Cash renovation deals: what you give up when there is no contract

The offer sounds simple: knock off the tax, pay in cash, skip the paperwork. The saving is visible on day one. The cost shows up later, when the tile cracks, the contractor stops answering, or a worker falls off a ladder in your yard. The Canada Revenue Agency's guidance for homeowners lists what is lost.

What the CRA says you risk

In its tax tip 'Renovating or rebuilding your home? Protect yourself by getting it in writing', the CRA says that paying under the table without a written contract puts you at risk. You may lose warranty coverage and recourse for poor workmanship, and you may take on liability if someone is injured on your property. Without a contract, the CRA says, you have no recourse for poor or incomplete work. The page is archived and dated March 10, 2017, but the risks it lists have not changed: they come from having no paper trail, not from a particular tax rule.

Why the paper matters in a dispute

Small claims courts, consumer protection offices and warranty programs all start with the same question: what was agreed? A written contract, receipts for every payment and the contractor's real name and address are what let you show the scope, the price and who was responsible. With a cash job and no contract, you may not even be able to prove who did the work. That is also why some provincial laws require written contracts for home renovations; see the province articles on ArtBuild.

Insurance and injuries

The CRA advises verifying that a contractor has workers' compensation coverage and private liability insurance before hiring. Uninsured contractors who cause damage can leave you paying for the repairs yourself. Contractors who work only for cash often have neither. In several provinces a homeowner who hires a contractor who is not in good standing with the workers' compensation board can be held responsible for unpaid premiums; check the clearance articles for your province.

What to get in writing

The CRA says to get a written, signed contract before work starts and to keep updated records during the project. The contract should include the contractor's contact information, a GST/HST number, a detailed warranty, and a receipt for all money paid. CMHC's guide to hiring a contractor adds a start and end date, a payment schedule showing how much you pay at each stage, and a precise description of the work, and says that even if you are offered a discount for cash, it is critical to still have a written contract.

A cash offer is a signal

A contractor who will not put the job in writing or offers a 'tax-free' price is telling you how a problem will be handled later. Ask for a written quote from everyone, compare them on scope rather than on the cash price, and pay in a way that leaves a record, such as cheque or e-transfer, against invoices that match the contract.

Prevention Checklist

• Get a written, signed contract before any work starts.
• Make sure it shows the contractor's name, address, GST/HST number and warranty.
• Ask for proof of workers' compensation coverage and liability insurance.
• Pay by a traceable method and get a receipt for every payment.
• Keep change orders and updated records in writing during the job.
• Treat a 'no tax for cash' offer as a reason to keep looking.

References

1. Canada Revenue Agency. Renovating or rebuilding your home? Protect yourself by getting it in writing (tax tip, March 10, 2017, archived), Web page, Risks of cash deals; what the contract should include; insurance. Accessed 2026-11-03.
2. Canada Mortgage and Housing Corporation. Hiring a contractor, Web page, Written contract contents; cash discount warning. Accessed 2026-11-03.

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