The underground economy (UE) in Canada is estimated at $38 billion, annually. It is fair to say that millions of Canadians are either currently engaged in it or have benefitted from it in the past. Home improvement projects are among the most common financial transactions where people look to cut the taxman out.
While paying cash under the table may seem like a way to save money, it comes with significant risks:
No warranty protection. Without a proper contract and receipt, you have no recourse if the work is defective or the contractor disappears.
No insurance coverage. If a worker is injured on your property and they're working under the table, you could be held liable.
No permits or inspections. Work done without proper permits can create problems when you sell your home and may not meet safety codes.
Tax consequences. If the CRA discovers unreported payments, both you and the contractor could face penalties.
Quality concerns. Contractors who work under the table may not be licensed, insured, or qualified to do the work properly.
The small savings from avoiding taxes are rarely worth the significant risks involved. Always work with licensed, insured contractors and insist on proper documentation.