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Lawyers.com Survey Finds Wealthiest Canadians Most Likely to Purchase Products or Services for Cash Without Paying GST
Forty Per Cent of Canadians Admit to Participating in Underground Economy, and More Than Three Quarters of Respondents Believe It Is the Responsibility of the Vendor to Report Sales Tax
TORONTO, ONTARIO, Canada, June 14, 2006 - The underground economy is booming, thanks to the 40 per cent of Canadians who, at some point, according to a new survey by lawyers.comSM, have not paid tax on goods or services bought with cash. According to the survey, it was the wealthiest Canadians who were the most common offenders when it comes to avoiding sales tax.
The Ipsos Reid survey conducted for lawyers.com, an online legal resource centre from LexisNexis Canada that helps consumers and small businesses find lawyers and legal information, reveals that Canadians who earn over $100,000 per year are 19 per cent more likely to make a purchase and not pay sales tax than those who make less than $55,000 (52 per cent vs. 33 per cent, respectively). Of those with incomes over $100,000, 52 per cent admitted to making under-the-table tax-free purchases.
The majority of Canadians place the tax reporting onus solely on the vendor, as 77 per cent said they felt it was the responsibility of the individual providing the goods or service to report the taxes to the government. Some of the more popular services purchased "tax-free" by those participating in the underground economy include house cleaning (40 per cent), work done by general contractors (36 per cent), and house painting (25 per cent).
"We all know that people hate paying taxes—but it’s surprising that 40 per cent of the Canadian population at one time or another has avoided paying sales tax on cash purchases," said David Douglas Robertson, a lawyer practising with Fasken Martineau in the area of Sales Taxes, and a consultant to lawyers.com. "The liability of knowingly paying for goods or services without paying the applicable sales taxes varies between provinces, but can be as high as $10,000 plus two years’ imprisonment, plus, of course, payment of the tax."
Quebecers were the least likely to avoid paying sales tax; only 31 per cent admitted they have avoided the taxman. On the other hand, Canadians from British Columbia were the most likely to have paid cash to avoid taxes (45 per cent). Federal laws differ from provincial laws; however, it is illegal to avoid paying taxes no matter which province you live in. The lawyers.com Web site provides information on GST and detailed findings from the survey.
Regional Breakdown
The following percentages of Canadians have purchased goods or services for cash without paying sales taxes:
- British Columbia — 45 per cent
- Prairies — 44 per cent
- Ontario — 44 per cent
- Quebec — 31 per cent
- Atlantic — 35 per cent
The survey also found that men are more likely to have taken advantage of the underground economy than are women (46 per cent vs. 35 per cent, respectively). The lawyers.com directory is an online directory of lawyers and law firms in Canada for consumers to find the legal help they need. Searches for lawyers can be done easily by location, by name of the law firm or lawyer, or by area of law practised. Articles and information on legal topics are also available to help consumers get answers to their basic legal questions. The lawyers.com service is free and easy to use, and helps Canadians make informed decisions when selecting legal services.
Methodology
These are the findings of an Ipsos Reid/LexisNexis poll conducted on behalf of lawyers.com from April 27 to May 1, 2006. For the survey, a representative, randomly selected sample of 1,184 adult Canadians completed an online survey. With a sample of this size, the results are considered accurate to within ±2.8 percentage points at a confidence interval of 95 per cent. The margin of error will be larger within regions and for other sub-groupings of the survey population. To view the survey factum, please visit www.ipsos-na.com/news.
About LexisNexis
LexisNexis® (www.lexisnexis.com) is a leading provider of information and services solutions, including its flagship web-based Lexis® and Nexis® research services, to a wide range of professionals in the legal, risk management, corporate, government, law enforcement, accounting, and academic markets. A member of Reed Elsevier Group plc [NYSE: ENL; NYSE: RUK] (www.reedelsevier.com), the company does business in 100 countries with 13,000 employees worldwide.
LexisNexis Canada Inc. (www.lexisnexis.ca) provides legal and corporate researchers with comprehensive and authoritative online and print information services and solutions, including the Quicklaw™ online research service for Canadian legal information; LexisNexis® Butterworths print and CD-ROM titles and newspapers for legal, accounting, and other professionals; the Lexis and Nexis research services for global online legal, news, and business information; and solutions that serve the needs of law firms and organizations in practice management, client development, and litigation services.
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