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99 Metcalfe Street, Suite 1202 99, rue Metcalfe, bureau 1202
Ottawa, Ontario K1P 6L7 Ottawa (Ontario) K1P 6L7
October 26, 2007
The Honourable Diane Ablonczy
Secretary of State (Small Business and Tourism)
Industry Canada
235 Queen Street
Ottawa, ON
K1A 0H5
Dear Minister Ablonczy:
I am writing to you on behalf of CFIB’s 105,000 members to congratulate you on your government’s
achievement in completing a first count of key government administrative requirements and
information obligations, which will be used as a baseline for achieving the government’s goal of
reducing federal paperwork burden by 20 per cent by November 2008.
As you know, government regulation and paper burden is a serious concern for all Canadians but is
most in the face of small business owners on a day to day basis. CFIB conservatively estimates the
cost to all Canadian businesses of complying with regulation at $33 billion annually.
Red tape is a pernicious problem that various previous governments have failed to adequately
grapple with. We are optimistic, however, that your government’s initiative will be different.
Measurement is key to accountability and tracking measures from various departments is a critical
first step towards making what has been an invisible, but nevertheless corrosive, burden visible.
Continuing down this path promises big dividends in terms of improved productivity and
competitiveness, issues important to all Canadians. We appreciate that an ambitious short-term
target has been set. We also strongly encourage you to set targets beyond 2008. For example, the
government could commit to no net increase in paper burden for the next five years. Without
continuing targets, regulatory creep will set in and reduction gains will quickly be lost.
We also recommend that the government adopt a “regulatory checklist” when considering new
regulatory requirements (attached). Ministers should be required to sign off on a checklist and
indicate how many new regulatory requirements will be added and how many subtracted for each
new piece of legislation or policy. BC has used this approach to great effect. During the early phase
of its red-tape reduction exercise, Ministers were required to eliminate two regulatory requirements
for each new requirement added. Currently a one-in one-out approach is being followed. We have
attached a copy of the checklist.
While we cannot overemphasize the need to think long term, we also recognize the importance of
meaningful short-term initiatives. In order to help the government focus its efforts, CFIB is
developing a database of specific red-tape reduction recommendations. Following are eleven
specific recommendations spanning a variety of issues and government departments. It is by no
means exhaustive, but meant to provide you with some ideas on how to focus your efforts, see
attached documentation for more details regarding some of these examples.
CFIB’s regulation and paper burden reduction recommendations:
1. Reform the Duty Drawback Program, CBSA
Claiming customs duty refunds imposes such an onerous paperwork burden on Canadian firms
that many smaller firms who conduct import/export activities are forfeiting money owed to
them or choosing to set up their import/export operations in the US, rather than Canada. The
government should explore opportunities to eliminate unnecessary duties and reduce record
retention requirements for remaining duties. (See attached example for more details).
2. Simplify and Reduce Waiting Times for the Labour Market Opinion Requirement, HRSDC
Small and medium size businesses across Canada are struggling with labour shortages.
Immigration and the temporary foreign worker program can be part of the solution. However,
the paperwork associated with proving hiring difficulties, while improving, creates significant
roadblocks for smaller firms. (See attached example for more details).
3. Streamline the Record of Employment, HRSDC
Four out of ten small business owners identify the ROE as a significant regulatory headache.
Out of the 8 million ROE forms produced every year, 5 million (63 per cent) are never used. The
ROE should be streamlined or eliminated. (See attached example for more details).
4. Simplify the Automobile Expense Deduction, Finance and CRA
Under the current tax system, motor vehicle expenses incurred to earn income can be deducted.
However, to receive the deduction, individuals are required to support their claim by keeping a
very detailed mileage log. In the public sector, employees are permitted to use a “Reasonable
KM Allowance” proxy calculation instead of keeping the onerous mileage log. CFIB recently
surveyed its members on this issue, and out of almost 10,000 responses received, an
overwhelming majority of business owners, 82 per cent, indicated the automobile expense
deduction should be simplified. The automobile expense deduction should be simplified and
private sector employees should be given the option to use the “Reasonable KM Allowance”
proxy method to calculate their automobile expense deduction. (See attached example for more
details).
5. Simplify the Pensionable Insurable Earnings Review (PIER), CRA
Of the 2 million PIER reports produced and sent to employers each year, 900,000 or 43% are
below ten dollars. In total these small amounts generate only 5.6 million dollars out of a total
of 60 million dollars. For employers, the cost of review and analysis, in terms of internal
resources or consultants, represents a significant administrative burden and is too time
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consuming to complete. Many SMEs choose to pay these small amounts rather than re-adjust
their records. The CRA should review and simplify its PIER process. This would save the CRA
and SMEs a considerable amount of time and money. (See attached example for more details.)
