Canada Sees a $50 Billion Tax Gap

February 14, 2017 Taxation in Canada

Canadian Tax GapOTTAWA – Canadians skip or evade as much as a quarter of all taxes owed in the country, according to the results of new research.

The results of new research completed by the Conference Board of Canada has indicated that the tax gap in Canada is now sits between CAD 8 billion and CAD 50 billion per year.

The tax gap is a measure of how much tax a government should be earning and how much tax is ultimately collected.

According to the Conference Board of Canada, tax gaps are mostly commonly caused by tax evasion, aggressive tax avoidance, non-payment of tax liabilities, and mistakes made by taxpayers, regardless of whether they are intentional or accidental.

It was noted that the tax gap across Canada may actually be much higher than calculated, as the study only concentrated on federal taxes, and did not account for local or provincial taxes.

Commenting on the importance of ascertaining the size of the tax gap, Matthew Stewart, a researcher behind the report, said that “We wanted to use an initial study to push the (Canada Revenue Agency) into doing more work on this. . . . The first step is figuring out what the gap is, then you can come up with a plan to crack down on it.”

The estimate of the tax gap was based on data for the 2010 year, when total tax collections by the Canadian Revenue Agency topped approximately CAD 160 billion.