Contracting makes up a significant portion of Canada’s underground economy. Cash-only sales that avoid taxes and promote the employment of illegal immigrants are highly prevalent, particularly in this industry.
Provinces with high taxes are the ones that are most concerned with the underground cash market. For example, Alberta, a province with only a 5% tax on labour, sees less cash-only contracting sales when compared to provinces like Ontario, where illegal cash-only activity has increased since the introduction of HST.
Toronto is currently home to about 100 000 to 250 000 illegal immigrants, and of that, 20 000 work in the city’s construction and contracting sector. Companies that employ, or are run by illegal immigrants, often avoid costs like liability insurance and safety training, making them competitors to their legitimate counterparts but also putting them at risk.
It’s important that clients are educated on the risk they take when working with illegitimate companies. Losing insurance coverage is just one of the risks when they engage in cash-only deals or employ illegal workers.
The good news is, your clients can use this to their advantage and create a value proposition by educating customers about why price is only one of the factors they should consider when working with a contractor or contracting company.
When you’re looking for new prospects, consider the legitimacy of their business. All parties and companies involved are put at risk when they engage in illegal activity, including something seemingly as harmless as under-the-table contracting work. Supporting legitimate contracting businesses ensures that you will continue to attract the right kind of business.
Click here to learn more about the struggles Canadian contractors face by operating in a black market.
