From: Canada Revenue Agency
Backgrounder
- Tax Gap in Canada: A Conceptual Study (June 2016)
- Estimating and Analyzing the Tax Gap Related to the Goods and Services Tax / Harmonized Sales Tax (June 2016)
- Tax Assured and Tax Gap for the Federal Personal Income Tax System (June 2017)
- International Tax Gap and Compliance Results for the Federal Personal Income Tax System (June 2018)
- Tax Gap and Compliance Results for the Federal Corporate Income Tax System (June 2019)
The CRA has followed through on its commitment to estimate the tax gap and to publish these estimates. It will continue to engage with external experts and stakeholders to ensure Canadians are informed about tax compliance.
Tax Gap and Compliance Results for the Federal Corporate Income Tax System (June 2019)
The CRA's fifth report in the tax gap series focuses on corporate income tax. This report builds on the work already completed in the first four reports on the tax gap.
Key highlights of the latest study include:
- Tax gap: Before accounting for results from audits, the overall federal corporate income tax gap is estimated to be between $9.4 and $11.4 billion in tax year 2014. This includes the tax gap for incorporated small and medium enterprises (SMEs), which is estimated to be between $2.7 billion and $3.5 billion, and the tax gap for large corporations, which is estimated to be between $6.7 billion and $7.9 billion.
- The CRA's compliance efforts are instrumental in reducing the corporate tax gap. The corporate income tax gap, after considering audit results, is expected to be reduced by between 55% and 66% to between $3.3 billion and $5.3 billion in tax year 2014.
- Tax gap methodology: Given the complexity of tax gap estimation and data availability, multiple methodologies are required to adequately measure Canada's corporate income tax gap. The CRA consulted other tax administrations, government departments, and experts to refine the methodologies used in the report, and will continue to engage with them on methodology and research moving forward.
- For SMEs, the CRA used a random sample, which was representative of the population as a whole, to estimate the tax gap.
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