The Cash Deal
The Underground Economy and the Cash Deal
We don't like it and neither should you! Be educated on how to protect yourself from the risks of a cash deal.
If a construction contractor offers to take cash and not charge you the 13% HST, you're going to be tempted. Who wouldn't be? But did you know that it makes you liable if a worker is injured? Or that you will have no recourse if they do a shoddy job? Professional renovators provide detailed written contracts, warranties AND insurance coverage so you can't be sued if there is an accident. Be protected and do it right the first time!
There is too much risk to take on, to avoid paying tax. Being frugal is admirable but just think about it. You're talking potentially huge investments of money depending on the size of the project, and once you include the potential of a lawsuit, it doesn't make sense to put your family in such a risky position.
Yet, it still happens.
Here in lies the problem - You can't have a written contract with a cash deal. It's the contract that specifies the work to be done, completion date, responsibilities of the homeowner and contractor and proof of insurance. Without this valuable document, it’s you who is liable and could be sued, should a worker be injured in your home. It is also the only proof of the contractor's involvement, should the workmanship not be of suitable quality. That contractor could trash your home, and you would have no recourse. Sadly, its true.
Neither do you get a building permit or city inspections. Even years later, when you try to sell your home or have new work done, the cash deal can backfire with an order from a city inspector to rip down walls to prove a past renovation or addition was done safely.
There have also been instances where a homeowner, who decided to oversee the construction of their new home in Richmond Hill, was fined $20,000 for a violation of the Occupational Health and Safety Act that resulted in the death of a worker in their home.
Whether from lack of awareness or diligence, the resulting tragedy will affect many lives for years to come. The $20,000 fine was likely a hardship for the homeowner, but think of the emotional trauma of being responsible for such an accident.
A similar situation occurred the year before of another homeowner, when a trim carpenter, hired to install door and window trim, fell about 3.2 metres through a stairwell opening on the first floor to the basement below. The worker was taken to hospital, but died the next day. A Ministry of Labour investigation found there were no guardrails at the sides of the stairwell opening.
The homeowner pleaded guilty, as a constructor, to failing to ensure a required guardrail system was in place, and in addition to the fine for contravening the act, the court also imposed a 25 per cent victim fine surcharge, as required by the Provincial Offences Act. Again, many lives were irreversibly changed and the homeowner was left to bear the heartache of responsibility.
These might be unusual examples, but many homeowners unknowingly have agreed to do business on a handshake and a promise.
We don't like our neighbours and friends not being protected or not getting their expectations met and we dislike our industry being tarnished by the conduct of underground contractors.
Protect yourself and say, "No" to the cash deal.
We support asking the federal and provincial governments to step up on behalf of homeowners to create a permanent tax rebate for home renovations as an incentive to use legitimate contractors as receipts have to be provided to qualify. This paper trail would disqualify the cash-only operators, support legitimate professional renovators and protect you, the homeowner.
(the above was aired in London by the London Home Builders Association)