CFIB Research: Hidden taxes cost Canadian businesses $12.6 billion annually with smallest firms hardest hit

August 21, 2008 – Ottawa, ON — Groundbreaking research by the Canadian Federation of Independent Business (CFIB) reveals businesses in this country pay $12.6 billion a year ensuring they are filing their taxes correctly, with the smallest companies being hit the hardest.

“This is money being spent on accountants, tax advisers and employee time just making sure the business is complying with the tax system, and that’s on top of the taxes remitted,” CFIB’s executive vice president Garth Whyte said today in Ottawa. “In effect it is a hidden tax,” Whyte stated. He added that taxes should not be so complicated that a ton of money needs to be spent to ensure they’ve been done properly.

“Particularly troubling is that the smaller the business, the greater the cost,” Whyte said, explaining that firms with fewer than five persons pay an average of $3,928 per employee to meet the tax system requirements. By comparison, said Whyte, businesses with 50 to 499 employees pay $481 per person.

“The time and cost associated with tax compliance would be better spent helping businesses grow and become more competitive,” said Whyte. He added that since the cost of tax compliance has now been quantified, the problem needs to be addressed. “It is a significant component of taxation that government at all levels must factor into their policies for the purpose of developing simpler tax systems.”

CFIB is recommending:

  • that the Canada Revenue Agency (CRA) and provincial tax administrations benchmark and measure tax compliance costs annually;
  • that more resources be put into better customer service;
  • that CRA and provinces communicate changes in tax policy more effectively;
  • that an ongoing process be initiated to ease this tax burden on smaller businesses;
  • that tax compliance costs be a factor in developing federal-provincial tax policies.

This is the first in a series by CFIB on tax issues affecting Canadian business.

About CFIB

CFIB has been a big voice for small business for over 35 years with 105,000 members nationwide in every sector. Taking our direction from CFIB Members, through regular surveys, we lobby for small- and medium-sized businesses at the federal, provincial and local levels of government. For more information, visit