If you've been doing the odd cash job and thinking IRD won't notice, it's time to reconsider. Inland Revenue has dramatically stepped up enforcement in 2026, with trades — particularly plumbing, building, and electrical work — named as priority targets. Here's what's happening, what it means for your business, and how to make sure you're on the right side of the line.
What's Changed in 2026
IRD's latest compliance campaign is not business as usual. In the past six months alone, Inland Revenue has opened 3,600 audits — a 50% increase year-on-year — and those investigations have already uncovered an estimated $600 million in undeclared taxes nationwide.
The crackdown includes:
- Unannounced on-site visits to job sites, particularly in Auckland, Wellington, and Christchurch
- Online advertising campaigns running on social media and at bus shelters, with the explicit message that cash jobs can be traced
- Data-matching programmes using bank transaction data, TradeMe listings, and building consent records to cross-check declared income
The trades singled out are no coincidence. Building, plumbing, and electrical work are high-cash industries where invoicing is sometimes optional and jobs are often priced verbally. IRD knows this — and they have the data to act on it.
What Counts as a "Cashie"?
A cashie isn't just a job where you accept physical cash. Under the Income Tax Act 2007, all income is taxable regardless of how it's paid — cash, bank transfer, crypto, or favour-in-kind.
The problem IRD targets is deliberate non-disclosure: completing a job, getting paid, and simply not recording the income in your accounts or on your tax return. This is tax evasion, not a grey area.
Common examples IRD looks for in the trades:
- Invoicing for a small amount but accepting a larger cash top-up
- Doing weekend jobs for private customers and not recording them at all
- Running a side business (e.g., odd-job handyman work) separately from your main income stream and leaving it off your return
- Accepting payment in goods or services and not declaring the fair market value
Even if the amounts seem small — a $500 deck fix here, a $300 tap job there — IRD's data-matching can identify patterns over time.
The Penalties Are Steep
If IRD audits you and finds undeclared income, the consequences scale with how the non-disclosure is classified:
| Category | Shortfall Penalty |
|---|---|
| Not taking reasonable care | 20% of unpaid tax |
| Gross carelessness | 40% of unpaid tax |
| Abusive tax position | 100% of unpaid tax |
| Tax evasion | 150% of unpaid tax |
On top of that, Use of Money Interest (UOMI) applies at 10.91% per annum from the date the tax was due. If you haven't declared income for three or four years, that interest compounds quickly.
In serious cases — repeated evasion or large amounts — IRD can refer matters for criminal prosecution, which can result in fines or imprisonment.
The Good News: Voluntary Disclosure
IRD has made clear that its preference is cooperation over confrontation. If you come forward before they contact you, a voluntary disclosure can significantly reduce or eliminate shortfall penalties.
To make a voluntary disclosure:
- Complete IRD's voluntary disclosure form (IR281) or contact them directly
- Disclose all undeclared income for the relevant years
- Pay the tax owing plus UOMI
- In most cases, shortfall penalties are reduced by 75% for pre-notification disclosures
If you think your records are incomplete or your previous returns may be inaccurate, talking to an accountant before IRD comes to you is the single best step you can take.
How to Run a Clean Cash Business Legally
There's nothing wrong with accepting cash — it's still legal tender and a legitimate payment method. The obligation is simply to record and declare it properly. Here's how to do that:
Issue a receipt for every job. Even a simple handwritten receipt or a note in your invoicing app covers you. Use your phone to photograph it and store it digitally.
Use your job management app to track everything. Apps like Fastcrew make it easy to create job records, capture customer details, and generate invoices on the spot — even from a phone on site. Having a digital record of every job means your income matches your bank deposits when IRD comes looking.
Reconcile your bank account monthly. Every cash payment should be banked and matched to a job. If cash is sitting outside your business account for weeks at a time, that's a red flag in an audit.
Keep records for seven years. Under the Tax Administration Act 1994, you're required to keep business records (invoices, receipts, bank statements) for at least seven years. IRD audits aren't limited to the last financial year.
Use our Job Cost Calculator to make sure every job you price includes the right allowances for tax, GST, and overhead — so there's no temptation to take a cash shortcut just to cover costs.
GST and the Cashie Problem
If you're GST-registered (required once your turnover exceeds $60,000 per year), the stakes are even higher. Not declaring a cash job doesn't just hide income tax — it also means you haven't returned GST to the government.
IRD cross-checks GST returns against income tax returns, and any discrepancy triggers scrutiny. If you're GST-registered and regularly underreporting income, you're essentially running two errors simultaneously.
Check out our GST Calculator to quickly work out the GST component on any job — and make sure your pricing accounts for it from the start.
For a broader overview of tax obligations, our guide to provisional tax for NZ tradies explains how IRD expects you to pay income tax through the year, rather than as a lump sum at the end.
What IRD's "Tax Toolbox for Tradies" Includes
IRD has published a dedicated resource at ird.govt.nz/the-tax-toolbox specifically aimed at self-employed tradespeople. It includes:
- A checklist of what income must be declared
- Guidance on claimable expenses (tools, vehicle, home office)
- Templates for keeping simple records
- Explanation of provisional tax and what triggers it
- Contact details for the small business support line
It's worth bookmarking. IRD doesn't give much sympathy to the argument that you didn't know — the information is all publicly available.
Practical Checklist: Are You Exposed?
Run through this quickly:
- [ ] Do you have a record (invoice, receipt, or job note) for every job you've completed in the last 12 months?
- [ ] Does the total income you've declared on your tax return match your bank deposits plus any uninvoiced cash received?
- [ ] Are all your bank accounts — personal and business — reconciled?
- [ ] If you're GST-registered, do your GST returns match your income tax figures?
- [ ] Have you kept records going back at least seven years?
If any of these are a "no" or "not sure," address them now — before IRD does.
Download our free NZ tradie templates at tradietools.nz/templates/ — including invoice templates, expense trackers, and a simple cashbook to record every job cleanly.
NZ Tradie Tools provides free calculators, templates and guides for New Zealand tradies. Visit tradietools.nz.