Canadian companies avoided paying up to $11.4 billion worth of taxes they should have paid, according to the federal tax agency.
The Canada Revenue Agency released its fifth and final report on the tax gap, this one focusing on corporate taxes. Previous reports examined factors such as sales tax fraud, domestic tax evasion, and the use of offshore tax havens to look at how much leakage Canada’s taxation system has.
Tuesday’s report estimates that in the 2014 tax year, Canadian corporations managed to pay somewhere between $9.4 billion and $11.4 billion less than they should have in taxes.
Broadly speaking, bigger companies seem to be responsible for a bigger chunk of corporate tax leakage. The CRA report says small companies avoided paying between $2.7 billion and $3.5 billion in taxes. Big companies, meanwhile, avoided paying between $6.7 billion and $7.9 billion.
The tax agency is cracking down on that sort of behaviour, and says it thinks it will be able to recoup between 55 and 65 per cent of the corporate taxes it feels it is owed for 2014. That brings Canada’s corporate tax gap bill down to $3.3 billion and $5.3 billion in 2014.
That’s somewhere between nine and fourteen per cent of all the corporate tax dollars Canada took in that year, according to official numbers. It suggests Ottawa didn’t collect almost one out of every $6 worth of corporate taxes it was entitled to that year — and that’s assuming they are able to recoup some of it. If they aren’t, the bill could go as high as almost one out of every four.
“Our government is committed to cracking down on tax evasion and aggressive tax avoidance, in Canada and offshore,” said Diane Lebouthillier, Canada’s minister of national revenue.
Along with previous reports, Tuesday’s corporate tax data “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,” she said.