6. Streamline the CFIA Labelling Requirement Process, Agriculture and CFIA
The Canadian Food Inspection Agency (CFIA) implements and imposes new rules and
regulations on farmers and small business often without considering the impacts, such as the
financial costs and the paperwork burden it will have on businesses. CFIB’s membership has
identified mandatory nutrition labelling regulations as particularly burdensome to their
business. Streamlining CFIA processes so that new rules and regulations, such as the new
mandatory nutrition labelling regulations, are approved and communicated in a timely manner
would go a long way in reducing the burden on small business and in improving compliance.
(See attached example for more details).
7. Reduce Statistics Canada Requirements, Statistics Canada
We recognize that Statistics Canada has undertaken a number of initiatives to reduce paper
burden on small business in recent years. However, CFIB survey results show that more needs
to be done. Almost 30 per cent of CFIB members identify it as among the most burdensome
federal regulations. (See attached example for more details.)
8. Reduce GST/HST Record Retention Requirements, Finance and CRA
Businesses are required by law to retain tax records for a minimum of seven years. Recently,
the government of British Columbia reduced to five years the retention period for tax records
relating to the provincial sales tax, hotel room tax, motor fuel tax and tobacco tax. CFIB
members are highly supportive of this measure. In fact, in a recent CFIB survey, 78 per cent of
respondents indicated they were in favour of reducing the number of years required to retain
tax records as it cuts down the record-keeping burden and frees up business resources. The
federal government should follow the BC example, particularly for GST/HST records.
9. Simplify the Lifetime Capital Gains Exemption
Most small and medium size business owners do not benefit from any kind of registered
pension plan (RPP). Consequently, the lifetime capital gains exemption (LCGE) is the most
important retirement savings vehicle for independent business owners. CFIB survey results
indicate that 70 per cent of independent business owners will rely on the LCGE upon
retirement. Unfortunately, the very strict and complex rules around this measure will rule out a
number of unsuspecting business owners from qualifying for the LCGE. Information on how to
qualify for the LCGE is virtually impossible to find, even CRA and Finance officials are unclear
as to where to find this information. The qualifying rules around the LCGE should be
simplified and information on this measure should be made more accessible.
10. Implement Bill C-212, the Cost Recovery Bill.
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Bill C-212, An Act respecting User Fees, was passed with support from all parties, in 2003. It
provides for parliamentary scrutiny and approval of user fees set by regulatory authorities. It
also provides for greater transparency in the cost recovery and fee setting activities of those
authorities, by requiring them to engage in a participatory consultation with clients and other
service users before introducing or amending fees. Basically, this legislation ensures that
federal cost recovery policy promotes competitiveness and innovation in Canada by ensuring
that fees are reasonable, linked to a service provided, and transparent to the businesses and
individuals that pay the fees. Although Bill C-212 is legislation it has never been implemented.
The government should waste no time and implement Bill C-212.
11. Speed up the T3 filing deadline and make it consistent with the T4 filing deadline
Currently, T4 slips, used to report an individual’s earned income, must be filed by the end of
February. The deadline for T3 slips, used to report trust income, is later. T3 slips are usually
filed by the end of March or beginning of April and sometimes even later. This discrepancy in
filing deadlines causes delays in receiving information required to file income tax returns. In
order not to get penalized for filing late, some income tax returns are filed without T3 slips
being available. As a result, those income tax returns must be adjusted by way of a T1
adjustment form once the T3 slip has been received. This causes a significant amount of
unnecessary paper burden for taxpayers and accountants. The T3 filing deadline should be
sped up to match the T4 filing deadline.
I hope you will find these examples useful. I look forward to meet with you again to discuss
these examples as well as your government’s progress on this very important initiative for
Canada’s small and medium size business sector.
Sincerely,
Original signed by:
Garth Whyte
Executive Vice-President
cc:
Hon. Gordon O’Connor
Hon. Monte Solberg
Hon. Gerry Ritz
Hon. Jim Prentice
Hon. Jim Flaherty
Hon. Stockwell Day
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CFIB Regulation and Paper Burden Reduction
Recommendations
Recommendation 1:
Reform the Duty Drawback Program, CBSA
Issue:
Claiming customs duty refunds imposes such an onerous paperwork burden on Canadian firms
that many smaller firms who conduct import/export activities are forfeiting money owed to
them or choosing to set up their import/export operations in the US, rather than in Canada.
