For the purposes of the Red Tape Reduction Commission, red tape is defined as the unnecessary and undue compliance burden: the time and resources spent by business to demonstrate compliance with the federal government regulations. Now, red tape reduction at the CRA is taking place helping to reduce the compliance burden for Canadian businesses.
The CRA’s history of red tape reduction
The CRA has been listening to, and working with, small and medium-sized businesses since 2002 to make meeting their tax obligations easier. In that time, a number of key improvements have been made, including new online services for businesses through the CRA’s online service portal, My Business Account, in 2007; working with the Province of Ontario in 2008 to allow businesses to file only one return for both provincial and federal purposes; eliminating over 9,000 reporting obligations for businesses in 2009 by reducing information requests on income tax forms and reducing the required filing frequencies for excise-related returns; and launching a new service in 2012 that allows businesses or their representatives to easily and quickly submit written questions electronically to the CRA.
The Red Tape Reduction Commission
The Red Tape Reduction Commission (RTRC) was announced by the Government of Canada in January 2011. Its mandate was to identify irritants to small businesses that result from federal government rules and regulations. The RTRC solicited feedback online and through 15 roundtable sessions with Canadians and businesses between January and March 2011. During the feedback process, the RTRC compiled a list of approximately 2,300 irritants, which it included in its “What Was Heard” Report in September 2011. In January 2012, the RTRC released its final report, called Recommendations Report – Cutting Red Tape…Freeing Business to Grow, in which it provided recommendations on how government departments and agencies could address the irritants identified by small businesses on a long-term basis.
The Government of Canada’s Red Tape Reduction Action Plan
The Government of Canada’s Red Tape Reduction Action Plan is the government’s response to the recommendations in the Red Tape Reduction Commission’s final recommendations report. This Action Plan demonstrates that the Government of Canada has listened and is taking action to address all of the recommendations.
The Action Plan includes six systemic reforms, under three major themes:
- Reducing the burden on businesses;
- Making it easier to do businesses with regulators;
- Improving service and predictability.
The Government of Canada’s Action Plan will introduce measures to control administrative burden on businesses and ensure that regulators are sensitive to the needs of small business when they design regulations.
Forward Regulatory Plans
Based on the RTRC’s final recommendations report, the Government has introduced forward regulatory plans to improve transparency and predictability for business and all Canadians. Forward Regulatory Plans are a publicly available list of potential regulatory actions that a government department or agency anticipates making within the two years. These regulatory plans could include the development of new regulations or changes to existing regulations.
Forward plans will be revised and updated over time to reflect changing circumstances.
Forward Regulatory Plans include the following:
- the title of the regulatory proposal;
- a brief description of the regulatory proposal;
- a list of planned public consultations; and
- instructions on how to obtain additional information.
Irritants identified by small businesses and stakeholders in the administration of the tax system
Businesses provided the RTRC with over 1,100 irritants related to tax system administration. The CRA analyzed and grouped the 1,100 irritants into 12 overarching issues and developed action plans to reduce or eliminate the compliance burden imposed by each irritant.
The 12 action plans are based on the following overarching issues:
- Timely information availability and clarity
- Effective communication to satisfy taxpayer requirements
- Online services: information accessibility and written enquiries; improved online registration process; information accessibility and clarity; enhanced identity authentication
- Accountability for written information
- Auditors’ knowledge, training and professionalism
- “Tell us once” approach to eliminate the collection of redundant information
- Timeliness for decisions related to appeals
- Timeliness for decisions related to rulings
- Reporting requirements
- Filing frequency requirements
- Ensuring that business perspectives are fully understood and appreciated in the policy development stage
- Coordination and collaboration among regulators.
While action is already being taken to implement commitments under many of the CRA action plans, other action items required consultation with the small business community to identify small business priorities to be addressed by the CRA.
In November 2012, 52 small business owners and 91 representatives and bookkeepers in seven cities across Canada participated in CRA Red Tape Reduction consultations. These consultations helped the CRA identify refinements to certain action plans that respond to priorities identified by small businesses.
The CRA looked for input on the following themes:
- Information availability and clarity
- Reporting obligations – current process and possible changes and enhancements
- Usage of existing online services
- Exploration of potential online services
- Duplication of information requirements across federal departments and across different levels of government
The results of the consultations are now available in the Focussing on Small Business Priorities: Canada Revenue Agency Consultations on Cutting Red Tape report. The relevant action plans have been adjusted to focus on the highest priorities identified by small business participants.
The CRA is committed to supporting small and medium-sized businesses by reducing red tape and making it easier for them to access services and fulfill their tax obligations. More consultations to get small business input are planned for the future.