Canada: Tax Evaders Slipping by “Confused” Revenue Agency

EspañolAfter a three-year initiative to create a new strategy to combat tax evasion and underground economic activity, the Canada Revenue Agency has found that the problem might be bigger than originally assumed.

Cash-strapped provinces like British Columbia and Ontario have been pressuring the CRA since 2010 to crack down harder on underground activity, which generates an estimated CAN$35 billion of untaxed revenue every year.

An October 2013 report to the CRA administration recounted that “a number of stakeholders [had] been consulted, all with varying opinions and suggestions as to what the focus and direction of the strategy should be, such that a strategy [had] not emerged.”

The CRA regularly audits the three most active underground sectors, which are construction, retail trade, and food services (including waitstaff). Almost 11,000 audits from the last fiscal year for which statistics were available (2011-2012) found more than $300 million in unpaid taxes.

The audits are costly, and according to an October 2013 report, the mechanism for catching tax evasion is outdated and confused by “varying opinions.” Technology has outpaced law, as cash register zappers have created another leak in the revenue stream. Types of businesses have evolved too, and the government has been targeting “unregulated couriers, paramedics and drivers who work on contract for big resource firms in British Columbia’s remote Peace River region.”

An audit of this sector alone revealed almost $2 million in unpaid taxes.

The aforementioned report also warned, “The risk of future non-compliance increases if compliance interventions are targeted at the wrong people or if taxpayers feel they are not treated respectfully.”

Source: Huff Post Canada.

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