Background and Impact on Small Business:
The Canadian Duty Drawback program allows Canadian importing/exporting firms to claim a
drawback (refund) on customs duties, anti-dumping and countervailing duties, or excise duties that
were paid on imported materials used for re-export.
To apply for a drawback, the claimant must complete, in duplicate, a K32 or K32-1 form, and file it
together with supporting documentation. The amount of paperwork involved is extremely
burdensome. Supporting documentation that must be submitted with a typical claim form includes:
a) Copy of any export sales invoices;
b) Bill of lading or other shipping document;
c) Waiver on commercial documentation or the original and one copy of a K32A form,
Certificate of Importation, Sale or Transfer, when the claimant is not the importer;
d) Waiver on commercial documentation or the original and one copy of a K32B form,
Drawback Certificate of Sale for Exportation, when the claimant is not the exporter; and
e) When a firm’s exporting activities are subject to NAFTA, which is the case for most
exporting Canadian firms, even more paperwork is required. For example, satisfactory
evidence information must contain all of the following elements;
• Foreign import entry number;
• Date of importation;
• Tariff classification number;
• Rate of duty;
• Amount of duties paid (converted into Canadian dollars).
Many smaller businesses do not have the time and resources to apply for duty refunds. Therefore,
millions of dollars that belong to SMEs are left with the Government of Canada. Those that do
apply have money tied up while the paperwork is being completed and processed.
Recommendation:
Create an advisory committee within CBSA that includes public and private sector representatives,
with a set timeframe (eg. 6 months), to meet the 20 per cent paper burden reduction target
announced in Budget 2007 and in order to streamline and simplify the paper burden associated
with many programs administered by the agency. Suggested areas of review include:
• Conduct a complete review of the paperwork associated with the duty drawback program.
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• Eliminate the duty on imported polypropylene bags and investigate opportunities to
eliminate other unnecessary duties.
• Reduce record retention requirements.
Examples of Impact on Small Business
Simpson Seeds Inc.
Greg Simpson is owner of Simpson Seeds, a small business in operation for over thirty years with
55 employees. Simpson Seeds exports lentils, peas and chickpeas to over 40 countries.
Polypropylene bags are used to export the crops. There is an 18 per cent import duty on the bags
used to export the crops, which is paid by the importing bag companies and then passed on to
exporting companies like Simpson Seeds who use the bags.
Originally, the duty was applied to protect bag manufacturers in Canada but there is now only one
company that produces these bags and discussions with the owner of that company reveal that he
also wants the duty removed!
When Simpson Seeds applies for the duty drawback, for every one container of empty bags
imported (200,000 bags) they must fill out 400 bills of lading as each container they export has 500
filled bags. A considerable amount of time is spent sorting the export sales invoices and matching
them to the bag purchase invoices and applicable duties, and then filling out the K32 form, in
duplicate. It takes a full-time employee three to five days to complete about 6 months worth of
duty drawback claims. Collecting the export sales invoices and bills of lading involves a huge
volume of paper and storing all of this paper is problematic. For every 6 months worth of duty
drawback claims, a full box of paper is produced and then has to be stored for up to 7 years for
audit purposes. Although records must be kept for 7 years, businesses sometimes find themselves
in the frustrating position of being unable to claim duty as there is a 4 year expiration date on the
duty drawback claim.
Furthermore, there is a considerable amount of time passed between the purchase of the bags,
when the duty is paid (import), and the export of the bags, when duty is eligible to be refunded.
This can tie up a significant amount of money. For example, in a typical year, Simpson Seeds can
have $50,000 to $70,000 tied up with drawback duty and unavailable for use in the business.
Garrison Guitars
Garrison Guitars manufactures and exports guitars to over 35 countries around the world. This
company imports raw materials to manufacture its guitars; therefore, they are eligible for the duty
drawback.
As a result of the tremendous amount of paperwork that has to be prepared for the company to
claim the duty drawback, Garrison Guitars loses approximately $13 per guitar built in Canada and
exported. Last year, it took one full-time staff person more than 7 months to do all the paperwork
involved with the duty drawback that resulted in a refund of about $7000. As a result, Chris
Griffiths has reluctantly moved some of his operations to Champlain, New York just over the US
border (45 minutes from Montreal), to avoid this very onerous paper burden exercise and allow his
firm to stay competitive. It is estimated that there are over 200 Canadian companies set up in
Champlain, NY, simply to avoid Canadian regulation and paper burden.
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Recommendation 2:
Simplify and Reduce Waiting Times for the Labour Market Opinion
Requirement, HRSDC
Issue:
Small- and medium-sized businesses across Canada are struggling with labour shortages.
