An estimated $40.9 billion
of economic activity goes unreported annually through Canada’s underground
economy. Within the underground economy, construction is the largest sector
accounting 28% of its value. According to the most recent estimates by the
Canada Revenue Agency, almost a fifth (20%) of private-residence contract work
in Canada takes place in the underground economy. This tax evasion
deprives the Canadian government of tax revenues which fund public services we
rely on, risking the homeowner along with the worker.
Many homeowners often assign home renovation projects without recording those projects (like reroofing a home) in a contract. This makes them vulnerable to common scams, poor workmanship, and legal liabilities. Moreover, dangerous tasks, like roofing, expose workers to harm, especially for those who do not receive proper training, equipment, and insurance - things which illicit businesses are likely to provide. Falls are one of the major causes of critical injuries and death on construction sites in Ontario. Despite these considerable costs and risks, regrettably, surveys reveal that many Canadians feel that paying cash in order to evade tax is acceptable. The Minister of Labour, Government and Consumer Services and Finance partnered with the Behavioural Insights Unit to tackle this issue. One online advertising campaign designed to make homeowners aware of the risks of the underground economy did so by directing these tax evaders from their online searches for roofers to the website of the Ministry of Labour.
In 2012, the Commission on the Reform of Ontario’s Public Schools, led by Don Drummond, identified that it is of the utmost importance to pare down underground economy costs in order to extinguish the government’s deficit. Consumers who actively participate in this underground economy, intentionally or unintentionally, put themselves and others at risk by operating beyond the realm of legal safety. Businesses who do not meet their tax obligations are less likely to comply with other obligations, such as safety, training, and access to benefits. Paying for goods or services in cash to circumvent HST is the most common form of participating in the underground economy.
Although the Canadian tax system enjoys a high level of uprightness and has amongst the highest compliance rates in Organization for Economic Co-operation and Development (OECD) countries, this unreported activity constitutes a significant loss to both the Federal and the Provincial governments’ revenue streams.
CRA encourages tax payers to complete a Voluntary Disclosure in order to prevent the growth of underground economy with associated substantial losses to the Canadian Government.
Many homeowners often assign home renovation projects without recording those projects (like reroofing a home) in a contract. This makes them vulnerable to common scams, poor workmanship, and legal liabilities. Moreover, dangerous tasks, like roofing, expose workers to harm, especially for those who do not receive proper training, equipment, and insurance - things which illicit businesses are likely to provide. Falls are one of the major causes of critical injuries and death on construction sites in Ontario. Despite these considerable costs and risks, regrettably, surveys reveal that many Canadians feel that paying cash in order to evade tax is acceptable. The Minister of Labour, Government and Consumer Services and Finance partnered with the Behavioural Insights Unit to tackle this issue. One online advertising campaign designed to make homeowners aware of the risks of the underground economy did so by directing these tax evaders from their online searches for roofers to the website of the Ministry of Labour.
In 2012, the Commission on the Reform of Ontario’s Public Schools, led by Don Drummond, identified that it is of the utmost importance to pare down underground economy costs in order to extinguish the government’s deficit. Consumers who actively participate in this underground economy, intentionally or unintentionally, put themselves and others at risk by operating beyond the realm of legal safety. Businesses who do not meet their tax obligations are less likely to comply with other obligations, such as safety, training, and access to benefits. Paying for goods or services in cash to circumvent HST is the most common form of participating in the underground economy.
Although the Canadian tax system enjoys a high level of uprightness and has amongst the highest compliance rates in Organization for Economic Co-operation and Development (OECD) countries, this unreported activity constitutes a significant loss to both the Federal and the Provincial governments’ revenue streams.
CRA encourages tax payers to complete a Voluntary Disclosure in order to prevent the growth of underground economy with associated substantial losses to the Canadian Government.
