Why Paying Cash for Construction Work Is a Big Risk

Posted By  
16/10/2020
16:00 PM

Everyone wants their home to look marvellous - because why shouldn't it? Some people even enjoy spending money on the construction and renovation of their homes because they want it to be a nice sanctuary for them to live and spend time with their families. But of course, some people also want to save money whenever they can.

 

For example, paying cash for construction work instead of having a written contract in order to get a discount on your taxes is one such way of saving. But this is not as glamorous as it may sound. If you think that cash payments are harmless, you are wrong and might want to rethink your plan.

 

Here are some reasons why paying cash for construction work is a big risk:

No Protection for the Homeowner

So, the simple deal with cash payment is that there is no legal paperwork involved. Thus, the homeowner gets the job done at a lower cost, and the construction company benefits by avoiding tax payments. Sounds pretty simple and doable, right? Hold that thought. It might benefit the construction company, but unfortunately for homeowners, it is a huge risk.

 

There is no contract, no paper receipt, no written proof whatsoever of the job, and there is definitely no warranty. This means that the homeowner cannot hold the contractor accountable for any damage or mishap, or even if they don't get the job done correctly. You will merely put your home, yourself, and your family at risk.

 

Moreover, if the contractor leaves the job unfinished, there is pretty much nothing you can do about it. You won't have any written proof of the terms and conditions in case of a cash pay-out.

Chances of Being Scammed

It is essential to do some research on your own in order to assess what needs to be constructed or renovated at your home. It is very difficult for homeowners to understand the technical details involved, especially if it is not their area of expertise. Unfortunately, many contractors take advantage of this and try to scam homeowners. Sometimes, contractors demand an upfront advance payment and then disappear without getting any work done. There is no paperwork; what can you possibly even do about it?

Risk of Blackmail

Contractors who demand and insist on cash payment might be doing so for illegal reasons. Before you agree to anything, make sure you do your research on the contractor and ensure that there is no fishy business involved.

Tax Fraud

It is the responsibility and liability of every business owner to pay their taxes. It might be difficult for businesses that involve in cash dealing to pay their taxes, because, after all, there's no paper trail. If a business fails to report its taxes, they might face some kind of penalty or even jail time.

Section 134.2 (1) of the Criminal Code Act-Australia titled 'Obtaining Financial Advantage by Deception' states that a person is guilty if:

  • the person, by deception, dishonestly obtained a financial advantage from another person, and
  • the other person was a Commonwealth entity

Therefore, it is always a better idea to get a written legal contract while hiring a construction worker. It will give you financial protection, and any sort of risk factors can be easily avoided. You won't even have to worry about any damages since you can ensure that the construction company has insurance through the contract. If you require any further information regarding construction work, you can reach out to us by clicking here.