Immigration and the temporary foreign worker program can be part of the solution. However,
the paperwork associated with proving hiring difficulties, while improving, creates significant
roadblocks for smaller firms.
Background:
Before almost any business can hire a foreign worker, they must apply for and obtain a positive
Labour Market Opinion from Human Resources and Social Development Canada.
Among many provisions, an LMO requires a business to do the following:
• Provide proof of extensive advertising and recruitment efforts;
• Provide evidence that wages and working conditions are in line with other Canadian
businesses in the sector. Size of firm is not considered in this evaluation;
Requirements for lower skilled immigrants are even more significant, including paying for airfare
an playing a role in finding affordable accommodation. The LMO application itself is five pages
long and the guide provided by Citizenship and Immigration Canada to help employers navigate
the form (www.cic.gc.ca/english/work/tfw-guide.html) is 23 pages long.
A positive or neutral "confirmation" labour market opinion is necessary for a foreign worker to be
issued a work permit. It is important to note that a positive LMO does not guarantee that a work
permit will be issued to the foreign worker.
On February 23, 2007, the Government of Canada announced several changes to the Temporary
Foreign Worker program including:
• Extending the duration of the LMO from up to 12 months, to up to 24 months in length
where appropriate, doubling the amount of time a temporary foreign worker can remain
employed in Canada;
• Allowing work permit applications to be processed at the same time as the application for a
LMO, if requested by the worker; and
• Enabling employers to complete the “Foreign Worker Application (Application for a Labour
Market Opinion)” form online as of April 1, 2007.
In addition, the process has been streamlined for certain occupations (determined in conjunction
with the provincial government) in several provinces. More recent changes have allowed certain
firms in Alberta and British Columbia to apply for an online “E-LMO”, which commits to processing
within three to five business days.
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While CFIB recognizes these recent and positive efforts by the federal government as important, it
is clear that more reform is required.
Recommendation:
To help streamline and simplify the paper burden associated with LMO requirements CFIB
recommends the following:
• HRSDC should move quickly to make the pilot project for an “E-LMO” with 3-5 day
processing commitment permanent, expand it to other provinces and make it available for
all occupations.
• HRSDC should consider eliminating the requirement that employers’ wage levels are
reviewed or at a minimum ensure small businesses are not expected to pay the same salary
levels as larger firms. Firms should be required only to comply with applicable
employment/labour standards legislation and pay the foreign worker the same as its other
staff at the same level.
• HRSDC should ensure that a full-scale LMO is not always necessary, as has been announced
for certain occupations in Ontario, BC and Alberta. These streamlining efforts should be
expanded quickly to other provinces.
• HRSDC should consider implementing “negative optioning” meaning that unless a
convincing case can be made that a certain field has a surplus of workers, it would be
assumed that an LMO is not required. This could also be accomplished by exempting the
need for an LMO in regions with unemployment rates below a certain cutoff.
• The requirement to demonstrate advertising and recruiting efforts should be entirely
satisfied by advertising on the national Job Bank in all cases.
Examples of Impact on Small Business
“With Canada having not even one school producing a violin maker/repairer with sufficient skill to
work in my shop, I have had to rely on the import of foreign skills.” Our member reports that a
violin maker is classified as skilled labour, while a violin restorer is classified as unskilled labour –
despite the fact that the industry regards a restorer as having far more skills. While our member
requested a two year permit for a violin restorer, she was told she could only apply for a one year
permit with the option of applying for an extension four months prior to the expiry of the first
permit. The department took longer than the four months period to reply so the qualified worker
was forced to leave Canada. Word has spread throughout the music community that our member
doesn’t have a qualified luthier. The member’s repair income dropped by more than half and she
has applied for a homeowner’s line of credit to prevent the business from closing due to this
shortage of skilled labour.
CFIB Member
A small construction company applied to hire temporary foreign worker for the position of general
labourer and offered a wage of $11.00. He received a letter in response to his application stating,
“Our research indicates that an appropriate wage for this position should be $15.19 per hour
rather than the $11.00 per hour, which you are currently offering”. A wage increase of $4.19 would
represent a significant increase in what he currently pays general labourers. As a result, he would
8
have to raise the wages of his entire workforce, which he cannot afford, or face the anger of his
employees who would be upset that a foreign worker is paid more than they are.
CFIB Member
A member in rural Alberta called with concerns about the length of time it takes to get a Labour
Market Opinion for her restaurant. She is unable to fast-track her LMO because only front of the
house workers in the restaurant business are included in the program while kitchen staff are not.
She says her staff will have nothing to serve if they can’t find kitchen staff.
