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Can I Pay Cash For My Renovations?

Updated: Sep 28

You've saved up your hard-earned cash, and after many years of living with your home as-is, you've decided it's time to take the plunge.


It's time to renovate!


You've looked at literally every option on Pinterest. You've spoken to your friend who's a designer. You've Googled how much it might cost -- somewhere between 5$-10,000,000$ from what you've seen. (More on the cost of renovations here.)


You've asked your friends for their favorite hot-shot contractor.


The contractor visits, takes measures, listens carefully to your hopes and dreams and gets to work on producing an estimate.


You get the email, you see the total. You notice that there's one of two certain things in life added to your amount. The taxes.


You pick up the phone and call Mr. Hot-Shot Licensed Contractor and ask:


"What's the price if I pay cash?"


Here's where it gets contentious. Mr. Hot-Shot says "it'll cost the same."


You reply "I don't need a bill, so can we take the taxes off?"


This contractor has the nerve to say "sorry, we don't do that."


You're fuming. Does he know how much extra it will cost you if you have to pay taxes? Does he realize how silly he sounds? Does he even know who you are?!


Before we get too carried away, let's take a look at why contractors shouldn't accept cash, and why you shouldn't pay with it.


I want to be clear, I'm not talking about settling up an invoice in cash, including taxes. I'm talking about paying in cash without an invoice to avoid taxes altogether. Under the table. "Our little secret." (read: "Tax Evasion")


No Recourse


One major issue with you paying in cash, without a bill, is that you have no recourse. What happens if the contractor walks out with your money (but the work isn't done)? Imagine the job looking great for a few months before it all starts to fall apart.


If there's no bill to prove that the work was done by a licensed contractor, how can you exact justice?


It's Illegal



This point is self explanatory. From the CRA website:


"When taxpayers are convicted of tax evasion, they must still repay the full amount of taxes owing, plus interest and any civil penalties assessed by the CRA. In addition, the courts may fine them up to 200% of the taxes

evaded and impose a jail term of up to five years."


While the Canada Revenue Agency rarely lays criminal charges, I can assure you most contractors are not super excited about breaking the law and risking the business they've built for so long to save you a couple of bucks.



Cash Is Not King


For a contractor, cash is not king. On the contrary, it's pretty much useless. Between licensing dues, security bonds, liability insurance policies, consumable products, office and storage-space rent, truck payments, professional membership fees... You get the picture. Licensed general contractors have bills to pay.


The problem is, if the cash is "off the record" aka black market money, we can't use it to pay any of this overhead. We can't use it to pay bills, we can't use it for much besides food and entertainment.


Why Not?


Because in our modern world, everything is electronically traceable.


I'm sure you've heard horror stories of people who claimed to make one amount on their income taxes, but had a different amount flowing through their bank accounts. If a contractor claims on their income taxes that they make 12K$/year, but have 120K$ cash deposits in their accounts, it's an automatic red flag.


Try It At Walmart


Or McDonalds. Or Best Buy. Or the movie theater. Or any other legitimate business.



Tell them "I don't need the bill" with a sly wink and see if the price changes. Make the "cash" symbol with your hand and see if they drop the taxes.


Unfortunately, like any other legitimate businesses, contractors are subject to scrutiny from the government. And if a rule is broken, it exposes their entire operation to liability.


For example, if a contractor is found guilty of tax evasion (or fraud, or other crimes), they're not just subject to penalty. In most jurisdictions, their license will be revoked, as will their tax numbers, which effectively precludes them from operating a business and working in construction legally.


Now What?


While it might seem tempting to save a few bucks by skipping the bill, you expose yourself, your home and the contractor to very real liability.


Your best bet is to find a reputable, trusted General Contractor to work with. Using a licensed contractor gives you due recourse which protects your home and your finances.


If you're ever unsure about how to go about it, please feel free to reach out to us and we'd be happy to help you out!


Montreal Contractors is a qualified company, holding an active bonded license as a General Contractor and Specialized Contractor with the Régie du Bâtiment du Québec (RBQ License: 5767-5480-01), ASP Health & Safety Certification and a $2M liability policy. Our employees have all passed background checks, are registered with CNESST and have their ASP Health and Safety certification.

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