Ethical business dealings

[Anglewannabe]

I contact a handy man to come do some jobs around my home. He told me that his fee is $45/hour + tax. If I pay cash, it is $35/hour no tax. I am assuming that if he does the job for cash, it is because he will not pay income tax and have more money in his pocket. That is usually the way things go.

Since these are small jobs, I am not concerned that I need a receipt in case he does a bad job.

Here is my dilemma. I have always prided myself on being honest and insisted the moral thing to do is to pay the $45/hour so the government gets their tax income. However here is my concerned. I originally told him I can pay cash’ and then I realized my shift in attitude and I see nothing wrong with it.

I have decided I will not take the lower price and will purposely pay by cheque or credit card so he has to declare it. However, my main concern is I don’t feel I am really doing the right thing. I feel I am being a fool. Are my morals going down hill?

Angie

 

[1ke]

Since you are in Canada, I am not familiar with the responsibilities of payer and payee. I can tell you that in the U.S. it is the handy-man’s responsibility to report his income, not the person who hires the service.

I can also tell you that some people offer a cash discount not to cheat on taxes but rather to avoid the credit card and check processing fees. Some banks charge a lot for processing checks in a commercial account and taking credit cards through PayPal, Square, or another method will cost the company a percentage plus a per transaction fee. Some people probably do cheat on their taxes, but that is not your problem or responsibility.

Bottom line: Don’t assume and don’t base your decision regarding what or how to pay on what you “think” he might be doing. Base it on how you want to pay for your own convenience, tracking, and fraud protection.

 

[Anglewannabe]

Since you are in Canada, I am not familiar with the responsibilities of payer and payee. I can tell you that in the U.S. it is the handy-man’s responsibility to report his income, not the person who hires the service.

I can also tell you that some people offer a cash discount not to cheat on taxes but rather to avoid the credit card and check processing fees. Some banks charge a lot for processing checks in a commercial account and taking credit cards through PayPal, Square, or another method will cost the company a percentage plus a per transaction fee. Some people probably do cheat on their taxes, but that is not your problem or responsibility.

Bottom line: Don’t assume and don’t base your decision regarding what or how to pay on what you “think” he might be doing. Base it on how you want to pay for your own convenience, tracking, and fraud protection.

You made some real good points I had never considered before. The only question in my mind is ‘Why is it is I pay cash there is not GST’? GST is what us Canadians pay on products and services. It stand for Good and Service Tax

 

[UbiCaritas]

You made some real good points I had never considered before. The only question in my mind is ‘Why is it is I pay cash there is not GST’? GST is what us Canadians pay on products and services. It stand for Good and Service Tax

Another American here, but is it possible that he handles the GST himself, factoring it into the total cost he presents to you but without itemizing it?

I have no idea if this is a possibility, but it’s something to consider; I know at least one person here who runs her own small business and simply sends the appropriate authorities a check for the requisite sales tax on her transactions at various times of the year. Of course, that might not be an option in Canada. Also, some businesses here offer a bit of a discount for payment by something other than credit card due to the aforementioned processing fees.

I do second asking him for more details about the cash discount, as it may well be above-board.

 

[Jelrak_TB]

There is no significant cost for processing cheques, and credit card fees are at most 4.5%.

Clearly this individual is attempting to avoid paying taxes and, should you assist him in doing so, you would be at least partially responsible…in order for an honest and just society to properly function it requires the greatest degree of resistance against corruption…your participation in the underground economy would not merely mean that others would carry a greater portion of the tax burden, but also, and more significantly, that this individual will be emboldened to continue in his pursuits of defrauding the government and, by extension, his fellow citizens.

Further, this individual is potentially undercutting more honest businessmen by such methods, placing pressure on others to follow his practices.

I would suggest you find a more reputable contractor rather than reward bad behavior.

Clients who offer to corrupt our business by placing cash in envelopes are calmly reminded that if we are dishonest in one aspect of business how may they be certain we are not equally dishonest in other areas as well?

I applaud your hesitation in paying in cash…your conscience is correct in finding something disagreeable with this transaction.

 

[WJeffrey]

Since he did not tell you that he was going to do anything illegal, and there are other legitimate reasons why he could be charging you more for not paying in cash, I do not see the sin in paying cash. Many gas stations in America charge a surcharge $.05 per gallon if you do not pay in cash. I’ve never asked if this is to cover the card fee or if it is to cheat the government out of tax revenue.

Once you pay, it is his sin if he does not report the income to the government.

You could ask him what his motivation is and base your response on his answer.

You could hire someone else to do the work. Do you really want to hire a handyman whose ethics you do not trust? That could be a recipe for disaster.

Personally, if I trusted the guy, I would simply pay the extra $10 and sleep peacefully.

Of course, I suppose you could contact the Canadian version of the IRS to ask if taxes were paid on your transaction. I imagine that the handyman would appreciate your follow through.

 

[mommy_k]

Is he providing you with an invoice and list of work done?
If yes, then he plans to pay taxes regardless of payment.
Personally, I would never have anyone do work in my home without a detailed invoice. This is for consumer protection and insurance purposes regardless of how small the job is.

 

[Allegra]

His taxes are his responsibility to file. You’re fine taking the discount.

 

[ChurchSoldier]

Since you are in Canada, I am not familiar with the responsibilities of payer and payee. I can tell you that in the U.S. it is the handy-man’s responsibility to report his income, not the person who hires the service.

I can also tell you that some people offer a cash discount not to cheat on taxes but rather to avoid the credit card and check processing fees. Some banks charge a lot for processing checks in a commercial account and taking credit cards through PayPal, Square, or another method will cost the company a percentage plus a per transaction fee. Some people probably do cheat on their taxes, but that is not your problem or responsibility.

Bottom line: Don’t assume and don’t base your decision regarding what or how to pay on what you “think” he might be doing. Base it on how you want to pay for your own convenience, tracking, and fraud protection.

Pretty much sums it up.

 

[Anglewannabe]

This might be totally rationalizing, but it is my understanding that you might not have to worry about this too much if it is a small amount. .

Well, he has been here and that is the attitude I took. It is a small amount. (By the way, yes Canadian taxes are a headache)

The original deal as he was to come tonight to have a look. On the phone I asked him if cash was to avoid the taxes and he said yes. So I originally told him that I was not into cheating the government. I also asked if his minimum fee was an hour to which he said ‘we will see’

So when he got here, he pulled out a screw driver and started to do the jobs. He did everything except for one job he needs to buy a piece for and one job I forgot to mention

Well, when he got here we got talking and it turns out (and I believe him) that he retired early and he just likes to help people. He said that if a senior appears to be low income he just does it for free. He did strike more as a guy wanting to help others, not do shady business deals.

He spent about 50 minutes and I said ‘so you have been here an hour’ to which he responded just give me a $20. So I said ‘Ok, I will cheat the government but I won’t cheat you I will pay $40.’ We finally settled on $30.

I feel that the $3.00 of GST the Canadian government is out is immaterial. And… it is his conscience how he handles his income tax

Angie