CRA Tackles Underground Economy

The Canada Revenue Agency (CRA) will be able to look at the identity and transaction records of most of J.D. Irving’s Kent Building Supplies’ commercial clients, associated contractors, and installers to make sure they paid all their taxes. A federal court has approved a request by the CRA to require J.D. Irving to provide data dating back to January 2019 as part of the tax agency’s fight against the underground construction economy. It wants the complete name and contact information, CRA business number or social insurance number, and total transaction amount of all ‘Kent Pro’ account holders who made purchases totaling over $20,000 in a year. ‘Kent Pro’ is a service of Kent Building Supplies which has 48 locations across Atlantic Canada. It will also have to send CRA a list of all tradespeople, contractors, and installers who perform building or installing services for Kent Building Supplies customers. The CRA used a legal tool called an ‘Unnamed Persons Requirement (UPR)’ in its successful argument for the data. An affidavit filed in support of the UPR said the agency has “identified significant non-compliance” with tax laws by people working “in building construction and renovation.” It also reveals the CRA has turned its attention towards potential tax fraud and evasion in the construction industry in Atlantic Canada specifically. It estimates the hidden income earned in the construction industry accounted for over one quarter of all unreported personal income tax in 2018. That represents about $10 billion in unreported taxable income and $2.1 billion in estimated lost tax dollars.