Major Fabien | Unpublished work: facts and implications

In Quebec and Canada, undeclared work is considered tax fraud. The laws are clear: all income must be disclosed. If the tax authorities are found, the consequences can be serious. Revenu Québec and the Canada Revenue Agency (CRA) have more advanced methods to root out fraudsters. If you get caught, expect to have to pay not only the evaded taxes, but also interest and penalties that can reach up to 50% of the amount owed. In the worst cases, you could even face criminal charges, risking large fines and even jail time.

Remember that moonlight often involves other people. A disgruntled customer, a jealous colleague or even a suspicious neighbor could report you to the authorities. Both levels of government have established anonymous tip lines, making the risk of reporting even more likely.

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Reputation damaged

Imagine for a moment that your illegal work has been discovered. The consequences for your reputation could be catastrophic. In the digital age, information like this about you can spread quickly on social networks and have a lasting impact on your professional image. Your future employers or clients may be reluctant to do business with someone who has a history of fraud.

From day to day, the results obtained with your illegal work can quickly become a headache when it comes to using it. Financial institutions must report suspicious transactions. Frequent cash deposits or unexplained cash transfers may attract the attention of your bank and may trigger an investigation. Contrary to popular belief, even amounts of less than $10,000 can be reported to FINTRAC (Financial Transactions and Reports Investigation Center of Canada).

As for investments, they become a real obstacle course. How can you justify where this money came from to buy property or invest in RRSPs, TFSAs, RESPs and even take out a life insurance policy to protect your loved ones? When it comes to financing the purchase of a family home, mortgage lenders require proof of income which you cannot provide.

Tax domain and nominees

Some may be tempted to use tax havens to hide their undeclared income. Pay attention! This practice is not only illegal, but also very dangerous. Governments around the world, including Canada, have increased cooperation with many countries that were once complacent. The fight against tax evasion is increasing worldwide. The exchange of information between countries makes it more difficult to implement and maintain these schemes.

Using nominees is not a miracle solution either. If discovered, you expose yourself to even more serious fraud charges, not to mention the risk of being betrayed by the nominee.

By working illegally, you lose many social benefits. Unemployment insurance contributions do not mean; no benefits if job is lost. Your reduced contributions to the Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) will result in a smaller retirement pension. Not to mention the coverage that could be lost in the event of a work accident.

Unscheduled work may seem like a short-term solution, but it can seriously damage your professional future. Without officially recognized experience, how can you justify your skills to future employers? How to negotiate a better salary without a strong work history?

Living in constant fear of being found out can take a toll on your mental health. The stress of hiding your activities, the fear of tax audits, the anxiety of every bank deposit… All this can quickly become a heavy mental burden.

While moonlighting may seem like an attractive option to increase your income in the short term, the risks and potential consequences far outweigh the benefits. Peace of mind, long-term financial security and compliance with the law are worth more than a few dollars behind the scenes.

Source: https://fintrac-canafe.canada.ca/intro-fra

In 2023, Quebec’s GDP was about 500 billion Canadian dollars. According to Statistics Canada, undeclared work represents between 3.5% and 4.5% of GDP. So we estimate that the underground economy represents around $20 billion per year. The tax shortfall including GST, QST and income taxes is probably around 10 billion per year.