Ranking Canada’s Tax System: Compliance Burden Not So Bad?

It takes 131 hours per year for the average small business to comply with CRA demands, but that’s actually not that bad, comparatively speaking, according to some recent reporting.

This year’s fiscal report from the Taxpayers’ Ombudsman highlights many of the challenges Canadians have faced in their dealings with the CRA this year. While their summary delivers few surprises, a report from PricewaterhouseCoopers (PwC) stating that Canada leads the G7 countries for ease of paying taxes may catch you off-guard, considering Canada’s tax system is known for its complexities.

The thirteenth edition of the Paying Taxes report released by PwC last week finds that Canada’s tax regime is “considered favourable for small businesses but is significantly less attractive than the other countries for large businesses.” In fact, Canada is ranked first out of the G7 countries for ease of taxpaying, and is nineteenth out of 190. These results take into account the fact that small to medium-sized companies make only eight payments per year on their taxes and take 131 hours to comply with tax regulations, whereas the global average is twenty-four payments and 237 total hours.

The CRA’s inconsistencies in effectively supporting Canadian business owners was one of the things noted in the 2018 Taxpayers’ Ombudsman Report. It also highlighted some of the major challenges experienced by Canadian taxpayers in 2018, and identified some necessary improvements. For example:

• Making T1 forms available again in post offices, and having hard-copy tax packages mailed to those who had previously filed using paper forms
• Improving wording of the Canada Child Benefit annual entitlement notice to better clarify the changes to the program
• Including complete return mailing addresses for the CRA tax centres requesting further documentation from taxpayers who are accessing the Ontario Trillium Benefit program
• Expanding the Community Volunteer Income Tax Program so it would be accessible to Canadians unable to access the in-person clinics
• Enabling Canada Child Benefit applicants to list more than two children on the application

Additionally, the Taxpayers’ Ombudsman addressed the following CRA issues:

• Access to CRA phone lines, and incorrect information provided once agents are reached
• Issues with tax credits, including: The Disability Tax Credit, The Northern Residents Deduction, the Foreign Tax Credit and the Canada Child Benefit
• CRA delays in processing individual income tax returns, and benefit returns (including delays in seniors receiving their Guaranteed Income Supplement)
• Significant issues with the Taxpayer Relief Program, and the length of time the CRA took to process the requests
• Lack of access to benefit programs by more vulnerable demographics, including accessibility to the Canada Child Benefit by women living in shelters

Considering that the CRA is promising significant service standard improvements in 2020, it’ll be interesting to see how Canada’s tax system ranks in 2019 and beyond.

Additional educational resources: Get the tools you need to help Canadians navigate complex tax issues in this climate of uncertainty. Enrol in convenient, online certificate courses leading to industry-recognized designations including  the DFA – Tax Services Specialist program. Or save money by doing true-to-life “what-if” scenarios on Knowledge Bureau’s tax calculators. For a great instructor-led peer-to-peer networking experience join us at the January CE Summit workshops for an advanced personal income tax update coming to a city near you starting January 17. Avoid price increases by enrolling by January 10.

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