CBA Construction Loan - Won't Make Payment Without Proper Tax Invoice

lasiafjmc on 13/03/2019 - 14:12
Last edited 13/03/2019 - 14:29 by 1 other user

I got home loan from CBA for construction through a mortgage broker. Process was smooth and I got all my claims approved during construction immediately after submitting the invoice for each stage. During loan application, I added extra allowances for doing landscaping,fencing, CCTV and driveway after handover.

I have completed all post handover tasks and submitted the invoice (except driveway concrete) to process the claim which got processed within a week. There we some surplus fund of $900 on my home loan account which CBA transfered to my saving account without any question.

I did my driveway and concrete around the house through a tradie for $6000 and paid him by cash without a proper tax invoice. He gave a handwritten receipt which is not proper one and bank is refusing to accept that. I am unable to get a tax invoice from him as he gone overseas for some treatment. I am ready to pay the GST for the tax invoice but he is not responding properly.

For claiming driveway payment which was quoted $6000 as allowance in my initial contract quote, I am facing issues in getting that from CBA. My mortgage broker is telling that I have to submit invoice to make the claim. But my friends who got loan from other banks like NAB & ANZ got all the extra quoted allowance amount on their savings account immediately after final settlement to the builder.

Did anyone face similar kind of situation, any thoughts/advice to claim this amount from bank. I haven't talked to CBA directly till now, all communication is happening through my broker.

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Comments

  • HighAndDry on 13/03/2019 - 14:19

    But my friends who got loan from other banks like nab & anz got all the extra quoted allowance amount on their savings account immediatly after final settlement to the builder.

    Was the driveway included in the build for those friends? Those would be processed like any other part of the building progress payment claims. But here, the issue seems to be you arranged the driveway work yourself after the build contract was already completed and didn't get a proper invoice for the work.

    Surely you're not expecting the bank to accept an invalid handwritten invoice/receipt are you?

    One way without needing to get a receipt from the tradie might be this: Do you have a Final Occupation Certificate for all the work, including the driveway? The Bank just needs to know that they're not just giving you money - that their money went towards the asset (the property) you've given them under the mortgage. If you have a final OC showing the driveway has been completed to spec, that might convince them their security is safe.

    • lasiafjmc on 13/03/2019 - 14:29

      For my friends, driveway was added as extra allowances in building contract quotation. For one of my friend, he got the cheque from builder after final progress payment from bank. For another friend, he got the balance amount in his saving account.

      In my case, i thought bank will give allowance amount after the build in my savings account which I could use it to do the job cheaper compare to the builder. But after submitting the claim only I came to know that I must submit proper tax invoice to get the money back.

      • HighAndDry on 13/03/2019 - 14:57

        The allowance isn't just free money. It's money the bank is lending you for that specific purpose. It's you telling the bank: "I'll need this much money to also do this - which will increase the value of the property". Think of it almost as a reimbursement - without the invoice, there's no way the bank can tell that the money went to the driveway instead of to the pokies.

        If your friends got the driveways done as part of the building contract - even if added afterwards - that gets included in the building contract which is an official document. Your tradie driveway doesn't have anything like that.

    • lasiafjmc on 13/03/2019 - 14:33

      I got the occupancy certificate from builder during handover. At that time driveway was not poured. And I don't see anywhere in OC that talk about driveway,fencing or landscaping.

      • HighAndDry on 13/03/2019 - 14:56

        Is that an interim OC or a final one? You might need to get your own final OC if you don't have it.

        • lasiafjmc on 13/03/2019 - 15:11

          how to check that. Its didnt mention anything like interim.

  • boomramada on 13/03/2019 - 14:26
    +6

    Your first issue, invoice need to be proper with ABN for tax purpose. Else it's only good as toilet paper for bank.

    • lasiafjmc on 13/03/2019 - 14:30

      yes agree, thats a stupid mistake I did for cheap price. Now i am ready to pay the gst amount but the unable to contact the tradie.. Thats my problem now.

      • boomramada on 13/03/2019 - 14:32
        +3

        That's not end of the world, pretty much you paid $6k off your loan in advanced, cheaply and without paying any bank interest :)

        • lasiafjmc on 13/03/2019 - 14:36

          Yes correct. I need that money for my other personal expenses which will be very helpful if I get it from the bank that will make my life easy if not then I have to find other sources.

