Canadian Contractor

Working for cash, some thoughts

It's the homeowners. They are the ones that want to avoid the taxes, but it's the contractor who is exposed to most of the risk.

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February 12, 2013 by Alec Caldwell

Let’s be honest, working in the home renovations business these days is more and more challenging, especially with the growing underground cash economy. Who are the culprits fueling this market?

Government readily points out that this underground economy is about avoiding taxation-responsibility at the expense of all Canadians. Participation in this economy places an unfair burden on law abiding businesses and individuals, and reduces the amount of money available for important government programs such as health care, education and the environment. Again, who can disagree with this logic?

Putting logic aside and getting into the real world, let’s address who really are the main culprits fuelling this cash economy. I believe it’s homeowners. It’s they who want to circumvent paying the HST on renovations, it’s not the contractors. Furthermore, these homeowners are then willing to forfeit receipt for payments or receive a written guarantee for the work. The questions are: what happens if the job goes wrong and they don’t have a paper trail?  What if the contractors causes unnecessary damage at the residence, will the contractor have liability insurance? Worse still, what happens if someone gets injury and they visit the hospital for treatment? Will this not alert investigation from Ministry of Labour and WSIB? Will this blow the whistle on these homeowners and contractors activities?

It’s simple, contractors who are not willing to accept cash normally don’t get these jobs, as these homeowners will find others who are willing to accepy king cash. Some contractors have adjusted their attitude in order to secure work. They accept the cash work; they eat the HST and take the loss. Behind the scene they put this work legally through their books. It’s a case of using tactics to safeguard your survival in today’s economy.

The dangers facing contractors who accept cash without reporting it is, it opens you up to the possibility of later problems. And it’s a myth that if you fail to keep records, it makes you immune to taxes. If your lifestyle is not in line with the income you report, like you drive nice vehicles, go on great holidays and more, how can you explain this to the CRA on assessment or investigation? Keep in mind, evading taxes is illegal and it can result in criminal convictions leading to fines and jail time in addition to any taxes and penalties owing under the Income Tax and Excise Tax Acts.

Remember, someday it all catches up with us!

Reach Alec Caldwell at  or call CARAHS at 1-866-366-2930

Alec Caldwell

Alec Caldwell

Alec Caldwell is the Founder of CARAHS, a Health & Safety Organization.

We are approved providers by the Ministry of Labour (Ontario) to teach Working at Heights Training (Pro#34609)

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10 Comments » for Working for cash, some thoughts
  1. Larry Otten says:

    It is time a law was passed that made it a punishable or criminal offence for homeowners to hire cash contractors with guilty partys subject to same fines and pentalties as the contractor. This would serve to support contractors who play the roll of tax collector for our governments

    • Robert Koci says:

      That’s very tough to enforce. Cash is just a means of exchange, and you can’t expect a homeowner to know if a contractor is paying his taxes. Rightly, the homeowner would say, hey, that’s not my problem.

  2. Jim Quaife says:

    There have been some customers who have asked if I will accept cash, I have not lost a job by refusing to accept cash! Thankfully, most of my customers are large property owners, property managers and business owners.
    All of my proposals for projects contain the applicable tax.

  3. Greg says:

    “Do I save any money if I pay cash?”

    “Cash or cheque, it’s all the same to the government.”

    That usually puts an end to it right there.

  4. Here’s what other said in response to this post.

    From the: Networking for Trade Professionals Ontario Bob M. comments:

    Hello Alec
    I am not a contractor or a tradesperson BUT I am a tax payer and I am 100% in approval of your position on this issue. SO many “rules” are put in place by people who have never so much as met a payroll let alone adhered to a budget, directly impact the economy just as you have noted. How sad that is for the legitimate contractor to be faced with the option of working like a moonlighter. I understand the “program” is desperately in debt from mismanagement to a point that forensic accounting should be happening and SOMEONE held accountable….its NOT their money. Is anyone listening at Queens Park? This is one hell of an election platform!!!
    Fight on Alec!!!

    From the: Owner/Builders Group John P. comments:

    I recently talked to a contractor who I sub to on occasion and he said he is doing nothing until he, his accountant, and his lawyer can figure out a way around the WSIB restrictions. I wonder if the ruling liberals know (or even care) what sort of damage they are doing to our economy by enacting insane labour practices such as these.

    • Matt says:

      We must show this on our receipts to clients, show them that this is a tax, keep it on a separate line titled WSIB tax and the percent amount. Let the client see it for what it is. Do not bury this in costs, show it very clearly, and who is taking it.

  5. Larry says:

    I’m suffering huge from the underground economy. Customers love to save money and there are more businesses willing to do cash than ever before. In the past I could still sell the job but now I’m finding it tough. The HST at 13% really put us at a disadvantage as most contractors will drop that completely even though they still have to pay the HST on the material. Now they save WSIB at 14%, On top of that they don’t pay UIC, CPP and 4% vacation pay on their employees. Statutory holiday pay, and income tax. Some have no liability insurance as well. How are we to compete with that. The government does nothing to help us. We get regulated to death and the underground takes the jobs. In the end we all pay for the cash customers as the government needs to find different ways to get money out of the legitimates so they create more rules and regulations.

    All suppliers should be made to imprint some form of ID’s on every invoice. I’m sick and tired of seeing the wads of cash flowing through my suppliers hands knowing that every job is taking food out of my families mouth. There has to be a solution to this problem other than targeting us.

  6. Matt says:

    It’s funny that customers think they are saving by paying cash. Most cash jobs do not come with contracts or any kind of written agreement. So in that case, the HST can still be charged without the customer knowing. I do not condone cash jobs for the many reasons mentioned in previous comments. I also agree with a previous comment where the WSIB should be labeled as a separate tax to educate the customer about where some of their hard earned cash is going.
    What sickens me more than cash jobs is the wannabes who have little skill in the trade and somehow are able to pull off these jobs a rock-bottom prices making it difficult for real craftspeople to charge fair prices for their hard earned skills!

  7. max curry says:

    Great Article. article , I am thankful for the specifics ! Does someone know if I would be able to acquire a blank Cash Receipt example to fill in ?

  8. John Kropp says:

    where do I find cash paid jobs