CFIB Member
Recommendation 3:
Streamline the Record of Employment, HRSDC
Issue:
Four out of ten small business owners identify the ROE as a significant regulatory headache.
Reforming it would result in significant time savings for business and government. Specifically,
small business concerns include:
• Out of the 8 million ROEs produced every year, 5 million (63 per cent) are never used. ROE
forms must be produced for any seven day-interruption in insurable earnings.
• The legislated timeline requirements associated with the ROE can put employers in a
position of completing the ROE form incorrectly in order to meet their legislative
requirements. This can lead to reconciliations and post processing consultations with
government representatives. Thus, placing even more burden on the system.
Background:
The purpose of the ROE is to approximate weekly earnings to support a participant’s claim for
Employment Insurance (EI) benefits. Legislation requires an employer to produce an ROE anytime
there is a seven-day interruption of earnings. Furthermore, once there has been a seven-day
interruption in insurable earnings, the legislation also requires the employer to produce the ROE
within 5 days. In contrast employees have 4 weeks to file their EI requests as well as submit the
ROE.
In many cases recipients will not be making a claim for EI benefits, yet the employer is still
required to produce a form. For example, if an employee is leaving one firm to join another or is
leaving to return to school or if an employee only worked a few days an ROE must still be
produced. Of the 8 million ROEs produced every year, 5 million (63 per cent) are never used to
make a claim for EI benefits.
In addition, the legislated timeframes can be difficult for employers to meet. For example, some
employers use an accountant to file their payroll information, in this instance, a delay of more than
5 days may occur in filing the ROE. In other cases, complete employee information, such as the
final terms of the termination or commissions or entitlements to incentives payments are not yet
available to payroll, making it difficult for the employer to fill out the ROE form accurately. This
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may cause EI benefits to be paid out incorrectly and can result in investigations that require the
employer to produce a modified ROE and generate a Request for Payroll Information form
(INS5097).
The Request for Payroll Information form requires even more detailed information than the ROE.
For example, it requires payroll information based on a Sunday-Saturday weekly basis. Most
employers do not manage their payrolls under that timeframe. Only 18 per cent of payrolls
nationally are produced on a weekly basis and even fewer are produced on a Sunday-Saturday
basis. This form imposes a great deal of needless administration on both employers and
government representatives.
Currently only 1 million of the 8 million ROEs produced annually are done so through the on-line
WEB ROE. While processes like the WEB ROE have helped to alleviate some of the paper burden
associated with the form, the fact remains that it does not reduce the most significant regulatory
burden, which are filing out many forms.
Recommendation:
Create an advisory committee within HRSDC that includes public and private sector representatives
and is given a set timeframe (eg. 6 months), to help streamline and simplify the paper burden
associated with ROE compliance. Suggested areas of review include:
• Having HRSDC request an ROE from employers only when someone applies for EI benefits.
• Requiring employers to produce ROEs only when an employee is terminated or when
requested by an employee if termination is voluntary.
• Replacing the ROE with the payroll summary (T4 Summary of remuneration paid), which
contains 90 per cent of the data required on the ROE.
• Empower government representatives to make decisions and calculations based on the
Payroll Summary to reduce the number of Request for Payroll Information forms that must
be completed.
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Recommendation 4:
Simplify the Automobile Expense Deduction, Finance and CRA
Issue:
Current tax rules with respect to claiming the automobile expense deduction are complex and
represent an administrative burden that is felt most acutely by small- and medium-sized
businesses (SME) and the self-employed.
Background:
Individuals are entitled to deduct automobile expenses related to earning income. To do so, they
must keep a record of both the total kilometers they drive and the kilometers they drive to earn
employment income. Current tax rules impose a significant administrative burden in that the
records need to show each trip taken to earn income, including the date, destination, purpose and
the number of kilometers driven. Employees in the public sector are not required to keep such a
mileage log. They are permitted to use a proxy calculation called the “Reasonable KM Allowance”.
The current rules are also very confusing. An individual has to figure out whether he/she owns a
motor vehicle, an automobile, a passenger vehicle or one of the other 11 different vehicle
definitions covered by the current tax rules.
Recommendation:
Simplify the rules and reduce confusion by streamlining the administrative burden on small
business. Issues to consider include:
• Giving businesses the choice to use a “Reasonable KM Allowance”, which would be based on
industry averages, instead of having to keep a mileage log.
• Simplifying the vehicle definitions, in order to make the Motor Vehicle Expense easier to
understand and more accessible to individuals and the self-employed.
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Recommendation 5:
Simplify the Pensionable Insurable Earnings Review (PIER), CRA
Issue:
Of the 2 million PIER reports produced and sent to employers each year, 900,000 or 43% are
below ten dollars. In total these small amounts generate only 5.6 million dollars out of a total of
60 million dollars.
