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Recent tax measures aim to simplify compliance for small business

I don’t usually get political in this space, but when I think about taxes—as one can’t help around this time of year—I find it nearly impossible not to think about the trouble our representatives put us through—not only in tax season, but throughout the year. Except for a few lucky individuals, taxes are confusing; if they weren’t, we wouldn’t need a massive (and growing) class of citizens to explain them to us—or to simply take them out of our hands. And when politicians say they want to make taxes simpler or less burdensome—and they often do say these things—they almost always want to add some tax measure or another (i.e., complicate matters) rather than take any away (i.e., simplify).

In some cases, governments create whole new offices to advance efficiency, and that is what the current government has done:

As part of its red tape reduction efforts, the Canada Revenue Agency has created a dedicated team that is responsible for coordinating and addressing small business issues. The CRA has mandated the team to ensure that the Agency takes a “small business lens” approach to service improvements, with a renewed and enhanced focus on cutting red tape. This focus on engagement with small business stakeholders is ensuring that the perspectives of the small business community are continuously taken into account in the CRA’s work.

According to one international study, the measures may be working. In 2012, PricewaterhouseCoopers found that “based on the overall ease of complying with tax obligations,” it was easier to pay taxes in Canada than any other G-7 country. Indeed, the study suggested Canada should be a model for other countries, particularly with respect to organizations filing and paying taxes.

Call me skeptical, but I don’t know if the results of that study mean that Canada has an efficient corporate tax system, or if the other G-7 nations have just got really disastrous arrangements.

I’ll leave it to you to decide whether the following tax-related initiatives the current federal government has introduced will make your life easier.

In 2012, the government announced an online inquiry service, and in April of that year, the Canada Revenue Agency introduced it. The agency has responded to 4,500 inquiries via the service, part of the new My Business Account system. This online system also allows businesses to access important information, file and amend their GST/HST returns, submit books and records for audits, view their account balances, transactions and previous tax returns, and change their information. Moreover, the CRA now offers customized written responses to electronic enquiries via the My Business Account system. The agency aims to add to these services, and as of this April, users can choose to receive notices via email rather than paper.

The CRA is working with provinces and cities across the country to make the federal business number (BN) “the common identifier for federal, provincial and municipal government interactions with businesses.” Using one number deal with all levels of government should make changing information (e.g., address, phone numbers) easier and avoid duplication of accounts (and the potential for multiple errors).

Another CRA initiative aimed at small businesses involves eliminating the burden of reporting the same information multiple times to various departments—a “tell us once approach.” Relatedly, the CRA is using a “tell you once” approach to get crucial compliance information to small businesses before they face audits.

The CRA has also sped up its process for a business to authorize an accountant, lawyer or employee to conduct tax business with the agency on behalf of the organization. The CRA now aims to respond to such applications in five days rather than the previous fourteen, and respond proactively when applications are incomplete or incorrect.

Effective, January 2013, the GST/HST Streamlined Accounting Thresholds were doubled, making many more businesses eligible to use the simplified methods.

A measure that would make it possible for a single partner in a partnership to sign waivers on behalf of all partners has received royal assent.

My idea of simplifying tax compliance would be designing the system so that businesses didn’t need a third party to sort it all out for them, but I don’t know what all the accountants and tax lawyers would do then. (Not that I have anything against them; I just think individuals and businesses should be able to understand taxes on their own.)

Adam Gorley
First Reference Editor

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Adam Gorley

Editor at First Reference
Adam Gorley, B.A. (Phil.), is a researcher, content provider and editor. He contributes regularly to First Reference Talks and Internal Control blogs, HRinfodesk and other First Reference publications. His areas of focus include broad human resources issues, corporate social responsibility, corporate governance and government policies, information technology and labour market trends.Read more
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