Canada’s “tax gap” for individuals at the federal level is estimated to be about $8.7 billion, or 6.4% of personal income tax revenue, for the 2014 taxation year, according to part of a study on individual income tax compliance in Canada that the Canada Revenue Agency released on Tuesday.
The CRA has committed to examining the tax gap, and releasing its findings, in response to a recommendation from the Standing Committee on Finance on tax avoidance and tax evasion last year.
The calculation of the tax gap was based on estimates of taxes that were assessed but not collected and on unreported income from the underground economy, the CRA indicated.
For the 2014 taxation year, the CRA reveals that 86% of income was assessed, 74% of deductions were reported and 83% of credits were claimed.
“The study shows that Canadians can be highly confident that the overwhelming majority of the tax base is at low risk of non-compliance, though there is minimal direct intervention by the CRA,” the CRA says in a news release announcing the study.
The CRA has established a team that’s currently examining other aspects of the tax gap. Last year, it released its first tax gap report, which estimated that there had been a tax gap of $4.9 billion for 2014 in terms of non-compliance with GST and HST.
The next study in the tax gap series, expected in 2018, will focus on international tax evasion and will draw on increasingly available international tax data to support the analysis, the CRA says.
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