CRA fights underground economy with Home Depot purchase records

The Canada Revenue Agency (CRA) is trying to use Home Depot customer information to crack down on the underground economy.

The company has sent letters to customers who have a business credit card account, advising them that Home Depot will forward information such as business names, addresses and purchases between 2013 and 2016 to the agency.

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A tax lawyer told Global News that additional information could help the CRA crack down on moonlighting contractors.

“Rather than having to contact individual taxpayers, they can go to a broad source and this will allow the CRA to detect who they think they should check,” said Lane Zabolotney of Cuelenaere LLP.

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The CRA cannot recover information from third parties without a court order.

Home Depot fought the order over the summer, but complied with the judge’s ruling.

In an emailed statement, the company said that “several home improvement retailers have received requests for customer information from the CRA, and when Home Depot Canada received such a request for information, not only she disagreed, but refused the CRA’s request for more than three years.

“Following the court ruling affirming the CRA’s right to require such information from retailers, The Home Depot Canada complied with the Federal Court order and the law.

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Zabolotney added that the CRA will look for trends in suspicious tax returns.

“They’ll look at somebody in a certain industry and they’ll look at their spending habits and they’ll say, ‘Hey. This person’s spending habit is different from what most people do. And their income and expenses don’t match. And they will investigate further and do an audit, ”he said.

A Statistics Canada report found underground economy to be worth $ 51.6 billion in 2016, 26.6% of which came from residential construction.

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The Saskatoon and Area Home Builders Association said a number of its members are concerned that contractors are accepting payments under the table.

“How do you compete with that when you have a business that just keeps the prices down? Maybe they don’t provide a lot of information on their quote. And that sounds appealing to an owner, ”said CEO Chris Guérette.

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In an emailed statement, the CRA told Global News that the information it collects from third parties enables the agency to ensure that individuals and companies fully meet their tax obligations under the Income Tax Act and Excise Tax Act.

“The CRA has also dramatically increased its efforts to identify non-filing individuals and businesses and resolve their cases. If left unchecked, the underground economy leads to job losses and hampers economic growth, ”the statement said.

© 2019 Global News, a division of Corus Entertainment Inc.


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Shawn G. Randall

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