The economy has evolved as technology advances, so too, should the CRA innovate its auditing and verification techniques, argued by National Post. In less than a decade, the number of Canadians working in the platform economy has increased by ten folds. Given these relatively new sources of income, the CRA breaks down the platform economy into the following categories:
- The sharing economy i.e. AirBnB. Uber, or Lyft;
- The gig economy i.e. Doordash, Uber Eats;
- Peer to peer sales: vendors on ebay or Kijiji;
- Social media influencers
According to National Post, the platform economy is now a vast sector, booming with a worth over tens of billions of dollars in Canada. This inevitably leads a growing concern for even a vaster number of taxes going unreported. To harness control of the national revenues, the CRA has begun monitoring people’s online presence and parsed for discrepancies. That is, when a person showcases a new Mercedes-Benz on Instagram but declares $0 in the tax return, it would raise questions compelling the CRA to ferret out answers.
To narrow down the search, the CRA has laser-focused on such top-tier players as power users with over tens of thousands of followers and rake in revenue from ads on their platforms. Tax obligations in people’s online presence are surprisingly self-evident. That aside, the CRA has also employed software tools of Chainalysis and Crypertrace to scrutinize transactions made by cryptocurrency. We have briefly touched on how income made in cryptocurrency can affect your income tax in our last post, click here if you need a recap. Equipped with such advanced tools, the CRA is now able to track payments made with cryptocurrencies on certain platforms and increases the chance of detecting fraud or money laundering.
In short, while we revel in more ways to rake in cash, the CRA is hot on our heels, determined to unveil the number and means of all our incomes. While the practice obviously has raised concerns regarding privacy, there is no denying that taxes are what make liberal Canada possible. And between a rock and a hard place, the rub between security and privacy is nothing short of a rehash.