We hired a private contractor to do our renovations. He wants to charge us tax on top of the total price. I'm not opposed to paying tax but I don't believe he is going to claim this as income as he pays all of his helpers cash under the table.
Will an official receipt be enough for him to claim it? Or is there something else I can request to make sure he absolutely claims the money I am giving him so he isn't getting an additional $2000 from me to put in his pocket?
Normally a receipt would provide a paper trail for auditing, so he should claim it if he provides a receipt. Paying by certified cheque/credit card would also help ensure the claiming of the taxes. The more paper trail the better.
Paying cash leaves you open to being scammed.
His receipt should have his HST number. Once there is an HST number register on his company name its official documents and you now obligated to report you renovation in your annual income statement as contractor should report this tax collection. Even if he will not report it to the government that's is not your issue anymore.
Government constantly doing a random check of contractors and if they found out that he did not report a tax charge he will be prosecuted and pay much, much more then he collected from you.
The only one thing, once you get his HST number check it through CRA website that number you were given belong to his company. Just google "HST number check" and it should provide you with a link. In case his HST number is not in the system then you do not have to pay HST and still legible to claim your renovation in your annual income statement. Do not worry about him paying to his trades under the table. He is taking a responsibility for his method of payments and tax not you.
Hope it helps.
Have you received an invoice or progress invoices from the contractor? Have you been dealing in cash with them? Have you asked for an invoice marked paid?
Invoices are required to display a company's tax number so that GST/HST/PST can be appropriately recorded and tracked by both parties. Taxation is usually associated with and based on revenues for the purpose of sales tax and any investigation by the CRA will be based on metrics and thresholds around that basis. Therefore if they have not issued an invoice to you it is easier for them to simply not record the revenue.
Paying sub-trades cash does not always mean that they are avoiding taxes or are not recording information properly, but if the trades are also not invoicing the contractor it becomes much more likely. When they have to cash cheques this creates additional paper trails they may have to explain to CRA investigations. Paper trails and invoicing are quite important in all of this.
If you are concerned you can choose to discuss the issue with the CRA directly; they have programs in place to address concerns and follow-up on reported problems. I have included a general link below, but you can simply search on the internet and find contact points:
Each one of our invoices has our HST registration number. If their is none on his or it is fake call Revenue Canada. This year they established the Snitch line. You can now receive a commission on illegal operators like this.
The reason he pays cash to his employees is because he does not pay source deductions to the government either as well no WSIB which put's you at risk as well.
Revenue Canada 1-800-959-2256
Normaly if you made agreement to do job for cash you will need only recepit for that amout. Tax - you did not specify is it PST or GST.
All businesses that charge GST have to have GST Number from Revenue Canada. That is a must if there is no GST Number you pay no tax. It is easy to check GST Number for registerd Company on Revenue Canada site on Internet.
If contractor bought materials he will ask you to reimburse PST with proper justification like recepits from purchase. So be aware of that. Many small businesses are not registerd for GST and trying to collect what by law does not belong to them!
The contractor should provide you with an invoice.
There are certain pieces of information that have to be on invoices if the contractor is charging GST, HST and/or PST. The invoice must include:
Contractor business name and address
The date of the invoice
Contractor Business Number (also known as the GST Registration Number)
The purchaser's name
A brief description of the goods or services performed
The total amount paid or payable
The terms of payment
An indication of items subject to GST at 5% or HST at the appropriate provincial rate, or that the items are exempt, and either the total amount of GST/HST charged, or a statement that the GST/HST is included and the total rate of tax
If applicable, an indication of items subject to PST (also known as RST) at the provincial rate, or that the items are exempt, and either the total amount of PST charged, or a statement that the PST is included and the total rate of tax.
This way you will be covered, if the contractor is claiming the tax or not is his problem. If he charges you taxes he will have to declare them or he might get in trouble sooner or later.
Hope this help. Good luck.
Thank you everyone for your help with this!
If he claims tax, make sure you get his HST number.
A invoice is all he has to give you with his HST number on it there is no separate GST PST. If he does not claim it and pockets the extra $2000 dont worry about it because he will be caught.
With are company you get an invoice no mater cash or cheque. Not worth going to jail over a few hundred dollars here and there.
Hope this helps.
Tooley's Painting & Home Improvements
You can ask for a receipt at the time that you make your final payment make sure his name and company name are on it and it is properly dated and signed. Or you can pay by cheque to at least have a record of payment. Put a note on the comment line that this is for or including tax.
Accessibility Construction Tech
If this person you hired is a legitimate business person, he is required to collect tax from you. This is no different than you having services performed by a mechanic or carpet cleaner. Any contractor that has a registered business must collect taxes and remit to the government on a regular basis. If you are so concerned about him misusing the money, call Revenue Canada and report him.
Why did you hire an unlicensed contractor in the first place? Licensed contractors are business people who pay taxes, WSIB and carry insurance. There are too many fly-by-night guys out in the market place that keep their prices low and make it difficult for contractors like myself to find work. Half the blame falls on the consumer. If you want and good job, you need to pay the price to get qualified, licenced and insured contractors.
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