November 17, 2014 5:54 pm
Updated: November 17, 2014 8:12 pm

From wait staff to contractors, Canada cracks down on under the table deals

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WATCH: The government is saying that workers paid under-the-table are wreaking havoc on the country’s tax system and taking advantage of consumers.

TORONTO – The federal government has formed an advisory committee to crack down on everyone from waiters to construction workers – who are paid under-the-table and costing the country roughly $41-billion a year.

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At a news conference in Toronto on Monday, Federal Minister of National Revenue, Kerry-Lynne D. Findlay announced the first meeting of a new Underground Economy Advisory Committee.

The group is made up of key industry stakeholders from businesses across the country who will help the Ministry and the Canadian Revenue Agency crack down on under-the-table transactions.

“The underground economy of course impacts all taxpayers because it undermines our tax base which means we don’t have as much revenue that we could have for all of our goods and services,” said Findlay.

The advisory committee would meet twice a year and help spread the word to consumers about the harmful effects of the underground economy which 2011 data from Statistics Canada values at 2.3 per cent of Canada’s gross domestic product.

Business leaders in Toronto for the meeting say the problem is rampant in every sector, particularly in the retail, restaurant, restoration and construction industries.

WATCH: Minister of National Revenue Kerry-Lynne D. Findlay says taking on the underground economy is a tough task with big rewards and the Canada Revenue Agency should be able to adapt to new challenges going forward.

“There are definitely a lot of cash operators out there and they tend to rear their heads when a disaster happens,” said Darrin Drake Winmar of Winmar Restoration who adds underground workers impact the bottom line of reputable companies.

“Your average rebuild basement after a flood probably forty to $50,000. So if we lose ten jobs because people have cashed out  with a cash contractor then it adds up quickly,” said Winmar.

It’s a scenario restoration experts and people in Canada’s construction business see it all the time. But when consumers are enticed by workers offering services at lower rates and under the table, many business owners often hear complaints from customers who feel they were duped. Stefanie Coleman Dias from Coleman-Dias Construction Inc. describes one such scenario that happened to a female client.

“He offered her an unrealistically low price, said Dias. “What ended up happening was he charged her double and she ended up with a mess.”

Tracking how many workers are off the books is a difficult task. But Joyce Reynolds, the Executive Vice President of Government Affairs says it’s a work in progress.

“That’s one of the things the advisory committee is going to be looking at,” said Reynolds. “And then how do we over time measure compliance has increased”

If that was successfully measured and all money was claimed and taxed through the proper channels, experts say the billions of dollars that would be found could be used towards infrastructure or to lower taxes.

“We’re talking about an amount of money larger than our military spending,” said Mike Moffatt, an assistant professor at the Ivey business School, Western University.

“That could go to anything from roads to hospitals to you name it. Or the government could simply give everyone a cheque for $500 to $1,000.”

READ MORE: Ontario targets illegal smokes, tax avoiders

The underground economy also includes the sale of contraband tobacco which the government also hopes to crack down on. But that takes help from both consumers and businesses country-wide.

“They’re very concerned about helping us identify those who work for cash and don’t do as good a job and basically rip off the taxpayers,” said Findlay.

The responsibility is on workers and the people hiring them to make sure all of the work is being done legally. If you’re unsure, there are ways to protect yourself before you hand over any cash.

“Get it in writing see what they want to charge see that they want to charge the tax on it and be aware of who you’re dealing with,” said Findlay.

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