Paying your tradie in cash, especially for a discount, may seem like a great idea at the time, but the Australian Government is aiming to phase out the practice.
A few years ago the Reserve Bank aimed to create a new Australian payments system. It wanted the ability for users to make real-time payments; send more complete remittance information with payments; address payments in a relatively simple way; and make and receive payments outside normal business hours.
The result was the New Payments Platform (NPP), launched last week. It is backed by 13 banks.
NPP supports the Australian Tax Office’s push to combat the cash economy. The ATO said that through data matching, it can identify businesses that don’t have electronic payment facilities.
“These businesses often advertise as 'cash only' or mainly deal in cash transactions. When businesses do this, they are more likely to make mistakes or don't keep thorough records. Our 'protecting honest business' visits and contacts address this risk,” it said.
The ATO said those who participate in the cash and hidden economy are disadvantaging the community, honest taxpayers and honest businesses by not competing fairly.
“Over 85% of Australians believe it's unfair to use cash to avoid paying their fair share of tax.”
However research from serviceseeking.com.au showed that more than 60 per cent of tradies were not aware of the NPP.
It surveyed 1,500 tradies and found that while 19 per cent said they would still prefer their customers pay them in cash, 51 per cent said instant payments such as the NPP would encourage them to move away from cash. Many cited bank delays in processing payments as negatively affecting their business.
Chasing payments has been an age old battle for tradies and nominated by 48 per cent of respondents as the most hated customer trait. About one third said invoicing was the task they most wanted to be made easier. The NPP allows invoices and additional documents to be attached to payments, and introduces ‘PayID’ to replace BSBs and account numbers with a single identifier: either an email address or mobile number.
"The NPP is a significant weapon for the ATO, incentivising EFT payments and hence reducing the size of the 'cash economy'. It answers the main concern of tradies, which is the need to be paid on site, on the spot." ServiceSeeking CEO Jeremy Levitt said.
"Tradies have always preferred cash payments in order to avoid fees and delays - but the NPP will be a game changer for the ATO, tradies and best of all consumers”.
