Number of Black-Market Transactions in Canada Up Over 30% Since 2016: StatCan

A construction worker shingles the roof of a new home in a housing development in Ottawa, in a file photo. The residential construction business is the largest contributor to the underground economy, Statistics Canada says. The Canadian Press/Sean Kilpatrick

The number of black-market transactions in Canada grew by more than 30 percent over the five-year period between 2016 and 2021, according to a new report by Statistics Canada, which says residential construction is the largest contributor to underground activity.

“The gross domestic product (GDP) at market prices for underground economic activity in Canada was estimated to be $68.5 billion, or 2.7% of total GDP, in 2021,“ wrote the agency in its report, titled ”The underground economy in Canada, 2021,” as first reported by Blacklock’s Reporter.

In its 2016 report on underground economy activity, Statistics Canada found that the total value of the country’s black market was just over $51 billion, meaning the number was up over 32 percent in 2021.

The federal agency defines the black market as consisting of “economic activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature.”

Statistics Canada acknowledges that accurately tracking black-market activity is difficult “by its very nature” and estimates attempting to represent it “necessarily rely on assumptions, indicative information and various indirect methods.”

When viewed as a proportion of Canada’s GDP, black-market activity across the country remained steady between 2.5 and 3 percent of Canada’s total GDP between 2014 and 2021.

However, the underground economy grew by 4.8 percent “in real terms in 2021,” which came on the heels of a 4.5 percent decline in 2020.

“Most of the growth in 2021 was the result of an 18.0% increase in underground economic activity related to investment in residential structures,” says the report.

The residential-construction business accounted for over one-third of all black-market activity across Canada in 2021, it says.

“While the residential construction industry has historically been the largest contributor to underground economic activity, it was particularly high in 2021, as underground economic activity in this industry increased 32.8%,” the report says.

Online Underground Market

The Canada Revenue Agency (CRA) issued a report on the underground economy in 2022, noting that increased numbers of online sales across the country as a result of the COVID-19 pandemic accounted for higher numbers of unreported transactions.

“The COVID-19 pandemic has had a positive effect on many platforms, while others have been negatively affected,” the CRA wrote.

“The increased use of platforms has amplified the risk that online income is not reported or is underreported by individuals and businesses, especially since it cannot be identified using conventional techniques.”

The CRA also “identified two areas of risk for non-compliance” for individuals earning a living through the digital economy, which were “the platform economy and virtual assets.”

“Digitalization is fundamentally changing the ways in which individuals, businesses and governments interact,” the report said.

“In response to these changes, the CRA is exploring digital solutions that facilitate sharing of information between taxpayers/registrants and tax administrations, and that support compliance while reducing the administrative burden.”