Those Cash Deals Could Cost More Than You Think
We are all tempted on occasion to accept a deal where we don’t have to pay any taxes. Most often we run into situations where we need things done around the home, and the budget is pretty tight. Then someone offers to do the repair or renovation on a cash basis and this seems to be a golden opportunity. You are going to save some money here and it seems like a great solution. However, this type of great deal could be more costly than you think.
For the individual who is offering to do the job for cash they are putting themselves at great risk. If the CRA catches wind that a contractor is carrying on this type of activity there can be a lot of legal repercussions. It can amount to anywhere from hefty fines, to criminal charges being laid that could result in jail time.
Individuals who carry on this type of cash only business do not realize just how much authority and the numerous resources that are available to the Government when it comes to tax matters. These people end up not reporting their cash income and yet appear to have a very high caliber lifestyle, which doesn’t fit with the level of income. This in itself raises some warning signs for the CRA and opens the individual up for further scrutiny.
Now with the snitch rule being in place the cash only service provider is running a high risk that whoever he is doing business with could end up reporting them to the CRA. It could be a person who suddenly felt they were not doing the right thing by paying cash only, or a disgruntled customer who wants to get even.
For the customer who is opting for this type of cash service indirectly you are cheating yourself. Nobody likes to pay taxes, but it is important to remember that your tax dollars pay for many different services that you get to enjoy and require.
Then there is the risk you are taking regarding the work that is being performed. You have nothing in writing by way of guarantee if the job is not done correctly. You will not be able to take any type of formal action against shoddy type work. You are compromising the authenticity of the work being done by thinking you are saving a few dollars on your taxes.
The best way to save on taxes is to have your taxes done the smart way. This means keeping good records and using the right tax accountant to assist you with your returns.