Nearly $16 billion worth of transactions in the residential construction sector in 2018 were performed illegally.

That was one of the key findings of a report issued on October 23 by Statistics Canada. The report looked into the estimated size and volume of the country’s underground economy in 2018.

It revealed that the estimated GDP of the unreported and largely cash-based economy was $61.2 billion—or abut 2.7 percent of the entire economy. That figure represented a small decline of about 0.8 percent over the year previous, while 2017’s figures were 1.9 percent higher than 2016’s.

Of the overall figure, about 26 percent of transactions were judged to have been completed in the residential construction sector. It was by far the largest contributor to underground activity.

Retail trade (12.3 percent), finance, insurance, real estate, rental and leasing and holding companies (10.3 percent), and accommodation and food services (9.1 percent) followed suit. These industries have been the main contributors to underground economic activity in Canada since this study began in 1992.

Most (42 percent) of the $61.2 billion in estimated unreported income in 2018 was paid to employees in the form of labour compensation. Wages that are not accounted for in payroll records and tips on undeclared transactions were $26.0 billion. The remaining portion of underground income went to unincorporated business owners (28.6 percent) and incorporated business owners (26.1 percent).

The underground economy is defined as consisting of market-based economic activities, whether legal or illegal, that escape measurement because of their hidden, illegal or informal nature. In this study, some illegal activities, such as those related to drugs (except cannabis) and prostitution, have been excluded.

From 2014 to 2018, the underground share of GDP varied between 2.7 percent and 2.9 percent. The share of GDP in the previous study (which excluded the production and consumption of unlicensed cannabis) varied between 2.2 percent and 2.7 percent from 1992 to 2013.

The total value of underground economic activity in 2018 was highest in the four largest economies: Ontario ($22.8 billion), Quebec ($14.2 billion), British Columbia ($10.8 billion) and Alberta ($6.2 billion). These four economies accounted for 88.4 percent of total underground economy, while the total GDP created by these four provinces accounted for 87.1 percent of total economy.