Canadian Manufacturing

Ottawa estimates corporations dodged up to $11.4B in 2014 tax payments

The Canada Revenue Agency study provides information on what approach to take when cracking down on tax evaders

June 19, 2019  The Canadian Press

A new federal estimate shows corporations avoided paying Ottawa between $9.4 billion and $11.4 billion in taxes in 2014.

The study by the Canada Revenue Agency estimates a “tax gap” – the difference between what is owed to the government and what was collected – for small and medium enterprises of between $2.7 billion and $3.5 billion and for large corporations of between $6.7 billion and $7.9 billion.

The corporate figures bring the total estimated 2014 tax gap from a series of reports by a dedicated CRA unit to between $21.8 billion and $26 billion – or 10.6 to 12.6% of revenues – not including the impact of audits.

Previous reports calculated the tax gap for personal income tax and federal sales taxes, with the information to be used to repair loopholes in government tax coverage and preserve its revenue stream.

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Corporate tax filers reported approximately $298 billion in taxable income and $40.9 billion in total federal tax payable for tax year 2014.

Although they made up only about 1% of the 2.1 million corporate tax filers, large corporations reported about 52% of the total corporate taxable income and contributed about 54% of the federal tax.

“Our government is committed to cracking down on tax evasion and aggressive tax avoidance in Canada and offshore,” said National Revenue Minister Diane Lebouthillier.

“The government is delivering on its commitment to calculate the tax gap. This information will help the CRA evaluate its approaches and better target compliance actions to ensure a tax system that is fair and equitable for all Canadians.”