First off, do not lie on the application. For one thing, it's likely that they'll find out, either now, or when you go to apply for a higher security clearance later down the road. This would be a bad thing. Lying about your past on the application form is both liable to come back and bite you down the road, as well as being rather unethical.
Having worked for cash isn't likely to keep you out of the CF. Your original post was asking about them having trouble verifying the information, without records having been kept. Verification can be done by providing references who worked with you.
Not paying taxes on income earned, on the other hand, may very well keep you out of the CF, if it is discovered during the application process. I apologise if I have completely misconstrued your statements, and you have in fact already declared all this income on your tax returns. recceguy was right to point out that I do not know how deeply the RCMP delves into matters such as your tax records when conducting these checks, nor do I know that they would alert CRA should they discover evidence of tax evasion. We don't really know if the results of you undergoing a background check would be a tax audit.
But, I still think you should come clean to CRA, declare your previously undeclared income, and pay the requisite taxes upon it. Not merely to cover your own behind, but because it is the right thing to do, both legally, and morally.