Construction: The Risks of Under-the-Table Work 

In the News

According to the latest estimates, the residential construction industry accounted for 35% of all under-the-table economic activity. What are the legal consequences of such work for homeowners and construction workers?

Risks for homeowners 

When work is done under the table (also known as undeclared work), the quality of the work is not guaranteed, and legal recourses are more complex in the event of a dispute. A contract that was concluded with the intent to pay less — or no — taxes is invalid because it is in violation of the Income Tax Act.  

If you own a condo, you should also know that the syndicate of co-owners is responsible for the conservation of the building and for damage caused by construction defects. If you hire someone under the table and the work they do is shoddy, you may have to cover the cost of repairs.  

Under-the-table work can also affect the value of a building. Let’s say, for example, that you have the roof of your house redone. A few years later, you decide to sell. Potential buyers could ask for proof of the work done to the roof to justify the price. Without an invoice or other official documents, you won’t be able to cite the recent renovations to justify the value of the building.  

Risks for construction workers 

Saving on taxes may seem like a nice advantage when discussing potential work with a client, but undeclared work can put you in a vulnerable position. Being paid under the table prevents you from receiving unemployment benefits. What’s more, if you get injured while working an undeclared job, you could lose your right to be compensated for work accidents by the Commission des normes, de l’équité, de la santé et de la sécurité du travail (Quebec’s labour standards and worker health and safety board). 

Your borrowing power is also a factor to consider when choosing to accept under-the-table payments. If most of your profits are undeclared, your income will appear to be lower, reducing your capacity to borrow money from banks. This can be detrimental if, for example, you want to buy a house or a car.  

But the most significant risks you face by accepting under-the-table work are fines, civil proceedings, and even criminal proceedings. If you don’t declare money you’ve received, you could face criminal charges for tax evasion or tax fraud.