          • lasiafjmc on 13/03/2019 - 14:39

            @lasiafjmc: Now I am paying interst only on my home loan instead of principal + Interest. technically my construction loan is not fully disbursed

          • boomramada on 13/03/2019 - 14:39
            +2

            @lasiafjmc: Well only way to fix this issue is;
            * Get a valid invoice from concreter or
            * Learn from the mistake move alone.

      • donbot on 13/03/2019 - 14:35
        +8

        The concreter doesn't want to know you as its not just the GST that they are concerned with, but also income tax. Thats a whole lot more than just the GST of $600.

        • Typical16-bitEnjoyer on 13/03/2019 - 14:49
          +1

          ^ This. Zero chance you'll get a tax invoice from him now.

        • subywagon on 13/03/2019 - 16:48
          -1

          Just tell the concreter you will dob him in to the ATO if he doesn't hand over a proper receipt immediately. He'd be doing cash jobs left right and centre. I very much doubt he'd want the ATO auditing him…

          • HighAndDry on 13/03/2019 - 17:48
            +3

            @subywagon: Not sure that's a good idea when the tradie would have proof OP was also trying to dodge tax by paying in cash.

            • subywagon on 13/03/2019 - 19:14

              @HighAndDry: I think the ATO is more concerned with businesses that do cash jobs than individuals that pay in cash. I'm sure the OP could even say that he was only given a handwritten receipt and play dumb.

              • Typical16-bitEnjoyer on 13/03/2019 - 21:30
                -1

                @subywagon: You're an expert on how the ATO think ey?

                • subywagon on 13/03/2019 - 21:34

                  @Typical16-bitEnjoyer: Of course, isn't everyone an expert on ozbargain? But actually no, but I have known tradies that have been chased down and audited by the ATO and they didn't go after the customers who payed cash in hand. I assume you are though?

                  • Typical16-bitEnjoyer on 14/03/2019 - 09:19

                    @subywagon: Well, considering the ATO put forward recommendations to how GST is paid on real property and these were subsequently incorporated into the recently introduced Treasury Laws Amendment (2018 Measures No. 1) Act 2018 (which puts the onus and responsible of the GST on the PURCHASER) AND the ATO has made and proposed further recommendations for consumer purchases, I think the ATO has somewhat of a focus on purchasers/customers paying cash to avoid GST :)

                    But hey, you know tradies! so that's definitely more credible than federal legislation!

                    • subywagon on 14/03/2019 - 11:22

                      @Typical16-bitEnjoyer: That's cool reggie. Glad you had the time to research that for me. Good luck to the ATO hunting down the hundreds of customers who paid in cash for services per tradie. It's kind of like arresting drug users instead of going after the drug dealer. Might be different in this circumstance being as it's dealing with the banks and loans etc..From my real world experience ONLY the tradies were audited, there was no talk in going after customers. This was a couple of years ago now before the amendment you are mentioning…. what would I know though, I've only seen first hand traides being audited by the ATO…

                      • Typical16-bitEnjoyer on 14/03/2019 - 12:19
                        +1

                        @subywagon: I think your feedback is for the ATO, not me. ATO randomly audits ~100,000 individuals (not tradies) based on individual tax returns every financial year so I personally think they likely have the means of "hunting down" those who rort the system! A couple of tradies is a pretty small (and poor) sample size for your claims.

                      • HighAndDry on 14/03/2019 - 13:21

                        @subywagon:

                        It's kind of like arresting drug users instead of going after the drug dealer.

                        Not really. OP is dodging tax as much as the tradie is. Not to mention - police do go after drug users, and I wouldn't rely on the ATO to be more reasonable than the cops.

                        • subywagon on 14/03/2019 - 13:25

                          @HighAndDry: Yeah that's true. Isn't OP trying to rectify the situation now? Or is he just trying to get his money from the bank by getting a proper receipt?

                          • HighAndDry on 14/03/2019 - 13:27

                            @subywagon: Yes, but coming clean with a crime doesn't really make you immune to the consequences of committing it in the first place. (If that was the case, there'd be no disincentive not to commit the crime in the first place - you'd just come clean any time it looks like you're going to be caught).

