Why Is The CRA Targeting Temporary Labour Agencies?

Introduction - Temporary labour agencies targeted by the Canada Revenue Agency

Temporary labour agencies, also known as employment agencies or staffing agencies, are often contracted by employers to provide inexpensive temporary labour. For years, the Canada Revenue Agency (the "CRA") has targeted these agencies and their clients in the form of tax audits and subsequent criminal charges for what it believes to be the perpetration of different types of income tax and GST/HST fraud. Common issues in the temporary labour industry include failure to report bank accounts, hiring workers off the books, and paying client companies cash kickbacks. The CRA believes that many of these agencies engage in schemes to fraudulently claim Input Tax Credits ("ITCs") relating to Goods and Services Tax and Harmonized Sales Tax ("GST/HST") and to improperly deduct expenses.