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Paying with cash

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Should you accept a cash deal?

You have decided it’s time for a home makeover. You’ve set a budget and started to research options, including hiring a contractor. Your chosen contractor asks for you to pay in cash. What do you do?

H&R Block released statistics in September 2012, stating the results of a survey regarding avoiding taxes. The release states: “When presented with two quotes from a contractor – a cheque payment or a lower cash payment with no tax – 55 per cent of Canadians said they would opt for the cash option because there was no sales tax.”

Yes, you may want to save money by knocking off the taxes and get a better rate, but here are a four things to consider before heading towards the ATM.

No paper trail

It is likely that you will not receive a contract if you are paying in cash. This means you have no proof that the contractor worked on the project, they could leave at any point, and you are likely not to have warranty protection.

Insurance coverage

If you home is damaged during work being carried out on your home by a contractor, you may not be covered. It is unlikely for an underground contractor to have the adequate insurance to cover any damage. Be wary when thinking you may have covered yourself – your homeowners insurance may not cover you for third party damage.

Dodging taxes is illegal

This may seem obvious, but if a contractor is asking for cash then it is most likely because they are looking to dodge the tax man too!

You want to pay in cash you can

The Ontario Ministry of Consumer Services, states on their website: “If you do pay in cash, make sure that you get a detailed, signed receipt from the contractor. Remember, it’s always best to keep a record of payment.” 

By Sarah Hoy

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