Our tax laws make it clear that those who are living here, legally or not, must shoulder the tax burden of the state.
Over the years I have represented many foreigners who were working here illegally while trying to acquire lawful permission to live in Canada.
Since many do not have a SIN, they work for themselves or for someone else for cash in order to survive. Rarely is any of this income reported for income tax purposes.
Others “borrow” someone else’s SIN and identity and enter the work force. Their taxes are deducted at source, albeit in someone else’s name.
Others open up and run businesses in the name of a Canadian friend or relative. They usually pay their taxes in the name of the notional owner.
Because of their vulnerable existence here, many illegals just manage to get by although some do phenomenally well in spite of the challenges they face.
I often hear the refrain from some of my clients that they would “love the opportunity to pay taxes” here in Canada but simply “can’t” because of their unlawful status.
To test the veracity of this position I contacted Sam Papadopoulos, a media relations official for the Canada Revenue Agency.
Papadopoulos confirmed that those who are physically present in Canada for 180 days or more in a calendar year are subject to our income tax rules and must file a tax return and pay taxes on their income. In fact, if they don’t file, they can be found guilty of an offence and be subject to a fine of up to $25,000 and one year in jail.
So, what would happen if they file a return without a SIN but include a cheque to cover their tax liability? Papadopoulos opined that the cheque would be deposited but the tax return would not be processed without a SIN and would be returned to the filer. However, without a processed return there would be no tax liability. Accordingly, if the return was not processed the filer could obtain a refund even though, by filing his return, he conceded in writing that he owed taxes to the crown.
Would the CRA report the attempted tax filer to immigration authorities?
No.
Does this mean that the contents of the return would be treated confidentially? Not really.
While the contents of a tax return is normally treated as confidential, the Income Tax Act authorizes the CRA to sign memorandums of understandings with other federal or provincial agencies for the sharing of information. So, if the Canada Border Services Agency were to enter into an agreement with the CRA and asked for i.e. a list of all returns filed without a SIN, the CRA would release the contents of the returns to CBSA, including presumably the addresses of the filers.
Our tax laws make it clear that those who are living here, legally or not, must shoulder the tax burden of the state. Yet, notwithstanding the fact that there are hundreds of thousands of undocumented workers now working in the country, there does not seem to be any practical way for them to report their income without risking getting caught.
Clearly, there are those who feel that we shouldn’t treat illegals as if they are here lawfully. But refusing to process their tax returns and shouldering the entire tax burden ourselves does not sound like a better option to me especially when many are willing to pay their fair share.
Guidy Mamann is the senior lawyer at Mamann & Associates and is certified by the Law Society as an immigration specialist. Direct confidential questions to metro@migrationlaw.com
