Description: Statistics Canada reported last week that it estimates Canada’s underground economy was approximately $70 billion in 2021. This unreported activity was up about five percent over 2020. The largest components of the underground economy are residential construction, at 35 percent, followed by real estate rentals at 12.7 percent and retail at 10.5 percent. Statistics Canada did not include the illegal drug trade in its estimates.
Date: October 6, 2023
1) Were you surprised by these figures on the underground economy?
2) Would you consider these “under the table” activities to be fraud? Why or why not?
3) Page 3-13 of Wiley’s Financial Accounting: Tools for Business Decision-Making describes how the Canada Revenue Agency (CRA) normally collects income tax instalments from businesses. If you were a decision-maker at the CRA, what might be some approaches you would recommend to bring some of the underground economy under control?