The underground economy (UE) in Canada is estimated at $38 billion, annually. It is fair to say that millions of Canadians are either currently engaged in it or have benefitted from it in the past. Home improvement projects are among the most common financial transactions where people look to cut the taxman out.

Saving money is a priority for all of us, however, whether you are looking at updating your kitchen or finally finishing your basement there are some corners you should not cut, like agreeing to a nothing-written-down cash deal instead of insisting on a proper written contract. These businesses don’t claim the income and fraudulently avoid paying taxes, Workers’ Compensation, and business insurance, much of which is illegal.

The Canadian Home Builders' Association clearly outlines the risks of such cash deals. For example, should a contractor accidentally damage your home and not have business insurance, the onus is on him/her to agree to pay for repairs out of pocket. The same can apply if a worker gets injured on the job. Without required Workers’ Compensation coverage, you may be liable for their medical costs.

As homeowners without a written contract, there is little or nothing you can do if the project is not completed or the work is inadequate. Furthermore, you also don't have warranty on the work that is done. If something needs repair after a renovation, without a written contract you’re likely out-of-luck. It is important to safeguard your interests when embarking on a home improvement project. Do your research, find a qualified contractor and get a proper written contract, clearly stating the contractor's responsibilities.