The size of the shadow economy in Canada was estimated to be approximately 68.5 billion dollars in 2021, representing 2.7 percent of the total GDP, according to a report from Statistics Canada.

The report shows that in 2021, the shadow economy experienced significant growth of 4.8 percent in real terms, primarily driven by an 18 percent increase in shadow economic activity related to investment in residential buildings.

In contrast, the shadow economy saw a decline of 4.5 percent in 2020, mainly due to a decrease in economic activity in final consumer spending by households, which fell by 8.4 percent.

The shadow economy is defined as consisting of market-based economic activities, whether legal or illegal, that cannot be measured due to their hidden, illegal, or informal nature, according to the report.

Statistics Canada excluded certain illegal activities, such as those related to drugs (excluding cannabis) and prostitution from the report.

The census report shows that in 2021, the residential construction industry played an important role in the shadow economy, contributing 35.0 percent or 23.9 billion dollars, making it the largest contributor.

Following this, property owners ranked second with 12.7 percent, followed by retail trade with 10.5 percent, and accommodation and food services with 7.3 percent.

According to the report, these four industries combined constituted about two-thirds of the shadow economic activity in Canada.

The report highlights that shadow economic activity in the residential construction industry saw an increase of 32.8 percent in 2021. This corresponds to a 31.3 percent increase in commercial investment in residential structures across the entire economy.

In 2021, nearly 45 percent of the unreported income, totaling 30.6 billion dollars, went to employees as wages. This represented about 2.4 percent of total employee compensation in the economy. At the same time, incorporated business owners received about 30 percent, while sole proprietors received about 24 percent of the remaining shadow income.

The census report revealed that the shadow economy related to household spending reached 38.3 billion dollars in 2021. More than a quarter of this amount (26.3 percent) came from purchases of alcohol, tobacco, and cannabis, representing four percent of total household spending in the world.

The next contributors to the shadow economy in household spending are rent for housing (19.5 percent) and food and beverage services (18.8 percent).

According to the report, Ontario led the nation with the highest value of shadow economic activity in 2021, totaling 26.9 billion dollars. Quebec followed with 15.5 billion dollars, while British Columbia and Alberta recorded 11.1 billion dollars and 6.8 billion dollars, respectively.

These four provinces collectively accounted for 87.9 percent of the total shadow economic activity, closely reflecting their contribution to the overall economy at 87.1 percent.

However, Prince Edward Island and British Columbia recorded the highest ratios of shadow economic activity as a percentage of total GDP in the economy in 2021, at 3.4 percent and 3.2 percent, respectively. In contrast, Nunavut had the smallest share at only 0.4 percent.