Posted by & filed under Ethics.

Description:  In what might be called an ethics survey of Canadian tax preparers, the Canada Revenue Agency has some surprising results. While about 60% do feel failing to report cash income is a serious issue, about half of those preparers don’t see much wrong about a charity giving an inflated tax receipt. Professor Ian Lee from Carleton University in Ottawa questions the findings though, pointing to the relatively small sample size. Further, he believes the professional ethics process of Ontario’s CPAs would prevent most of its members from cheating in preparing returns.

Date:  January 29 , 2019



Discussion points:

1)  What did you find to be the most interesting result from this survey?

2) Try doing your own in-class survey of students’ attitudes using the five bullet points that tell us the survey results. For example, question one, using the first bullet could be “How do you feel about someone receiving cash for work performed and not declaring the income?”

3) The Ottawa Citizen article tells us “only 44 per cent of those polled agreed with the statement that ‘taxes help the government do worthwhile things.’” How might this belief influence a tax practitioner’s view on fraud? (Hint: Check out the fraud triangle in Wiley’s Auditing: A Practical Approach, for a possible clue.)

5 Responses to “Surprising CRA survey”

  1. Grace Kenny

    1. I found it very interesting and little bit surprising that less than half of people surveyed believe that the government uses tax money to do worthwhile things. I understand that many people do not necessarily enjoy paying their taxes but I did not expect the number of people that do not believe in the governments actions to be so high.
    2. I asked a few classmates and friends their thoughts and generally people view paying cash for a discount as not serious cheating but not completely honest.
    3. Based on the fraud triangle, tax practitioners may use the belief that government does not use tax money effectively as rationalization to omit portions of earnings or misrepresent their clients true earnings. the large percentage of Canadians that hold this belief also provides an opportunity for tax practitioners to misstate earnings because they see how many other people hold this same belief and they may have a “strength in numbers” mindset.

  2. Taylor Campbell

    The most interesting result I found from this survey was that I was initially surprised with the amount of tax preparers that answered the survey saying that they think its not a serious crime to not pay tax on income for various reasons such as flipping your condo for profit or receive cash and not pay tax on that income. And despite our relatively high tax rate in Canada compared to other countries, it was also interesting to see that only 44% of people surveyed by the CRA actually believed that taxes paid out to the government do not do worthwhile things. When it got to the piece with the Carleton University professor, Ian Lee, the article began to come back into hindsight, and I seemed to make more sense of the article when he said with his own experience of dealing with CPA’s, that it is very unlikely a significant amount of these tax preparers are corrupt as they have a very strict code of conduct, and if they were to break this code of conduct they would lose their license, and you cannot be a working accountant with your license, so you just wont see these CPA’s not obeying the laws. Similar results were given when ordinary people were asked these same questions in the survey, which leads me to believe the average person is displeased with the amount of taxes the government places on our income.

  3. Morghan Malyk

    1)  I found the tax receipt for charitable donations being inflated very interesting, I was personally unaware that this was a common practice or it could be done undetected. I feel this points to a need to change the way the CRA monitors tax receipts to avoid the system being taken advantage of. Although a larger tax receipt seems like a small effect on an individuals’ tax return, a few dollars less in taxes due if it is common practice the losses for the government could add up quickly. It also feels morally wrong to overstate giving’s to charity and really takes away from the act itself.
    2) – How much tax-free cash are you comfortable receiving for odd jobs before you would declare it?
    -How honest do you think charities are when issuing tax receipts?
    -Would you report a capital gain if you could get away without declaring it?
    -Do you think paying for odd jobs in cash is ok?
    -What are the services in our society you think taxes should pay for?
    3) This statistic is bad news for the CRA since a negative view of the tax system will most likely effect citizens’ compliance with it. I think a way to change taxpayers’ perception would to make information on how government funds are spent more accessible to the general public. In theory, a citizen should be able to access government budgets to see how funds are distributed but the average person probably wouldn’t spend the time tracking it down. Possibilities for making this information more accessible include breaking the information down into a simple pie chart with categories like; infrastructure, healthcare, salaries, EI, etc. to show the proportion in which tax dollars are being redistributed. Overall, if taxpayers feel the system they are paying into is corrupt and inefficient, Canadians have fewer incentives to be honest and forthcoming on their tax returns.

  4. Jared Gray

    The most interesting statistic from the recent CRA survey was that less than half of the Canadian population believes that our government does not do useful work with the tax dollars they collect. This leads me to question the Canadian population’s perception our tax system and who finances the vital amenities that our government provides? Our health care system in particular should be an amenity that most Canadians should be well aware of. In order to gain the trust of the Canadian population concerning the allocation of tax dollars, the government should consider making certain budget reports available to the public. This will allow tax payers to actually see where their tax dollars are going in an effort to gain the trust of the entire Canadian population.

    Cash that individuals earn from employment should be reported within their tax returns. If the undeclared cash is material either personally or relating to a business, then this will reduce the quality of life for Canadians in the future.

    The negative view that a large portion of the Canadian population has concerning taxes is something that should not go un-noticed. This view clearly shows that a large portion of Canadian tax payers have a motive to attempt fraudulent activities and more importantly have the ability to rationalize this poor behaviour. Tax practitioners must be aware of the opportunities for individuals to commit fraud and take the appropriate precautions stop all fraudulent behaviour.

  5. Liam Carmichael

    1) I find it interesting that both only half of people believe that the government uses their money in useful ways, and that people support businesses sheltering money to prevent from paying tax on it. I agree with both statements to an extent, but am surprised that others do as well.
    I find it difficult to wrap my head around government spending more times than not, and find myself questioning their decision making. Although I’m sure their spending is benefitting others, most of their spending tends to be toward things that do not benefit me. This is likely the case for the people who were surveyed as well.
    Having businesses shelter money to prevent from paying taxes seems fine to me, as they are just being rewarded for knowing how to work with the rules. Also, allowing for this to happen creates a demand for local tax businesses, as people will go to them for consulting on how to shelter money to avoid paying taxes.
    2) From talking to a few people, the general consensus is that we’ve all been a part of an event where cash was paid and income was not declared. It doesn’t come across to us as a big issue. We were all on the same page for the most part.
    3) With 44% of people not believing that government tax dollars are used for worthwhile things, it is likely that some of these 44% will be tax practitioners and be willing to commit fraud to avoid paying taxes. If people do not think tax dollars are being used well, then they will not be very interested in paying tax dollars to the government.


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