If I buy a chair from my neighbors and he does not declare the income and I pay no tax, is this a black market? What kind of market is this?
Answer: Informal Market.
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4 replies
When it comes to income and taxation, there is a lot more grey than you think.
Technically, ALL income for business-earning purposes should be reported and taxed accordingly.
Regarding taxation of the buyer, at least in Canada, GST is generally not applicable until the seller is earning $30K+.
But REALISTICALLY - no taxation agency really cares about 1 chair.
I probably wouldn’t consider it a black market/underground economy unless it was significant and ongoing. E.g., your neighbours REGULARLY sell chairs for profit and don’t report their earnings.
This is like how buying and selling Bitcoin was no big deal until people started making significant money. Now the US income tax forms include direct questions about whether you have income from cryptocurrency.
I'm not a lawyer but maybe grey market?
Neighborly market?