Background:
The Canada Revenue Agency (CRA) runs Pensionable Insurable Earnings Review (PIER) reports
annually on all T4s processed in Canada. The taxable income on all T4s is compared to Pensionable
(CPP) and Insurable (EI) data fields and discrepancies are reported on the PIER report. Estimates
show that 2 million PIER reports are identified and sent to employers to manually review each year.
For employers, the cost of review and analysis, in terms of internal resources or consultants,
represents a significant administrative burden and is too time consuming to complete. Many SMEs
choose to pay these small amounts rather than re-adjust their records.
Recommendation:
• Businesses should not have to review any PIER report that is below $10; a threshold should
be set such that any PIER report below 10 dollars be exempt. This would significantly
reduce administrative burden for SMEs.
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Recommendation 6:
Streamline the CFIA Labelling Requirement Process, Agriculture and CFIA
Issue:
The Canadian Food Inspection Agency (CFIA) implements and imposes new rules and regulations
on small business without:
• Considering the financial cost of the new regulation to the agri-business sector affected by
the regulation.
• Considering the increase in paperwork burden on the small business sector.
• Adequate training of CFIA inspectors/personnel.
• Ensuring that new regulations are interpreted fairly and consistently across the country and
within each provincial jurisdiction.
CFIB’s membership has identified labelling regulations as particularly burdensome to their
business. For this purpose, the introduction of mandatory nutrition labelling is a clear example of
how new CFIA regulations can consume significant time and financial resources in the small
business community.
Background:
According to CFIA’s website, “Nutrition labelling became mandatory for most pre-packaged foods
on December 12, 2005.” While CFIB recognizes that smaller businesses have been given a longer
time period to implement nutrition labelling, the small business sector is facing significant
financial strain as they struggle to implement these rules by the December 12, 2007 deadline.
Many smaller businesses cannot absorb the investment in time and money to implement the
changes to the labelling regulations. For example, all producers of prepared food for distribution
will have to label their product with a nutritional information analysis. According to CFIB
members, this analysis is costly ($250 for a computer analysis to $1400 for a full recipe analysis)
and small producers of local products will be hit the hardest. CFIB has contacted small business
owners who are affected by this requirement. Even these smaller businesses can have as many as
200 or 300 products in their portfolio, which would require analysis.
Therefore, compliance costs for a business with a relatively small product offering can amount to
tens of thousands of dollars. These business owners are becoming uncompetitive in the
marketplace because of these regulations.
Recommendation:
It is recommended that the Canadian Food Inspection Agency continue to review its interaction
with the small business community and analyze how any new CFIA regulation will impact agri-
businesses. In this case, the CFIA needs to work on:
1. Streamlining CFIA processes so that new label applications and rulings are approved and
communicated in a timely manner.
2. Preparing and training the CFIA department and inspectors that are interpreting the new
label regulations. Rulings must be consistent across the country.
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3. Completing a cost/benefit/risk assessment before new labelling regulations are imposed on
the agri-business sector. Make sure the new regulations are:
i. Easy to implement in a small business.
ii. Not financially prohibitive to implement by the small business sector.
Examples of Impact on Small Business
“The addition of providing nutritional information on small pieces of cheese was exceptionally
burdensome. Initially, we were led to believe that a phone number to supply this information was
sufficient; however, at the 11th hour and after some labels were printed, this was not acceptable.
This caused total chaos for three months in our business plus an estimated cost of $200,000. Also,
in order to have enough label space available, logos and marketing detail had to be altered
dramatically to make room for the nutritional information. Some products now have three labels
on them. It is an on-going burden to maintain compliance with the numerous small changes
required on an every day basis.”
CFIB Member, Food Product Processing
Regarding “New packaging label changes. Each inspector has his/her own interpretation to the rule
changes which sometimes conflicts with results.”
CFIB Member, Food Product Processing
“We have been forced into product labelling by the CFIA even though the products are sold within
our facility where they are produced. We have been told no other bakery in the province has had to
do this. Upon checking another independent bakery recently, although it is supposed to be
federally regulated, they did not have labelling as we have been forced to purchase and use.”
CFIB Member, Food Product Processing
“Inspectors/regulators…can shut down your business over a minor infraction and they can prevent
production for months due to a minor grammatical error on a French translation on a label. Label
approval for one federal establishment and not for another.”
CFIB Member, Food Product Processing
“One current incident that stands out is differences in label approval moving from one federal
establishment to another. It has held up my production for 60 plus days.”
