Over 40% of Canadian gig workers risk tax evasion, despite new laws and available tax benefits
In a survey conducted by H&R Block Canada, it has been uncovered that a significant number of Canadian gig workers are willing to take substantial risks with their tax declarations amid evolving reporting requirements for digital labor platforms.
The findings indicate that 32 percent of gig workers are inclined not to declare “any” income, while 43 percent are willing to risk not declaring “all” income.
This comes at a time when nearly 9 million Canadians, or 28 percent, report engaging in various forms of gig work to supplement their income. This marks a notable increase from just 13 percent in 2022, with an additional 12 percent considering such work in response to financial hardships.
The survey sheds light on the motivations behind the surge in gig work, attributing it to the rising cost of living. A staggering 73 percent of Canadians report difficulties in covering everyday expenses, with 24 percent struggling to pay their bills.
This financial strain has pushed over half (58 percent) of gig workers into the economy for additional income. Despite this, the gig economy serves as a secondary source of income for 72 percent of workers, contrasting with 28 percent who rely on it as their sole income source.
The disposition towards tax declarations among gig workers is notably risky. A concerning 27 percent did not declare all their gig income in the 2023 filings (for the 2022 tax year), with a significant portion now contemplating withholding “all” or “any” gig-related income in their current tax season filings.
Yannick Lemay, a tax expert at H&R Block Canada, emphasizes the legal risks associated with such decisions, pointing out the potential for audits and penalties from the Canada Revenue Agency (CRA) and Revenu Québec.
Despite these risks, Lemay highlights the availability of numerous tax benefits and credits for gig workers, which can help in maximizing refunds and lowering overall tax burdens.
The survey also brings to attention recent legislative changes affecting gig platform income reporting, specifically mentioning Bill C-47. This legislation mandates new reporting obligations for certain digital platform operators, aiming to enhance tax compliance and transparency within the gig economy.
Moreover, the findings reveal a shift in transparency regarding side hustles, with 49 percent of gig workers stating their primary employers are aware of their gig employment. This openness contrasts with the 31 percent who reported their employers were unaware.
However, there is a lack of clarity among gig workers regarding the tax implications of their income. About 25 percent admit to not fully understanding the tax requirements, which include navigating multiple income sources and the different considerations for self-employed individuals.
The survey outlines the various deductions and credits available to gig workers, such as auto-related expenses, travel, home office costs, and professional development activities, underscoring the importance of being informed to navigate the tax landscape effectively.
