An estimated $40.9 billion of economic activity goes unreported annually within Canada’s underground economy. Among these values ​​of the underground economy, construction is the largest sector with 28% of its value. According to the most recent estimates by the Canada Revenue Agency, nearly one-fifth (20%) of private residence contract work in Canada takes place in the underground economy. These tax evasion techniques deprive the Canadian government of tax revenue on which public services depend and also put the homeowner along with the worker at risk. The CRA suggests that Canadians help themselves with voluntary disclosure and disclose their unreported income.

Many of the homeowners often assign home renovation without registering those projects, such as reroofing a house, in a contract and thus leaving themselves vulnerable to common scams, poor workmanship, and legal liabilities. In addition, roofing is a dangerous task for workers, especially those without proper training, equipment, and insurance, all of which are likely to lead to illicit business. Falls are one of the leading causes of serious injury and death on construction sites in Ontario. Despite these considerable costs and risks, surveys sadly reveal that many Canadians find it acceptable to pay cash to avoid service tax. The Ministry of Labour, Government and Consumer Services and Finance has partnered with the Behavioral Insights Unit to address this issue, in an online advertising campaign designed to make risk owners aware of the underground economy by targeting these tax evaders taxes from your online searches for roofers. to the website of the Ministry of Labour.

In 2012, the Ontario Public Schools Reform Commission, led by Don Drummond, identified that reducing the cost of the shadow economy is paramount to abolishing the government deficit. Consumers who actively participate in this underground economy, intentionally or not, put others at risk along with themselves by trading beyond the realm of security and legal provision. Businesses that don’t meet their tax obligations may also be less likely to meet other obligations, such as protections, training, and access to benefits. Paying for goods or services in cash to bypass the HST is the most common underground economy.

Although the Canadian tax system enjoys a high level of fairness and has one of the highest compliance rates among members of the Organization for Economic Co-operation and Development (OECD), this unreported activity constitutes a significant loss to both the federal government and provincial governments. income streams.

The Canada Revenue Agency is trying to cut losses by uncovering this underground economy. Canadians will be audited and, if found guilty, will be charged with tax evasion. Tax evasion is a criminal offense in Canada and the penalties are very high, ranging from 50 to 250% of the tax payable.

The only way out is to resort to the Voluntary Disclosure Program. By using this program, the individual will disclose the unreported income to the CRA and be free from prosecution or penalties.