                            • subywagon on 14/03/2019 - 13:33

                              @HighAndDry: I still think it would be easy for the OP to claim he didn't realise it was a cash job as such unless there are records of msgs etc. I also still think the tradie has more to lose than the OP. I better be careful next time I pay cash at the local Chinese take away who doesn't accept eftpos, unless I want to go to prison for tax fraud….But what would I know? I haven't spent the prerequisite amount of time investigating and researching tax fraud on google :P

                              • HighAndDry on 14/03/2019 - 13:40

                                @subywagon: Eh…… cash in hand for a $6,000 job that OP knows was significantly below market rates because it was cash in hand?

                                Plus - separate from the ATO, probably not good to piss off a tradie who knows where you live. OP would have to fork out probably $2k or more to make up the difference.

                                And I don't see that OP is in the right either - he agreed to pay cash in hand, he's now reneging on it.

                                • subywagon on 14/03/2019 - 14:48
                                  +1

                                  @HighAndDry: Yeah good points. I agree op is pretty stuffed. I wouldn't have been doing anything dodgy with the banks etc involved like that. He should have had the work done when he actually had the cash in the clear. Will have to live with it and move on really.

                        • Sofie519 on 15/03/2019 - 00:16

                          @HighAndDry: OP handed over legal tender and obtained a receipt for it (albeit the receipt was in the incorrectly format) but he cant be held responsible regarding how the tradie declares his tax.

  • Baysew on 13/03/2019 - 14:34

    What your friends claim NAB and ANZ do, won't carry any weight with CBA.

    Perhaps in the NAB case it was marked "Project Eagle" NAB chief of staff falsely used 'Project Eagle' Mike Baird as alleged cover for fraud

  • ozhunter on 13/03/2019 - 14:49

    I did my driveway and concrete around the house through a tradie for $6000 and paid him by cash without a proper tax invoice

    Sounds like the it was only $6000 since you paid him cash. If you wanted a tax invoice, he'd charge you $7,000+.

    • HighAndDry on 13/03/2019 - 15:01
      +1

      Yup, and likely far more.

      $6,000 cash no invoice is basically take home. Depending on how much the tradie makes, they might be paying ~20%+ in income tax, so at least $7,500 for an invoiced job, and then plus GST so around $8,200.

  • lasiafjmc on 13/03/2019 - 15:10

    Looks like i can't get that money from bank :-(

    • MITM on 13/03/2019 - 15:22
      +1

      Once the house and land is completed and your land loan & construction loan is combined into a home loan, you could get a revaluation and make it an equity home loan which could give you some play money. Basically they would give you access to 80% of the final valuation (including the driveway) less the land and construction loans.
      Talk to your bank manager to see if this is possible.

    • boomramada on 14/03/2019 - 10:50

      landscaping and CCTV can wait.

  • elgrande on 13/03/2019 - 15:17
    +2

    I am ready to pay the GST

    But is he ready to declare the income and pay the 40% tax..?

  • 87percent on 13/03/2019 - 17:46
    +1

    you also need to stop comparing to "your friend"… it's irrelevant

  • Sofie519 on 14/03/2019 - 12:49

    FUN FACT: The tax gap for small businesses is $10 billion compared to the corporate tax gap of $1.8 Billion and Individuals at $8.7 Billion. Small businesses and individuals have the largest tax gap associated with the black economy. i.e. Cash in hand jobs

    ATO should be interested in this case if you want to report it.

    Just as a reference, the figures are from todays article in "Accountants Daily" https://www.accountantsdaily.com.au/tax-compliance/12755-sma…

    • [Deactivated] on 14/03/2019 - 14:11
      -1

      Hehe. You said

      Cash in hand jobs

    • malich on 15/03/2019 - 15:49

      This is true. But I wouldn't be taking the risk of dobbing him in. Too many crazies out there in the world.

  • dealsucker on 15/03/2019 - 14:27

    I have no sympathy for anyone who gamed the system at first and the honest tax payers and is now blaming that the system doesnt work this way. No sympathy at all for you mate.

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