Authorities crack down on Quebecers using Ontario addresses to pay less tax

Quebec authorities are stepping up investigations to flush out residents of the beautiful province using fake addresses in Ontario to save thousands of dollars in taxes each year.

Radio-Canada has learned that Quebec’s tax collection agency, Revenu Quebec, has conducted hundreds of checks over the past few years to find Ontario taxpayers whose main residence is, in fact, in Quebec.

The Sûreté du Québec (SQ) also got involved during the pandemic by conducting dozens of investigations and transferring files to the Quebec tax authorities.

Revenu Québec said it recovered nearly $6 million between 2019 and 2021, including penalties and interest.

However, some critics say Quebec needs to do even more to recoup lost tax revenue.

The situation is causing particular discontent in the Outaouais, the most densely populated region along the Ontario-Quebec border. More and more residents are reporting their neighbors to authorities, especially in cases where families keep Ontario license plates on their vehicles for years.

Reports are expected to rise as more Ontarians move to the Outaouais, attracted not only by lower housing and electricity costs, but also by more affordable family-friendly services like daycare.

A tempting fraud

According to some tax experts, the temptation is strong for some residents of Quebec to use an address in Ontario during tax time. For a few high earners, the savings quickly exceed $10,000.

“At all levels, it’s more advantageous to be in Ontario, and quite substantially, when you make the comparison by income bracket,” explained Éric Gélinas, professor in the tax department at the Université de Sherbrooke, in interview in French.

Accountants say Quebec professionals working for businesses registered in Ontario can save even more, thanks to the province’s low tax rate for small businesses with fewer than three employees.

Surveys on the rise

According to a spokesperson, the Sûreté du Québec investigated about fifty individuals in 2020 and 2021 in connection with allegations of tax evasion, mainly in the Outaouais. The SQ declined to provide additional details, saying it was working in partnership with Revenu Quebec on the cases.

The SQ investigations were fueled by the work of patrol officers who carried out checks when non-essential travel was prohibited during the pandemic. The SQ also conducted investigations following complaints from neighbors during this period.

Revenu Québec is well aware of this scheme and spares no effort to counter it.– Geneviève Laurier, spokesperson for Revenu Québec

Revenu Québec, for its part, indicated that in 2017 it set up a team of specialized auditors to tackle the “false address scheme” used in the border regions.

“Revenu Québec is well aware of this scheme and is sparing no effort to counter it,” said Geneviève Laurier, spokesperson for Revenu Québec. “Full recovery by Québec of the tax revenues owed to it is a priority for Revenu Québec. This is a matter of fairness to all citizens and businesses that fulfill their obligations.

Over the past three years, the agency has verified the statements of 447 people and issued opinions – often over several years – to 179 of them. In total, Revenu Québec collected $5.7 million in additional revenue.

The office of the Minister of Finance of Quebec says it is well aware of the “phenomenon of tax avoidance observed in the border regions with other provinces”.

Difficult to pinpoint

Newcomers to Quebec officially have 90 days to register their vehicle with the Quebec Automobile Insurance Corporation. They begin to be covered by the provincial health insurance plan after three months in the province and must pay their taxes in Quebec as soon as they establish their principal residence in the province, on December 31 of each year.

Gélinas said primary residence is determined by a series of objective criteria, not the personal preference of the taxpayer. Still, the tax lawyer argued that it can be difficult for Quebec authorities to identify Quebec residents who use addresses in Ontario.

Quebec is the only province that has its own tax collection agency. Residents of other provinces need only file a return with the Canada Revenue Agency, which manages the federal and provincial components.

Jean-Paul Perreault, president of a group called Impératif français, says authorities have been complacent about the situation involving “fake Ontarians.” (Radio-Canada)

Even in cases where a false address is used, the CRA does not lose money.

“The federal component is paid anyway, and the provincial component is paid in Ontario, so there’s really no one who’s going to complain about it, except Quebec,” Gélinas said.

A group called French imperative has been complaining about the situation for years, saying authorities are complacent about the situation involving “fake Ontarians.”

Jean-Paul Perreault, president of the group, said in a French interview that Quebec taxpayers are the victims “given that they are the ones who have to pay the taxes of these fraudsters, in addition to their own”.

The opposition calls for a “blitz” of maintaining order

André Fortin, the Liberal MP for the riding of Pontiac in the Outaouais, says he regularly hears complaints about tax unfairness.

“It’s fraud,” he said in a French interview. “It’s all the ordinary taxpayers, the people doing it right, who pay the bill in the end.”

Fortin added that according to his discussions with the SQ, the investigations into these files take several days.

Pontiac MLA André Fortin said a law enforcement blitz would send a clear message that the fraud must stop. (Jacques Boissinot/The Canadian Press)

Provincial authorities must send a clear signal to the public that they take this issue seriously and increase the number of active investigations, he said. Authorities should, among other things, target people who have settled permanently in their cottages during the pandemic.

“A blitz would send a message. There are a lot of people, if they’re threatened with getting caught, who would do the right thing,” he suggested.

Fortin says for the moment that it is impossible to quantify the tax losses incurred by Quebec. He is convinced that the total amount greatly exceeds the amount recovered in recent years by Revenu Québec.