• The underground economy refers to any economic activity that generally would be taxable if it were reported at tax time.
• Certain sectors are more vulnerable to underground activity such as the construction or hospitality.
• Taking cash to avoid paying tax is cheating. It's cheating those Canadians who pay their taxes; it's cheating businesses that have to compete with lower prices charged by cash-only entrepreneurs; and it's cheating customers and workers who may not be covered if disaster strikes.
• It's a myth that taking cash and keeping no records makes you immune to taxes. If your lifestyle is not in line with the income you report, and you cannot explain the difference, your taxes will be assessed anyway based on an estimate of your income. You might even have to pay interest, penalties and even face prosecution if you get caught.
• Cheaters do get caught as the Canada Revenue Agency has an aggressive program to detect and deter those Canadians with suspicious profiles.
• The agency has 1,200 employees dedicated specifically to catching these underground operators. Once caught, cheaters can face prosecution, hefty fines and jail time. If you want to do some homework on the issue, go to the Taxpayer Alert section of www.cra.gc.ca, and click on the Underground Economy link.
- News Canada
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