Failing to pay the GST on all-cash transactions is immoral, declared a Nova Scotia judge, amid revelations from Canada Revenue Agency research showing widespread acceptance of tax cheating among Canadians.“There is nothing illegal about working for cash,” wrote Judge Raffi Balmanoukian of Nova Scotia Small Claims Court. “What is illegal and immoral is doing so and not reporting and paying the appropriate taxes.”Blacklock's Reporter says the comments arose during a contract dispute between a Baddeck, N.S., contractor and a customer. Evidence included a handwritten receipt for $4,860 in cash. The contractor swore in an affidavit that it was his “intention to report this cash payment to the Canada Revenue Agency as business income.”“I have my doubts,” wrote Balmanoukian. “It does not pass the smell test,” he added. “The affidavit refers to an ‘intention’ to report although it is sworn in June 2024 in relation to cash paid in August 2022.”Tax avoidance only punishes honest taxpayers, noted the judge. “A dollar you don’t pay is a dollar that someone else has to pay or that has to be borrowed, or which has to be cut from state services including courts,” wrote Balmanoukian.“This court will not come to the aid of either party seeking to uphold an arrangement to the contrary,” he continued. “Avoidance transactions are in my view the epitome of ‘contrary to public policy,’ and coming to the courts — the third branch of government — to enforce them is akin to the Menendez brothers seeking mercy because they are orphans.”Unpaid taxes nationwide, including foregone GST, amount to up to $40.4 billion annually, according to a 2022 Overall Federal Tax Gap Report by the Revenue Agency. This figure aligns with a 2019 Budget Office study estimating at least $40 billion in uncollected taxes.Canada Revenue Agency's Annual Corporate Research surveys reveal a perception among Canadians that tax cheating is common. “Canadians were asked to rate the likelihood that tax cheaters would be caught by the Canada Revenue Agency,” said a 2023 report. Only 25% “felt it was very likely that the Canada Revenue Agency would catch tax cheaters.”Additionally, 32 percent of respondents agreed with the statement, “The Canada Revenue Agency would never find out about income received in cash that is not declared on income tax forms.” Furthermore, 22% strongly agreed that “It’s acceptable for people to pay cash for goods and services in order to avoid paying the GST,” while 19% did not consider it cheating to “get a deal on home or car repairs by paying cash.”
