Canada unveils its tax gap report

The tax gap has remained stable in the country for the 2014 to 2018 tax years, according to the report on the overall tax gap released Tuesday by the Canada Revenue Agency.

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“The tax gap represents the difference between the taxes that would be paid if all obligations were met in all circumstances and the taxes actually collected,” the Canada Revenue Agency said in a statement.

A tax gap estimate can help give the Canada Revenue Agency “a clearer picture of how and why taxpayers avoid meeting their tax obligations.”

Thus, the report released on Tuesday reveals that from 2014 to 2018, the tax gap remained stable at around 9% of federal tax revenues. “This stabilization for five years in a period of economic growth is an encouraging sign for our tax system,” said the Canada Revenue Agency.

The report also estimates that, for the 2018 tax year, the total gross tax gap is between $35.1 and $40.4 billion, and the total net tax gap for that same year would be between 18.1 and $23.4 billion.

“The activities of the Agency have greatly reduced the gap related to corporate tax”, also noted the federal agency, which specifies that this gap has decreased by 48 to 59% per year on average during the years of taxation 2014 to 2018.

“We know that most Canadians are paying their fair share, and the government is committed to fighting tax evasion and aggressive tax avoidance… [Le rapport servira] better target our law enforcement activities. This will allow us to better protect our tax base, which provides essential benefits to improve the lives of all Canadians,” said National Revenue Minister Diane Lebouthillier.

Since 2016, the Agency has had a specialized team to examine different aspects of the tax gap and publish a series of analytical reports on this subject.

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