Plain meaning
An estimate of the difference between taxes that would be paid if all obligations were fully met and taxes actually collected.
Also called
gross tax gap
net tax gap
Key points
- The tax gap is an estimate, not a taxpayer-by-taxpayer assessment.
- It can include non-filing, under-reported income, hidden offshore income, payment non-compliance, and other gaps between legal obligations and collections.
- Different tax bases, such as income tax and GST/HST, may have different tax-gap estimates.
- A larger measured gap can support arguments for stronger enforcement, better information reporting, or international cooperation.
- Tax-gap figures should be read with methodology notes because estimates depend on assumptions and available data.
Why it comes up
Tax-gap reporting can shape CRA compliance priorities, international tax-evasion work, audit funding, and public debate about fairness.