Home construction and renovation the largest contributor to Canada’s underground economy
Looking to custom-build a home or do your dream renovation – and save a few bucks by using unlicensed contractors? One, you’re not alone. And two, it could be a huge, costly mistake. Indeed, residential construction is by far the largest contributor to Canada’s underground economy, according to Statistics Canada. In 2016, this sector was responsible for 26.6 per cent – or $13.7 billion – of this activity, compared to 13.5 per cent for the retail trade, and 12.1 per cent for accommodation and food services.
The underground economy is defined as consisting of market-based economic activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature.
And the numbers are huge – totaling $51.6 billion in Canada for 2016, or 2.5 per cent of gross domestic product, and up 3.5 per cent from 2015.
The underground economy in Canada is even outperforming the total economy – increasing 3.5 per cent from 2015 to 2016, compared to the 2.0 per cent growth in total economy GDP.
Underground economy by province and territory
Ontario was responsible for the largest contribution in 2016 – $19.7 billion, compared to $11.9 million in Quebec, $7.6 billion in BC and $5.8 billion in Alberta.
As a percentage of GDP
Nova Scotia 2.6
New Brunswick 2.5
Why you should care
Why should you care about this issue?
On a more global scale, underground economic activity means taxes are not collected – topay for programs and services such as healthcare, education, parks, child benefits, Old Age Security and Employment Insurance.
More directly for you, however, is that an “under the table” home reno or custom-build puts you at risk. Not only do you have limited recourse if the project is not done to your liking, or is over time and budget, but you could also could be liable if a worker is injured on-site during a home renovation or if you unknowingly purchase damaged goods or shoddy service with no receipt.
Always get a contract or receipt
Cash deals with no paperwork may mean a business isn’t paying its taxes. You may be liable if something goes wrong.
In the Greater Toronto Area, the Building Industry and Land Development Association (BILD) helps homeowners make informed decisions about renovation projects through a program called RenoMark. The program was established in 2001 and is now delivered in partnership with the Canadian Home Builders’ Association (CHBA) and local home builders’ associations across Canada.
RenoMark identifies professional contractors who have agreed to abide by a renovation-specific Code of Conduct. The Renovators Mark of Excellence makes it easy for homeowners to identify participating professional renovators who have agreed to provide a superior level of service.
Get it in writing
Make sure to get the details of any reno project in writing and signed by both you and your contractor. RenoMark Renovators provide a two-year warranty.
Do your research
Ask for at least three references and always check them
By dealing with reputable businesses that follow the rules, you’re also helping workers. Honest businesses follow health, safety and other employment standards.
The Canadian Home Builder’s Association also offers free and unbiased information on how to hire a contractor the smart and safe way, at getitinwriting.ca