Construction

Construction is a major industry in Québec, both in terms of the economy and the employment it generates. One individual in 20 in Québec works in construction.

The Québec construction industry is divided into four sectors:

• institutional and commercial construction
• civil engineering and roadwork
• industrial construction
• residential construction and renovation

The industry is governed by a number of laws and regulations, which are administered mainly by the Régie du bâtiment du Québec (RBQ) and the Commission de la construction du Québec (CCQ).

The construction industry is the sector of the economy that has shown the largest tax losses. According to a study published on April 22, 2005, by the Ministère des Finances du Québec, the construction (including renovation) sector is at the top of the list, with $872 million in lost tax revenue in 2002 alone.

Problems observed

Three problems persist in the industry, namely

• the failure to file tax returns,
• the under-reporting of income,
• the underground economy.

However, other practices are also used to elude tax authorities. These include false invoicing, where a contractor has a sub-contractor (fictitious or real) issue an invoice for services that were not actually rendered. The contravening contractor may use a false invoice to fraudulently claim a tax refund or to generate liquid assets to pay workers in the underground economy.

Actions taken by Revenu Québec

Revenu Québec's agreements with the RBQ and the CCQ allow it to effectively combat the schemes of tax fraud artists and those working in the underground economy. For example, by linking the information the RBQ and the CCQ have on file with its own, Revenu Québec is able to identify individuals that do not fulfil their tax obligations or whose lifestyle is inconsistent with the income they report.

Revenu Québec is also taking part in the Get it in Writing campaign, together with the Canada Revenue Agency and the Association provinciale des constructeurs d'habitations du Québec. The objective of the campaign is to inform consumers of the risks they face if they choose to hire someone without a written contract.

As well, since April 2002, municipalities are required to submit all information relating to license applications to the RBQ. This allows Revenu Québec to verify whether contractors are registered with Revenu Québec and if they fulfil their tax obligations.