Reducing red tape and lightening the tax-compliance burden

Business owners, prepare to have your vexation factor reduced. The March 29 federal budget ó the Economic Action Plan 2012 with the subtitle Jobs, Growth and Long-term Prosperity ó promises to continue the government's battle against "red tape,î making your working life easier.

"Red tape hampers economic growth and erodes trust between government and citizens,î says the budget plan. "The Government is committed to removing bureaucratic obstacles to businesses' efforts to create jobs and growth.î

So, this year's budget promises to implement the recommendations of the Red Tape Reduction Commission as well as reduce the tax-compliance burden for businesses.

The Red Tape Reduction Commission was an offshoot of the 2010 budget and came into being in January 2011. After a year of country-wide consultations, the commission delivered its Recommendations Report  in January 2012. The feds responded by introducing the "One-for-Oneî Rule, whereby the government will eliminate one existing regulation for each new one it introduces. So, when a new or amended regulation increases the administrative burden on business, the government will offset from existing regulations an equal amount of administrative burden.

The budget promises the government will develop an action plan to address the commission's other recommendations in the coming months.

The budget also promises to reduce tax compliance burdens by:

ï doubling the thresholds for eligibility to use the GST/HST streamlined accounting methods ó which simplify compliance for small businesses and public service bodies ó increasing access;

ï amending the Income Tax Act so that a single designated partner of a partnership can sign a waiver on behalf of all partners;

ï allowing corporations to pay a single dividend and designate a portion of that as an "eligible dividend.î Under existing rules, if only a portion of a dividend is eligible for an enhanced dividend tax credit, that portion must be paid as a separate dividend;

ï consolidating and clarifying the administrative policies pertaining to the Scientific Research and Experimental Development (RS&ED) tax incentive program that are currently contained in about 70 documents. These initiatives will complement the SR&ED Policy Review Project, according to the budget plan;

ï allowing the Canada Revenue Agency (CRA) to reply electronically to questions submitted by businesses using the My Business Account portal. The CRA's written responses will increase businesses' confidence in the information provided by the CRA;

ï enhancing businesses' electronic access to the CRA's web forms and to the secure My Business Account portal. As well, an improved business section on the CRA's website provides a "one-stop shopî for businesses and a clear path to available electronic services with a new task-based web page;

ï introducing a new administrative policy to ensure that the CRA's penalty structure for late-filed information returns is both fair and reasonable. When a business is unable to comply in a timely manner with its reporting obligations, the CRA will reduce the penalties when the number of late-filed returns is small;

ï adding information on recourse mechanisms to CRA notices of assessment and reassessment. The CRA is also updating publications related to tax fairness and developing new content and new types of content such as webinars on redress mechanisms.

For more information on the March 29 federal budget, please see Knowledge Bureau Report's Special Report: Budget 2012.