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Paying cash to contractor to avoid tax?

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  • Feb 11th, 2019 12:42 pm
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Jan 2, 2012
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pootza wrote:
Feb 10th, 2019 12:22 pm
Anything is possible.
Can you find any cases in Canadian history of it happening? If it hasn't happened before, most likely it won't happen going forward. It's easiest to just go after the contractor so that's what the CRA does.
OttawaGardener wrote:
Feb 10th, 2019 12:48 pm
You are focusing on income tax. It is the hst that you are not paying that is the issue. The contractor collects hst from you, and remits it to CRA.
It's the same thing. It's not the purchaser's duty or job to know what tax they need to pay when buying a product or goods and services. They get quoted an all-in price, which they pay to the contractor and then the contractor makes the HST payment. If the contractor is not paying proper HST to the government, that is on the contractor.

If the purchaser was the one making HST payment directly, that would be a whole other story.

In real life cases where contractors have been convicted of tax fraud by not reporting proper income/HST, has the CRA ever come back to the purchaser to recover the missing HST amount?
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Rob444, I have never been given an all-in price for renos. Contractors want you to know the difference between what you pay for their work and, separately, the hst.
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Bank wants to drop using so they can charge you fees. Government wants the tax yet Gov let big fishes go
unreported offshore tax accounts.
Smsll fine for Virpirations like SNL Lavalin..
Ironic policy that treats common and poLitical buddies differently.
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Dec 20, 2018
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cf7777 wrote:
Feb 10th, 2019 1:42 pm
Bank wants to drop using so they can charge you fees. Government wants the tax yet Gov let big fishes go
unreported offshore tax accounts.
Smsll fine for Virpirations like SNL Lavalin..
Ironic policy that treats common and poLitical buddies differently.
If you employ 50k people, yes you are treated differently, look at the automakers, banks and every large corporation. Because if they fail, they bring country down with them
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My personal take on this type of thing is this ... If they are willing to possibly cheat on their taxes or how they run their business, what assures you they aren't taking shortcuts or cheating you to make a buck.

Now I have seen service provider or retailers offer a small discount for cash, simply to help save on Credit Card fees which can be 4% or higher.
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OttawaGardener wrote:
Feb 10th, 2019 1:04 pm
Rob444, I have never been given an all-in price for renos. Contractors want you to know the difference between what you pay for their work and, separately, the hst.
But what they show you in a payment schedule or receipt, is not necessarily how they are actually paying HST or reporting their taxes.

i.e. say for a $50K job the contractor gives you 2 options:
1. Pay total amount by cheque/e-transfer etc, cash not required. Total bill shows as $50K + 13% HST (6500) = $56,500
2. Pay $25K of the amount by cash, and rest by cheque. Total bill shows as $47,124 + 13% HST (6126) = $53,250

If you pick 2, you are saving what amounts to the HST on $25K cash portion. Obviously what the contractor would do is just report $25K in actual job cost to the government, and pay HST on just the $25K ($3250). If the CRA later convicts him of fraud, I'm pretty sure you as the purchaser would not be in any trouble since you have no idea how much HST he is actually reporting/paying or how much he is later reporting as income.

In general I would guess that HST collection is the responsibility of the person or business providing the services, not on the person purchasing it. Not sure how actual HST fraud rules are writen on this, but I've yet to see any evidence of a person getting in trouble for not paying correct HST amount. It's always on the seller. Please correct if you've seen otherwise.
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Dec 20, 2018
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Jojo_Madman wrote:
Feb 10th, 2019 6:36 pm
My personal take on this type of thing is this ... If they are willing to possibly cheat on their taxes or how they run their business, what assures you they aren't taking shortcuts or cheating you to make a buck.

Now I have seen service provider or retailers offer a small discount for cash, simply to help save on Credit Card fees which can be 4% or higher.
Cheating (or not) on taxes dont mean anything for quality or reliability

If this was the case, always pay highest price? Lol

They could easily charge you tax and not remit it and keep it all for themselves
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StatsGuy wrote:
Feb 11th, 2019 12:33 pm
Cheating (or not) on taxes dont mean anything for quality or reliability

If this was the case, always pay highest price? Lol
No ... but many years of doing business in contract type work has shown this to often be the case from experience ... getting called in to clean-up and fix someone else's so called cheaper cash deal that they cut corners on.

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