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sub contractor- no tax paid for 5yrs nor lodged

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Old 16-10-13
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Default sub contractor- no tax paid for 5yrs nor lodged

Hi there
Im after some advice, ive just found out my fiance has not paid tax as a sub contractor for 5 yrs nor lodged a tax return.
3 yrs ago he worked as just an employee for about a year & his tax taken out but still never lodged.
Ive asked him to please see an accountant but I would like to know if anyone has any answers/advice what are the repercussions now and IF he doesnt sort this mess out.
Also does/will it affect his credit rating.
Thank you

*yes he is a puppet and stuiped

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

First up, he won't be the lone ranger, in my experience especially in construction, it happens often.

You need to get an accountant, sooner, rather than later. I'm not an accountant, so please only take this as opinion ... I'm sure one of the many pro's on here will have better advice.

As someone whose been in the poo with the taxman, I'd say you're far better off coming forward and dealing with it, than letting it get any worse. I'd see an accountant first though.

I've found the ATO to be very good to deal with if you approach them to resolve it. If they find you, it's a bigger issue.

To look on the bright side, last years return isn't that late ... yet. He's worked for wages one year, so he's in credit for that year, less a fine for a late return.

That leaves 3, he may not have remitted any tax for those years, but he also hasn't claimed any expenses either.

Go see, or talk to someone who really knows what they're doing.

Hope you get it sorted.

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

Thank you estim8
I definitely want him to sort it before it gets worse. The reason he has to sort it is now he has to become a company instead of sub contractor for work unless he goes on wages which is fairly poor.
I just hope there isnt going to be a ridiculous amount!

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

You'll definitely need an accountant, if you're setting up a company, better to clean the slate while you're at it.

You might even get a bulk discount

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

Most people like your fiancé are scared because they usually imagine it will be far worse than it ends up. One thing for sure it will only cost him more the longer he leaves it. Get it sorted before the ATO comes after him and they will let him enter a payment arrangement to pay the debt off. If they chase him and catch him they are getting nastier nowadays and may demand full payment at once and will sue him through the courts and may bankrupt him. That will definitely affect his credit rating for at least 7 years and even longer.

Regards
Evan

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

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Originally Posted by grubette View Post
Thank you estim8
I definitely want him to sort it before it gets worse. The reason he has to sort it is now he has to become a company instead of sub contractor for work unless he goes on wages which is fairly poor.
I just hope there isnt going to be a ridiculous amount!
It sounds like possible sham contracting to me. The ATO is on to this now especially in construction.
It may be worth paying for a legal opinion as well as the accountant.

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

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It sounds like possible sham contracting to me. The ATO is on to this now especially in construction.
It may be worth paying for a legal opinion as well as the accountant.
Im not sure whats goin on but most of the subs that are brickies & labours are getting company. We are in canberra, the accountant I briefly spoke to said this is perfectly legal. Its crap to be honest.
My fiance was/is a sub so works for another bricklayer company, they have gone bankrupt today due to workers comp payout to a fellow worker. The boss has started another company in a diff name and has asked all brickies & laboursttogo company because hes not forking out insurance, super and workers comp. So my fiance will still be only on $45ph when he'll be his own company. It just doesnt work unless he started his own gang

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

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Originally Posted by grubette View Post
Im not sure whats goin on but most of the subs that are brickies & labours are getting company. We are in canberra, the accountant I briefly spoke to said this is perfectly legal. Its crap to be honest.
My fiance was/is a sub so works for another bricklayer company, they have gone bankrupt today due to workers comp payout to a fellow worker. The boss has started another company in a diff name and has asked all brickies & laboursttogo company because hes not forking out insurance, super and workers comp. So my fiance will still be only on $45ph when he'll be his own company. It just doesnt work unless he started his own gang
The accountant has no idea, it is not legal. Bricklayers and labourers are high on the list of targets.
A lot of companies on commercial sites employ workers on EBA rates not the award. The rate is lower but it can be another option.
A company will cost you money to set up, yearly tax returns etc. An advantage is you can often write off the cost of running a vehicle with a company as long as the whole setup is legit of course. It sounds like the bricklayer contractors days are very numbered to me. Also be aware that all builders now have to report to the tax office the yearly payments to all subcontractors, this started last year. The ATO checks this information and also shares it with bodies like workers comp, payroll tax etc.
Sorry if this is not what you want to hear.

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

This is home territory for me, I have run gangs of up to 20 trowels, and most of my estimating work was for major subcontract bricklayers in the commercial sector.

First up, even if you're accountant reckons it's legal, it's still thinly disguised sham contracting.

Fairwork Australia have been hammering bricklaying contractors, I have an associate with a 30k bill to prove it. The ATO aren't far behind them either ... industry rumour is there's one builder a week going to the wall at the moment, many pushed by the ATO.

