CASH … a risky tax plan!

Generally accepted practices for all cash transactions demands that the payee should always receive a receipt at the time of accepting a cash payment. Many businesses will give a small discount for cash payments as certain transaction fees are avoided.

If you are ever offered a reduced price for cash without a receipt think twice! Usually this means that the person asking for an “unreceipted” cash transaction will not be reporting the sale as income to Canada Revenue Agency.

This behaviour promotes the impression that the sales person or worker is less than honest. This should naturally reduce your confidence in both the person and the service being provided. Cash transactions may reduce your immediate costs but even greater expenses may be incurred by your acceptance. The reduction of the HST you would have paid and the taxes not paid by the business will inevitably increase your personal tax burden when you consider the thousands of people who are members of this underground economy.

Consumers who are avoiding the immediate tax owing can later find out that as there is no proof of the transaction the product or service you have paid for has no warranty. You may have no recourse in case of poor workmanship. As the work may be sub-standard you may also incur a further risk of liability in case of injury on your property.

Business owners who contract products or services for cash, and there is no receipt, cannot deduct the expense. CRA demands that you provide documentation for all expenses deducted on your business statement.

All transactions involving cash should be immediately receipted. This is equally as important when paying for rent, child care services, auto and house repairs.

Our Guarantee

We take care to ensure that your tax return is prepared correctly. In the event that an error is made, we will correct that error with Canada Revenue Agency for you. If the error was ours, we will credit you for all interest/penalties assessed by CRA. These credits will be applied to the next year’s tax preparation fee.