CFIB Member, Food Product Processing
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Recommendation 7:
Reduce Statistics Canada Requirements, Statistics Canada
Issue:
The cumulative impact of time and resources spent filling out Statistics Canada surveys frustrates
small business owners. Despite steps that have been taken in the past few years to reduce survey
burden, recent CFIB research has found that one in three small businesses identifies Statistics
Canada surveys as one of the most burdensome regulations they face at the federal level.
Background:
Statistics Canada is responsible for collecting, analyzing, and publishing information on the
country’s economic climate and business conditions. The agency has a responsibility to provide
information to government, policy makers, as well as international partners. As part of its mandate,
Statistics Canada is required to regularly survey small business owners to collect valuable
information on their business and sector.
Surveys from Statistics Canada are often cited as one of the major contributors to paper burden.
Unlike big businesses, small firms do not have the personnel, time, or resources to devote to filling
out numerous questionnaires. Realizing this, Statistics Canada has attempted to reduce survey
burden for SMEs without compromising the validity of the information it collects. Initiatives
include:
• Establishing of the Ombudsman for Small Business Response Burde
• Measuring the compliance cost to businesses in terms of hours
• Reducing response burden through:
• Eliminating duplication through data sharing agreements with provinces and by using tax
data from Revenue Canada
• Using sample rotation to ensure that individual businesses receive surveys less frequently,
using exclusion thresholds to exclude the smallest businesses according to revenues, and
improving methods for data collection and questionnaire design
Despite these efforts, small businesses continue to report problems with Statistics Canada
regarding time-consuming questionnaires, strict and inflexible deadlines, and the obligation to
complete surveys or else face penalties. In addition, problems exist with several of the initiatives
already in place to reduce survey burden:
• The resolution process puts too much onus on the small business owner to seek out solutions
to alleviate their survey burden. To seek relief from survey burden, individual SMEs must
contact the Respondent Relations Unit of Statistics Canada and negotiate a customized
reporting arrangement. If the small business owner is not satisfied with the arrangement,
they must then contact the Ombudsman for Small Businesses to have the reasonableness of
their survey burden assessed. Both of these steps require time and effort and must be
initiated by an already time deprived business owner.
• As businesses grow in revenue they are required to complete an increasing number of
Statistics Canada surveys, this process serves as a disincentive to growth. Statistics Canada
uses a four-tier system to categorize businesses according to size and industry. The largest
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most complex businesses belong to Tier 1 and the smallest firms are in Tier 4 (they are
excluded from most surveys). Moving up from one tier to the next results in more
questionnaires for a business owner.
• Businesses in smaller provinces and in certain industry sectors do not qualify for the exclusion
threshold. The exclusion threshold is designed to reduce the number of surveys received by
the smallest businesses. Unfortunately, in provinces and industry sectors that have fewer
businesses, the exclusion threshold often does not apply. This results in certain businesses
being surveyed more often than their counterparts in other areas of the country.
Recommendation:
To help alleviate the survey response burden associated with Statistics Canada questionnaires, CFIB
recommends that the agency do the following:
• Investigate ways to reduce the size, complexity, and number of current questionnaires – This
can be accomplished through a more extensive use of data from other agencies such as
Revenue Canada, by including more online surveys, by combining more surveys together
(ex. the Unified Enterprise Survey), and by reviewing the usefulness of questions and the
overlapping of questions in all surveys administered to small businesses.
• Set specific response burden reduction targets – Statistics Canada currently measures the
cost of survey compliance in terms of hours spent completing questionnaires. The agency
should take the next step of setting annual reduction targets. Measuring response burden,
as well as outlining regulation reduction targets, will allow Statistics Canada to track the
progress they have made in their goal of reducing response burden and in meeting the 20%
regulation reduction requirements outlined in the latest federal budget.
• Publicly report on efforts to reduce response burden - Statistics Canada is required to submit
a Departmental Performance Report to parliament annually. As part of the report, the
agency highlights progress made on reducing response burden for business. With the
exception of this document, Statistics Canada does not publicly report on the effectiveness
of their initiatives. CFIB recommends that Statistics Canada do more to publicize any
current or new efforts to reduce regulatory burden by dedicating a section of their website
specifically to response burden reduction initiatives. This will allow for greater
transparency, public accountability, and access to information for other agencies and
government departments.
• Require that any proposed new surveys be scrutinized for their contribution to response
burden – Efforts to measure and reduce existing regulatory burden would be undermined if
new surveys are introduced that add to the overall burden. Therefore, CFIB recommends
that in addition to reducing the current regulatory burden, Statistics Canada implement
specific guidelines for the introduction of new questionnaires. The guidelines should
address: whether the survey/regulation is needed, that unintended consequences are
considered, and that the proposed introduction of questionnaires is made public.
