In Canada, nearly everyone who owns a business or just living their life knows how to file their taxes on the amount they owe to the government. In all the other countries around the world, a portion of the population fails or tries their best to avoid paying taxes. The CRA treats this portion of the people operating in the underground economy as their top priority. The CRA makes sure that these people meet all their payment obligation, such as GST/HST registration, filing, reporting, and payment. It will ensure a smooth and fair tax system for everyone.
The CRA strategy for controlling the underground economy includes tailored strategies ready to prevent and combat. The CRA also offers education and support for a vast majority to comply with their tax obligations. There are specific videos available on the website to help everyone understand the criteria and know-how they should follow the tax system.
The CRA has robust enforcement tools resulting in significant consequences with plenty of severe penalties for those who deliberately fail to comply with the obligations.
Ways To Target Underground Economies
- The law enables the CRA to get all the needed information from various sources. This information allows the CRA to locate, track, assess and identify the people responsible for the underground economy. CRA possesses special tools with advanced data analysis capabilities and other legal means to uncover unreported income. These tools are great to focus on the problems regarding compliance, especially in industries where non-compliance is abundant.
- CRA has enhanced its work since 2014 and now making efforts to identify the individuals and businesses that failed to return their taxes or neglected to file their income. Audits help CRA to identify all the individuals by examining their business lifestyle assets and expenditure. CRA also aims to collect the information of a person to determine how and who is hiding any income.
- The CRA has been keen since the cases of non-compliance increased. With time it is making efforts to enhance its lead programs so all the information that CRA collects can be managed in one place to be evaluated. Once the evaluation is done, the CRA then decides the nature of the case, whether to send it to the Agency’s Criminal Investigations Program. If you want to know the criminal convictions released by the CRA, your can visit Criminal investigations actions, charges, and convictions.
- The nature of the underground economy changes constantly. CRA continuously researches new trends and studies all the risks related to non-compliance to present some emerging findings to remain up to date. There is a strategy for how CRA manages to gather all the insights. The most common way is that CRA consults with the minister of the underground economy advisory committee and collaborates with all other responsible government and regional groups to tackle the territorial roundabouts.
- Lastly, the CRA also communicates with the Canadians openly to raise awareness about the underground economy and how one can avoid being a part of it.
CRA is doing all in its power to fight the underground economy. It is for the betterment of all Canadians. If the governments kept a seamless communication with all the Canadians, everyone could understand the process that will put the cheaters who refuse to compliance where they rightfully belong.
Sohail Afzal, CPA, CMA, MBA
Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.