Should I report a friend for tax evasion?

Question

I have a friend that is making a significant amount of side income from his business that he is not reporting (amounts to about 70,000 CAD per year). He is getting these amounts through bank transfers, and says the CRA will never catch him because he does little spending, as he's extremely frugal and lives well below his income (only spending on food and housing). How likely is he going to be caught, and trigger an audit?

Answer 1

Favorite Answer

In the USA he would be caught pretty easily if his customers were other businesses who were deducting what they pay him as a business expense and reporting that to the IRS on form 1099.

If tax evasion bothers you so much that you would rat out your friend to the authorities, I find it odd that you keep pretending to be his friend.   

Answer 2

Mind your own business.

Answer 3

Only if you hate him or are looking for a reward.

As a tax auditor I once investigated a man who ran a popcorn stand and his ex-wife said he had another stand that he did not report.  I called him in and asked him and he told me that the proceeds for the other stand were donated to the park district.  I verified this and gave him a refund for a contribution deduction. 

Moral of the story is that some people act like tax evaders but really aren't.