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Examples of Impact on Small Business:
Member ID # 840432/DM M96 – This member is fed up with Stats Canada. It seems that she has
been chosen to fill out 2 surveys every month on monthly retail trade and the other on retail
commodity. This is the same information that she sends to the sales tax department. She would
really like to be taken off the list for information but when she attempted to ask about not doing
the surveys she was told that would not be possible and if she did not comply there would be
consequences.
( NL) #952476 DM/R44 – Statistics Canada’s census for farms is as thick as a book. This is one
survey that could very easily be condensed. Agriculture/ Stats Can
(NL) #966650 DM/R44 – This member, who operates a greenhouse, finds there is a great deal of
overlap between Statistic Canada’s “Farm Financial” and “Greenhouse, Sod and Nursery” surveys.
The latter survey alone is eight to twelve legal-sized pages and is more geared toward farmers than
greenhouses. She is convinced that both surveys could easily be condensed into a four-page
document.
(ALB) #952403 / DM S61. This member and her husband are the owners of a popular franchise in
the Territories. The member informed me that she is getting surveys from Stats Canada on a
weekly basis. It is difficult for her to keep up with the surveys but she complies for fear that she
will be fined as a result of not completing them. The member feels bombarded and overwhelmed.
The survey from the week of the renewal call to the member deals with how much this franchise
makes per year. The member feels that this information can be obtained at year-end when she
files her corporate taxes and that the survey is just repetitive information. Member has completed
the monthly retail trade survey for 4 years and the Retail Commodity Survey more recently. In
addition, her husband has a farm business and she is also completing a stats can survey for the
farm. When she called Stats Can to ask how long she had to complete these surveys, she was told
indefinitely.
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Recommendation 8:
Reduce GST/HST Record Retention Requirements, Finance and CRA
Businesses are required by law to retain tax records for a minimum of seven years. Recently, the
government of British Columbia reduced to five years the retention period for tax records relating
to the provincial sales tax, hotel room tax, motor fuel tax and tobacco tax. CFIB members are highly
supportive of this measure. In fact, in a recent CFIB survey, 78 per cent of respondents indicated
they were in favour of reducing the number of years required to retain tax records as it cuts down
the record-keeping burden and frees up business resources. The federal government should follow
the BC example, particularly for GST/HST records.
Recommendation 9:
Simplify the Lifetime Capital Gains Exemption, Finance and CRA
Most small and medium size business owners do not benefit from any kind of registered pension
plan (RPP). Consequently, the lifetime capital gains exemption (LCGE) is the most important
retirement savings vehicle for independent business owners. CFIB survey results indicate that 70
per cent of independent business owners will rely on the LCGE upon retirement. Unfortunately, the
very strict and complex rules around this measure will rule out a number of unsuspecting business
owners from qualifying for the LCGE. Information on how to qualify for the LCGE is virtually
impossible to find, even CRA and Finance officials are unclear as to where to find this information.
The qualifying rules around the LCGE should be simplified and information on this measure should
be made more accessible.
Recommendation 10:
Implement Bill C-212, the Cost Recovery Bill.
Bill C-212, An Act respecting User Fees, was passed with support from all parties, in 2003. It
provides for parliamentary scrutiny and approval of user fees set by regulatory authorities. It also
provides for greater transparency in the cost recovery and fee setting activities of those authorities,
by requiring them to engage in a participatory consultation with clients and other service users
before introducing or amending fees. Basically, this legislation ensures that federal cost recovery
policy promotes competitiveness and innovation in Canada by ensuring that fees are reasonable,
linked to a service provided, and transparent to the businesses and individuals that pay the fees.
Although Bill C-212 is legislation it has never been implemented. The government should waste no
time and implement Bill C-212.
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Recommendation 11:
Speed up the T3 filing deadline and make it consistent with the T4 filing
deadline, Finance and CRA
Currently, T4 slips, used to report an individual’s earned income, must be filed by the end of
February. The deadline for T3 slips, used to report trust income, is later. T3 slips are usually filed
by the end of March or beginning of April and sometimes even later. This discrepancy in filing
deadlines causes delays in receiving information required to file income tax returns. In order not to
get penalized for filing late, some income tax returns are filed without T3 slips being available. As a
result, those income tax returns must be adjusted by way of a T1 adjustment form once the T3 slip
has been received. This causes a significant amount of unnecessary paper burden for taxpayers and
accountants. The T3 filing deadline should be sped up to match the T4 filing deadline.
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