Nova Scotia judge says not paying GST on cash transactions is 'illegal and immoral'

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Not paying the GST on all-cash deals is immoral, a Nova Scotia judge commented after an in-house CRA study found taxpayers commonly skip out on paying it.

"There is nothing illegal about working for cash," wrote Judge Raffi Balmanoukian of Nova Scotia Small Claims Court, Blacklock’s reports. "What is illegal and immoral is doing so and not reporting and paying the appropriate taxes."

A Federal Court injunction has temporarily halted the CRA's collection of $55,592,632 in carbon taxes and $237,140 in interest from Saskatchewan, a cash grab that the province has called 'unfair' and 'unconstitutional.'

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The comments came after a contract dispute between a Baddeck, Nova Scotia contractor and a customer.

Evidence in the case included a handwritten receipt for $4,860 in cash. In an affidavit, the contractor stated that it was his "intention to report this cash payment to the Canada Revenue Agency as business income."

"I have my doubts," Judge Balmanoukian wrote. "It does not pass the smell test," he added. "The affidavit refers to an 'intention' to report although it is sworn in June 2024 in relation to cash paid in August 2022… A dollar you don’t pay is a dollar that someone else has to pay or that has to be borrowed, or which has to be cut from state services including courts," wrote Balmanoukian.

The Canada Revenue Agency (CRA) paid more than a quarter million dollars last year to distribute fake news articles written by their own employees, documents show.

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Unpaid taxes nationally, including foregone GST, add up to over $40 billion annually, a 2022 report by the CRA said.

In surveys by the CRA, many Canadians felt as though skipping out on taxes would lead to no consequences: “Canadians were asked to rate the likelihood that tax cheaters would be caught by the Canada Revenue Agency,” said a 2023 report. Only 25 percent "felt it was very likely that the Canada Revenue Agency would catch tax cheaters."

Asked if they agreed with the statement, "The Canada Revenue Agency would never find out about income received in cash that is not declared on income tax forms," 32 percent agreed.

However, a recent report by the Fraser Institute found that Canadian families are being hit hard by ever-increasing taxation as the cost of living skyrockets, eroding the standard of living. 

Financial security is on the decline in Canada as taxation and inflation skyrocket, outpacing spending on all basic necessities combined.

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“The average Canadian family now spends more of its income on taxes (43.0%) than it does on basic necessities such as food, shelter, and clothing combined (35.6%),” found the report. By comparison, 63 years ago in 1961, 33.5% of the average family’s income went to pay taxes and 56.5% went to basic necessities.