The deadline to file Canadian income tax returns is April 30, and many Canadians may be wondering why completing their returns seems more complicated than it used to.
There is good reason to feel more confused, according to a Fraser Institute report published April 27, because as the tax system has evolved over the last couple decades, several more details have been added.
“What’s clear is that all indicators point to an increase in federal tax complexity for Canadian families, businesses and even governments,” said Fraser Institute director of fiscal studies and study co-author Charles Lammam.
Between 1991 and 2011, the total number of credits, deductions, exclusions and exemptions for individual tax filers jumped from 105 to 123 – an increase of 17%. For corporations, these increased 33%, from 48 to 64, over the same period.
Increases in complexity were found in tax policy, legal frameworks, compliance activity and administration. Tax expenditure and guides have also become more convoluted, said the think tank.
All these new details don’t just amount to more confusion; they also add up to increased tax preparation costs for individuals, businesses and governments.
“Canadian families and businesses incur significant costs to comply with the tax system, including time and direct spending on accountants, lawyers and computer software,” Lammam said.
GST court cases alone jumped between 1993 and 2011, from 320 to 499 – an increase of 56%. These are a direct result of changes to GST filing legislation, the institute said.
“A worthwile goal is to simplify the tax system, making it easier to understand and less expensive in time and money,” Lamman said.