One who I won't name went down last week, taking a local bricklaying contractor for around 400k, and a landscaper I know for 300k (he'll lose his house).

You can't employ tradesmen in this country at the moment on wages (except for the very elite tier one sector-and there going down just as fast), the real cost of putting a man on a job (in Vic at least) is around $80 an hour, without profit.

Pricing is back at decade old levels, if you have men on wages your losing big time on every job ... that assumes that you even get paid.

Pyramid subcontracting is the only way to survive, so if you want to keep working, I'd say a company is probably the best option (the only option maybe).

The goody two shoes will say it sucks, that you're missing out on the hidden benefits, that it's a grey area of the law ... the fact is many workers prefer to work as contractors. Most think they're making more money, a false supposition when you add up the benefits of a wage (and especially if you don't pay your tax). The other reason is, that if you're paid an "all in rate" at least you have all your money.

Very often, too often, workers in construction on wages find builders or contractors going broke ... and none of the hidden extras, including tax, have actually been paid ... this makes subbying very attractive after you've been burnt a couple of times.

For the "lead dog" at the top of the pyramid it's your only hope of winning a job and maybe dragging a living out of it ... most aren't ATM, they're making less than the guy's they've engaged, but are too stupid to work it out.

Bricklaying is one of the worst because it's still very labour intensive ... to win a job, you have to have the manpower to deliver to program.

The so called subcontract payment guarantees are little more than a sham, most commercial builders happily sign the stat dec claiming they've paid everyone ... BS.

If it wasn't a public forum, I could name several builders including at tier one, doing government, and statutory body work, that regularly sign false stat decs to get paid before they've paid anyone else, they rely on subcontractors as hidden project finance.

The labour laws in this country really need a major overhaul as well. We now have a major disconnect between bargaining agreements, actual productivity and supply and demand. Ordinary people shouldn't need to have to form companies to make a living wage (unless they choose too).

Your fella is actually lucky he has a job ATM ( I know lot's that don't). I'd bite the bullet, fix your tax and play on till something better turns up.

End of rant (you can tell I'm over the industry).

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Default Re: sub contractor- no tax paid for 5yrs nor lodged

Quote:
Originally Posted by estim8 View Post
This is home territory for me, I have run gangs of up to 20 trowels, and most of my estimating work was for major subcontract bricklayers in the commercial sector.

First up, even if you're accountant reckons it's legal, it's still thinly disguised sham contracting.

Fairwork Australia have been hammering bricklaying contractors, I have an associate with a 30k bill to prove it. The ATO aren't far behind them either ... industry rumour is there's one builder a week going to the wall at the moment, many pushed by the ATO.

One who I won't name went down last week, taking a local bricklaying contractor for around 400k, and a landscaper I know for 300k (he'll lose his house).

You can't employ tradesmen in this country at the moment on wages (except for the very elite tier one sector-and there going down just as fast), the real cost of putting a man on a job (in Vic at least) is around $80 an hour, without profit.

Pricing is back at decade old levels, if you have men on wages your losing big time on every job ... that assumes that you even get paid.

Pyramid subcontracting is the only way to survive, so if you want to keep working, I'd say a company is probably the best option (the only option maybe).

The goody two shoes will say it sucks, that you're missing out on the hidden benefits, that it's a grey area of the law ... the fact is many workers prefer to work as contractors. Most think they're making more money, a false supposition when you add up the benefits of a wage (and especially if you don't pay your tax). The other reason is, that if you're paid an "all in rate" at least you have all your money.

Very often, too often, workers in construction on wages find builders or contractors going broke ... and none of the hidden extras, including tax, have actually been paid ... this makes subbying very attractive after you've been burnt a couple of times.

For the "lead dog" at the top of the pyramid it's your only hope of winning a job and maybe dragging a living out of it ... most aren't ATM, they're making less than the guy's they've engaged, but are too stupid to work it out.

Bricklaying is one of the worst because it's still very labour intensive ... to win a job, you have to have the manpower to deliver to program.

The so called subcontract payment guarantees are little more than a sham, most commercial builders happily sign the stat dec claiming they've paid everyone ... BS.

If it wasn't a public forum, I could name several builders including at tier one, doing government, and statutory body work, that regularly sign false stat decs to get paid before they've paid anyone else, they rely on subcontractors as hidden project finance.

The labour laws in this country really need a major overhaul as well. We now have a major disconnect between bargaining agreements, actual productivity and supply and demand. Ordinary people shouldn't need to have to form companies to make a living wage (unless they choose too).

Your fella is actually lucky he has a job ATM ( I know lot's that don't). I'd bite the bullet, fix your tax and play on till something better turns up.

End of rant (you can tell I'm over the industry).
I couldn't agree more.

Back to topic as advised sort the tax out, think long term.

If your fiancé likes the industry maybe look at up skilling or training. Straight out bulk type bricklaying is hard on the body especially when you get older.

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