The Canada Revenue Agency (CRA) has had more success in recent years in reducing tax evasion among individuals than among businesses.

According to a tax gap analysis report produced by the Agency, a copy of which was obtained by our Bureau of Investigation, it was possible to recover $6.7 billion in unpaid taxes from individuals in 2018, while the amount recovered barely reached $2.2 billion in 2014.

About 70% of personal tax evasion stems, the report notes, from "underground economic activity [...] concealing some form of income", thus largely from undeclared work. The rest comes from undeclared income abroad.

Recovery of unpaid taxes between 2014 and 2018 increased due to increased collection activities by the Agency, the report said. However, it is not specified where the efforts have mainly focused: in Canada or abroad.

Businesses

For companies, the situation remained relatively similar between these two years. In 2018, the CRA was able to recover $7.9 billion from them, while in 2014 the amount of taxes collected reached $6.8 billion.

The report notes that large companies are the most at fault, since they are the source of 70% of tax evasion, while they represent barely 1% of businesses in Canada.

But, according to the report, it would be more difficult to carry out and increase collection activities with very large companies.

"This is especially true for large corporations given their size and global operational reach," the report said.

Unfulfilled promises

When he came to power in 2015, Justin Trudeau pledged to reduce tax evasion, especially among large corporations.

“Our government is fully committed to combating tax evasion and aggressive tax avoidance. We have invested historic sums to fight tax evaders, ”said the Prime Minister in the House of Commons.

In general, the Revenue Agency succeeds in countering only a portion of tax evasion in Canada through its audit and collection activities.

According to the analysis report, it is calculated that $23.4 billion in unpaid taxes escaped the CRA in 2018, for both individuals and businesses.