Since the dawn of time, the construction industry has always been on notice for compliance for zoning and building codes, for income taxes and for labor standards. The documentation requirement has always been over the top and getting worse.

Going back to the days of the Flintstones , when Fred was working at Slate and Company in the quarry and he had to punch his time card with the dinosaur punch-clock machine. Probably for pre-historic Osha… Documentation!

And, everything was checked for compliance.

So, since olden times, construction and development has always been. Jesus was the son of a carpenter and even back then, they were building stuff.

Still, nothing has changed. Construction is still the backbone of progress and ‘concrete’ development. For example, google before and after pictures of your city, your airport, your neighborhood. It’s really incredible, the difference.

Today, more than ever, compliance and documentation is very important. Why?

-to ensure all profits are reported.

– to ensure unreported cash expenses are not used to inflate gains on sales.

– to ensure building code violations do not go absent with fat envelopes.

In order to combat all of this perceived potential intent much has been put into place on both sides of the border.

Specific to the construction industry reporting in Canada is the T5018, where an entity whose primary business activity is construction is required to record and report payments to the CRA made to subcontractors for $500 or more for construction services.

For Quebec rental properties, labor costs and expenditures for renovations, improvements repairs or maintenance work to a building used to carry on a business or earn income must be reported on an annual basis…if, taking a deduction against rental income or business profits.

Even the various reno tax credits and green tax credits are in place  to force the declaration of all income by contractors for construction and renovation.

Also, in Quebec, the ACCES Construction Committee (concerted actions to counter the underground economy in the construction industry) was established to encourage government departments and agencies involved in the fight against tax evasion and underground economy to discuss

issues related to these practices and to propose solutions. The Committee’s objectives are aimed at strengthening the initiatives taken to counter tax evasion in the construction industry through a greater collaboration between the different organizations involved in identifying tax evasion schemes and

proposing intervention strategies, and changes to laws and regulations.

The Committee members are :

  1. Revenue Québec
  2. Commission de la construction du Québec
  3. Régie du bâtiment du Québec
  4. Director of Criminal and Penal Prosecutions
  5. Ministère des Finances
  6. Commission des normes, de l’équité, de la santé et de la sécurité du travail
  7. Ministère du Travail, de l’Emploi et de la Solidarité sociale

Wow! Seven government departments. Seven. To translate to English: taxation+ building code+ Criminal Code+ corporate antitrust law + Labor law

It’s no different in the US, between IRS compliance requirements  https://www.irs.gov/pub/irs-pdf/p3780.pdf

and OSHA requirements re labor standards  https://www.osha.gov/doc/compliance.html

Workmen’s compensation, and drug-testing are very expensive costs of conducting business.

So, in the construction industry, we must be on our game. We must ensure that we keep all of your documentation. We have proper systems in place. We must transact with suppliers and customers that are of the same integrity.

As the Jackson 5 said “One Bad Apple don’t spoil the whole bunch.”

Gavin Correa

January 28, 2019

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