Evaluating CRA’s performance in its dealings with small businesses and tax practitioners
Small- and medium-sized enterprises are an integral part of the Canadian economy, making up 99.8% of employers in Canada and employing 88% of the total labour force (10.7 million individuals).1 As the largest representative of small businesses in Canada, the Canadian Federation of Independent Business (CFIB) works to support small businesses, who have faced some unbelievably challenging years. Small business withstood the worst of the pandemic, and the business environment is still in recovery, with 56% of small businesses still below normal sales and 64% still dealing with pandemic debt.2 Small businesses are vital to Canada’s economic recovery in a post-pandemic world.
Many small businesses are still facing a long and challenging road to recovery after more than two years of uncertainty linked to the pandemic and lockdown measures. Labour shortages, inflation, supply chain disruptions, increasing costs (e.g., payroll taxes and carbon pricing), and unnecessary red tape have made it more difficult to run and grow a business. Year after year, small businesses have consistently cited tax compliance as one of the most challenging and time-consuming responsibilities.3
To administer tax laws and various social and economic programs, the Government of Canada and most provinces and territories rely on the Canada Revenue Agency (CRA). Their responsibilities include providing taxpayers support to understand and fulfill their tax obligations, taking compliance and enforcement actions when necessary to uphold the integrity of the system, and offering avenues of redress when taxpayers disagree with an assessment or decision. CFIB often hears of misunderstandings with CRA, which can put small business owners at risk of serious consequences and hefty fines for non-compliance. All Canadian small businesses must deal with the administrative burden of deciphering the different layers of tax obligations and benefits/incentives that apply to them.
Despite the complicated and cumbersome Canadian tax system, during the pandemic, CRA was able to create and execute on programs and changes at a speed not previously seen within the federal government. Several financial support programs, such as the Canada Emergency Rent Subsidy (CERS) and the Canada Emergency Wage Subsidy (CEWS), were quickly implemented to help mitigate the economic impact to small business. While the pandemic certainly accelerated the adoption of various CRA programs and services—a notable accomplishment—CFIB has long been committed to working with CRA to improve the services it offers to SMEs, and in turn, improve tax compliance and make it easier to do business in Canada.
This 2023 edition is the seventh report CFIB has published evaluating CRA’s performance in its dealings with small businesses. As with previous iterations, two surveys were administered to members: one to tax practitioners (such as accountants, bookkeepers, and tax consultants), and another to small business owners in various industries across Canada. To address the impact of COVID-19 relief programs available to small businesses, both surveys included a series of questions related to CRA’s administration of these programs, and a summary of the results is included in the pandemic section of this report. We did ask respondents to try and answer the remaining questions based on their experience with CRA outside of the COVID-19 programs but recognize that many of their experiences with CRA over the last three years may have been influenced by the impacts and programs associated with the pandemic. We have tried our best to distinguish between CRA COVID-19 services and regular services in this report.