May 21, 2019

Paying income taxes is bad enough. Canada’s brutally complicated system makes it worse

A detailed examination of Canada’s system is long overdue. The Canadian tax system is complex and has become more so over the years. The original document was 4,000 words, and is now 1.1 million words. The tax guide includes complex tax codes and is further complicated by an increased number of tax credits and exceptions. This makes tax preparation more expensive for individuals and more costly for the government. Many other countries have made laws to simplify their tax laws. Canada is long overdue for a similar simplification. Reduction of tax credits could be balanced by lowering the tax rates. That way, it’s easier for taxpayers and the government, without any loss in revenue or increase in taxes.

Key Takeaways:

  • Canadas Income Tax System has not changed for the better over the last 25 years.
  • The high number of personal tax credits adds complexity and the number of credits has increased by 26 percent between 1991 and 2015.
  • The Income Tax Act’s length, inaccessible language, and numerous exceptions increase the cost of compliance for taxpayers, which amounted to an average of $501 per household in 2012.

“While Canada has made no major revisions of its Income Tax Act since the 1960s, other countries have implemented measures to reduce the size and complexity of their tax codes over the past 25 years.”

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