According to a new report by Statistics Canada, the value of Canada’s black-market transactions increased by more than 30 percent between 2016 and 2021. Residential construction was identified as the largest contributor to this underground activity, with an estimated GDP at market prices of $68.5 billion in 2021. This represented 2.7 percent of the total GDP. Statistics Canada’s 2016 report on underground economy activity found that the total value of Canada’s black market was just over $51 billion.
The agency defines the black market as economic activities, whether legal or illegal, that escape measurement due to their hidden, illegal or informal nature. Accurately tracking black-market activity is difficult, and estimates representing it must rely on assumptions, indicative information and various indirect methods. The proportion of Canada’s GDP attributed to black-market activity has remained steady between 2.5 and 3 percent since 2014.
In 2021, the underground economy grew by 4.8 percent in real terms, following a 4.5 percent decrease in 2020. The residential construction industry was responsible for over one-third of all black-market activity across Canada in 2021, and saw an increase of 32.8 percent.
The Canada Revenue Agency (CRA) also reported in its 2022 “Underground Economy Business Plan” that the increased number of online sales due to the COVID-19 pandemic has led to more unreported transactions. The CRA identified two areas of risk for non-compliance for individuals earning a living through the digital economy: the platform economy and virtual assets. The agency is exploring digital solutions to facilitate information sharing between taxpayers/registrants and tax administrations, and to support compliance while reducing the administrative burden.