The cost of filing personal-income taxes

Larry MacDonald 0

It costs Canadians $4 to $5.8 billion annually to prepare and file personal-income tax returns, according to a study released today by the Fraser Institute. This estimate includes purchases of tax software, hiring tax professionals and the time value of filling out and submitting returns.
Data for the study were obtained from a survey of 2,000 personal-income tax filers in April and May 2008. The survey was carried out by Leger Marketing.
The costs to comply with the personal-income tax work out to an average $215 per Canadian, the study reports. Each year, Canadians spend an average of seven hours completing returns, gathering receipts, tax planning, maintaining proper records, appealing assessments and meeting with tax professionals/preparers.
The compliance costs are highest, above $300 on average, for those receiving self-employment income, rental income, capital gains, or foreign investment income. Married tax filers have average compliance costs of $253 compared to $168 for individuals.
The study concludes that Canada’s personal-income tax system places a significant burden on taxpayers. If thecosts of other types of taxes were included, such as those on business and property, compliance costs would be much higher.
The Fraser Institute urges governments to look at measures to reduce tax compliance costs. One of the more obvious would be to reduce or eliminate tax policies that add complexity to the tax system, such as special preferences, credits, and exemptions.
The Fraser studyalso found:
51% of filers use a tax preparer, accountant or lawyer to submit returns 31% of filers prepare their own tax returns (nearly half use paper forms) 18% of filers rely on friends, family, or a non-profit organization.

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