by Milagros Palacios, et al.
April 30, 2014
This study estimates the cost of complying with the Canadian personal income tax system in 2012. The study estimates that Canadians spent between $5.84 billion and $6.96 billion complying with the personal income tax system in 2012. To put this in perspective: we estimate that personal tax compliance represents 0.5 percent of total household income in 2012. This is roughly $501 per year for each Canadian household, or more than what the average household spent on groceries per month in that same year, according to Statistics Canada data. These costs fall disproportionately on lower-income tax filers who spend a greater share of their income complying with the personal income tax system. A number of specific measures could be taken to reduce compliance costs. The most obvious would be to reduce tax policies that add complexity to the personal income tax system, such as tax expenditures.