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Paying cash to contractor to avoid tax?

  • Last Updated:
  • Feb 11th, 2019 12:42 pm
[OP]
Member
Feb 18, 2013
218 posts
27 upvotes
Scarborough

Paying cash to contractor to avoid tax?

A buddy of mine is undergoing a top floor renovation, total cost is north of $100,000.

His contractor let him know that he can pay up to 50% cash and save the tax on that amount. There is a signed contract with payment schedule. Contractor says they will provide receipt should my friend choose to pay cash.

I should note that the 50% cash is not to be paid upfront. It follows the original payment schedule of equal amounts every week until the job is finished.

How can that be? Doesn't his contractor have to pay tax on materials/labour? Is there a downside to this?

Thanks
Last edited by caddie444 on Feb 3rd, 2019 12:15 pm, edited 2 times in total.
52 replies
Deal Addict
Dec 9, 2003
4725 posts
629 upvotes
Calgary
You'll get all sides on the ethics of this.

Bottom line he needs to make sure he gets receipts for the payments.
I apologize for offending sensitivities of alt right, alt left, or anyone in the middle, for humor or perspectives, for my maturity and occasional errors. I apologize for misunderstandings on gender, religion, politics, race or deals.
Deal Addict
Jan 19, 2011
2819 posts
1022 upvotes
Sounds like absolutely nothing can go wrong...

(Expressed rather sarcastically, with an eye roll included...)
"The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is."
Just a guy who dabbles in lots of stuff learning along the way. I do have opinions, and readily share them!
Newbie
Jan 2, 2019
50 posts
67 upvotes
Common practice, monitor the work, keep to payment schedules and get a receipt for every cash transaction. Cash has been around since the beginning of time and so have taxes.
Deal Addict
Nov 14, 2006
1727 posts
736 upvotes
GTA
I give customers the option to go cash if they want , cheaper for them in the end. They get same warranty with receipt included and honestly most go with cash price when offered so I don't see a problem paying cash to save some coin.
Deal Addict
User avatar
Feb 25, 2015
1038 posts
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York Region
lilmikey wrote:
Feb 3rd, 2019 12:28 pm
I give customers the option to go cash if they want , cheaper for them in the end. They get same warranty with receipt included and honestly most go with cash price when offered so I don't see a problem paying cash to save some coin.
The anti-cash brigade will come down hard on you. Grinning Face With Smiling Eyes
Deal Addict
Nov 14, 2006
1727 posts
736 upvotes
GTA
bacalhau4me wrote:
Feb 3rd, 2019 12:33 pm

The anti-cash brigade will come down hard on you. Grinning Face With Smiling Eyes
Cash , ass or grass , nobody rides for free Winking Face
Give them the option and let them decide.
Last edited by lilmikey on Feb 4th, 2019 7:43 am, edited 1 time in total.
Deal Fanatic
User avatar
Mar 23, 2008
9741 posts
6133 upvotes
Edmonton
My gut feeling is that if a contractor is willing to bypass laws and cut corners on taxes, what else is he willing to cut corners on? Is he going to screw me over to save a few bucks too, and then just cover up the mess with drywall and paint?

C
[OP]
Member
Feb 18, 2013
218 posts
27 upvotes
Scarborough
The contractor did give my buddy the choice. He said it makes no difference to him but wanted to pass on some savings if possible. He said it is very common.

Interesting to see the different opinions.
Temp. Banned
Dec 19, 2009
3502 posts
1489 upvotes
caddie444 wrote:
Feb 3rd, 2019 4:20 pm
The contractor did give my buddy the choice. He said it makes no difference to him but wanted to pass on some savings if possible. He said it is very common.

Interesting to see the different opinions.
Yes the contractor who is not reporting $50,000 worth of income saving himself $15,000 in taxes @ a 30% tax rate really makes no difference to him. Some people will believe anything they are told ... is that just ignorance? And con men will be con men. Who will face the most consequences if caught by CRA ... just the contractor?
Sr. Member
Nov 10, 2003
727 posts
118 upvotes
Concord
He will always benefit from the cash deal but the home owner also benefit. Key is to look out for a reputable business and not an independent 1 person contractor.

I would not correlate cash deal with always cutting corners. Plenty of non-cash deal go south too.

Cash or Pay with Tax, follow the schedule payment.
Deal Expert
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Jul 30, 2007
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Toronto
I see part 2 to this thread . “Nightmare of unfinished renovation job”
Deal Addict
Aug 29, 2011
4333 posts
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Mississauga
Non-cash deals typically have a paper trail so you have some protection if things go south.
Newbie
Jan 2, 2019
50 posts
67 upvotes
last year did many cash jobs and all went smooth, I got ripped off by a restoration company where the owner decided he had enough insurance money and enough credit with the trades to not pay anyone and close up shop, the final cheque bounced, 20k.

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