January 28, 2005

17,500 Ontario employers sent letters

WSIB and CRA join forces to battle underground economy

By Grant Cameron

staff writer

The federal and provincial governments have announced a co-operative venture aimed at combating the underground economy and protecting workers in construction as well as other types of industries.

The new agreement involves the federal Canada Revenue Agency (CRA) and the provincial Workplace Safety and Insurance Board (WSIB).

The two agencies have compared notes and come up with a list of more than 17,500 employers in Ontario that are registered with one organization but not the other.

Letters were sent out Jan. 21, asking the employers to ensure they are compliant with the relevant legislation by registering with the appropriate agency.

The CRA and the WSIB plan to follow-up with businesses that do not register voluntarily.

The venture was announced recently by federal Minister of National Revenue John McCallum and Ontario Labour Minister Chris Bentley.

The two ministers maintain the initiative will ensure businesses pay their fair share of federal payroll taxes and workplace health and safety insurance premiums.

“It’s important that everyone pays their fair share towards government programs and services,” said McCallum.

“The Canada Revenue Agency believes in using responsible enforcement to ensure everyone contributes equally.”

Bentley said the joint program is of enormous benefit to the workers of Ontario.

“By making certain that all employers required to pay workplace safety and insurance premiums do so, we are creating a system that provides appropriate coverage in workplaces across the province.”

Patrick Dillon, business manager of the Provincial Building and Trades Council of Ontario, said his group backs the plan.

“I think it’s a good thing if it’s done in the right way,” he said noting that both agencies aggressively go after workers when they don’t pay up.

“Both those organizations aggressively go after the individual worker and I hope that they go after the employers with the same aggressiveness.

“I’d say it’ll help both workers and legitimate employers and it’ll stop forcing new immigrants into the underground economy and being exploited.

“I think it’ll be good for the total population because, I think, in the past when there’s been tax increases, only the legitimate workers and employers pay those taxes.”

David Frame, president of the Council of Ontario Construction Associations (COCA), said the announcement is a step forward but more needs to be done.

“It’s an important piece of the puzzle but it’s not the whole puzzle. This gets you the ones that have legitimate employers registered with the CRA but not the WSIB.”

According to Frame, the province is losing millions of dollars as a result of employers cheating the system.

One year, he said, Statistics Canada reported 98,000 companies in construction in Ontario but the WSIB had records for only 48,000.

‘It’s an important piece of the puzzle but it’s not the whole puzzle. This gets you the ones that have legitimate employers registered with the CRA but not the WSIB’

David Frame

Meanwhile David Surplis, a consultant with COCA, said there isn’t enough manpower to catch the cheaters and there’s no incentive for companies that have been “flying under the radar” to come forward and register.

“They don’t have enough inspectors. If there’s 100,000 construction companies out there and, say they know of about 50,000, they’ve got to find another 50,000 construction companies and they don’t have enough people at all.”

The CRA and WSIB are working under a memorandum of understanding signed last March to share business data about employers in Ontario. Cross-referencing allows each organization to identify those businesses that are registered with one agency, but not the other, so appropriate action can be taken.

The WSIB estimates it will register approximately 8,000 non-compliant employers through the initiative in 2005.

In registering these employers the WSIB estimates it will recover up to $30 million in premiums.

The CRA anticipates a similar percentage of non-compliant employers to be registered for payroll taxes.

WSIB president Jill Hutcheon said the initiative will benefit both employers and workers.

“The agreement means Ontario’s employers will be working on a level playing field and that the employees of the province will have access to expert advice on workplace health and safety.”

The mission of the CRA is to promote compliance with Canada’s tax legislation and regulations through communication, quality service and responsible enforcement.

The WSIB administers no-fault workplace insurance for employers and their workers and is committed to the prevention of workplace injuries and illnesses.

Last year, the provincial Liberals announced they will aggressively target the underground economy to stem an estimated $2 billion annual loss of government revenue from the construction sector alone.

In March, Bentley called the underground economy “insidious” and said it places tremendously unfair pressure on legitimate businesses, deprives governments of tax dollars and jeopardizes the health and safety of workers.

He also said the underground economy “threatens the financial viability of many Ontario firms, and places a serious financial strain on the entire province.”

Here are some things employers should know about registering with the Canada Revenue Agency (CRA):

• The CRA is responsible for administering the tax laws for the federal government and for most provinces and territories. Under federal tax laws, most employers need to register with the CRA.

• You are considered to be an employer if: You pay a salary, wages (including advances), bonuses, vacation pay, or tips to your employees; or you provide a benefit — such as board and lodging — to your employees.

• A person is your employee if you hired that person under a contract of service to perform services for you. Generally, an employer-employee relationship exists if you have the right to control and direct the person or people who perform the services for you.

• You may also need to register with the CRA if you have taxable sales, are earning income as a corporation, or are engaged in import or export activities.

• If you are not sure whether you have to register with the CRA or if you are not yet registered with the CRA but should be, you can call the CRA Business Window at 1-866-432-6349.

• You can also register your business online at www.businessregistration.gc.ca.

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