I think the requirement to declare prevent honest theft more than anything else. For example... turnstiles in subway systems, don't stop people who are determined not to pay... they just increase the perception of safety and make it so that honest people aren't as tempted to cheat the system, because the penalty and embarrassment of being caught is high.JayLove06 wrote: ↑ I'm curious to know how many people avoid capital gains tax. I'd think they were non-Canadians. Trust me, I really hate having to fork out all that money but I also don't want to fork out a lot more in fines. That is enough to keep me in check. I'd have a tough time sleeping if I didn't include capital gains on my taxes.
If you must explicitly declare the proceeds of a house to get the exemption, then that paper trail and deliberate action is enough to prevent many from just omitting to declare the sale as income. I've always thought that the government should institute a renter's non-refundable tax rebate.
Imagine if the government said they're going to give a 2% rebate to renters up some maximum of say $500 / year. It'd be the opposite of the home-owners tax grant. If that was in place, renters all over would declare the amount of rent they paid. It would be a relatively easy thing to cross-reference rental income at an address with declared income at an address... and GOOD renters would be asking for receipts. Most landlords want good, honest, tenants who pay the rent reliably, and on time. Those renters probably want an honest landlord they're not worried about being shady... or IOW, a landlord who declares income on their taxes as the law dictates. Sure, some landlords will ask to be paid in cash in exchange for a cheaper rent... but those landlords usually suffer when it comes to tenant quality, I would think.
I suspect that there are LOT of suites out there generating income that land owners are not declaring. We don't rent out our suite, so we wouldn't be affected... but back when we rented, I would always wonder how much rent the land lord was actually declaring based on some of the personalities and reluctance to provide receipts ( at times ).
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