According to a new survey published by H&R Block, certain forms of tax cheating are viewed as more serious than others, despite the fact the majority of Canadians admit to dodging taxes by paying cash.
The survey found that Canadians were far more lenient with service industry workers who didn’t report their tips as income with 46 percent suggesting that money shouldn’t be considered income. However, when it came to business owners skirting the law by using sales suppression software to eliminate sales records, nearly 80 percent of those surveyed believed the business owners should be criminally charged.
Additionally, the number of Canadians who feel paying cash to avoid sales tax is wrong increased 30 percent over the last two years, jumping from 28 percent in 2012 to 58 percent in 2014.
Despite the increasing amount of people who believe tax avoidance is wrong, the survey found that Canadians aren’t likely to report the issue to the Canadian Revenue Agency (CRA) with only 34 percent of people expected to report a tax cheat.
“There are incentives for Canadians to contact the CRA and report tax cheats but it doesn’t seem to be enough to spur people to snitch,” says Caroline Battista, senior tax analyst with H&R Block Canada. “You may receive a cash reward for your tip but that is only paid out once the tax evader is found guilty which could take years.”
For the 53 per cent of Canadians who said they would pay cash, saving a few bucks was the main motivation.
“No matter how hard you try, there will always be people who do not comply with the system,” explains Battista.
“However, the penalties for not reporting income are severe so you need to understand the consequences of avoiding tax. If you do have income you failed to report, use the Voluntary Disclosure Program to make things less painful. You will still owe tax on the unreported income but you may be able to avoid penalties.”
The survey also found that Canadians aged 18 to 44 were most likely to turn in a tax cheat, with 42 percent suggesting they would, compared to the 45+ bracket where only 28 percent suggested they would report the cheat.
In addition, 17 percent of Canadians said they had been paid under the table for their services in the past, while 72 percent of Canadians felt bartered services should be tax exempt.
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