could be around eight thousand dollars. Your heart sinks.

Now, here’s the interesting part, the original cost of the roof was twelve thousand dollars. GST on this at 15% would’ve been eighteen hundred dollars(this was your tax avoidance perceived savings).

So, let’s see, it’s been three years

You will now need to spend eight thousand dollars(two thirds of the original cost), you will have a roof without warranty for the rest of it’s life, and who knows if the future will bring any more leaks.

The message I’m trying to get across is that this exact same drama could unfold in any number of situations.

And it would be a no-brainer for most people not to take this risk

But then there are others. Those that don’t know. Or really don’t care. Until they get caught out.

In your journey, you may find two types of people

Some that foil the system, somewhat. Some that foil it dramatically. Watch out for these people, for it is them that slowly contribute to leaking the efforts of genuine hard working citizens of the country. Drop. By drop. By drop.

 

 

2007 - 2017 © - All rights reserved.

Log in with your credentials

Forgot your details?