Corporate Tax Administration for Ontario (CTAO): Study of compliance cost savings

Prepared for the Canada Revenue Agency by PricewaterhouseCoopers LLP

Table of Contents

Executive summary

On October 6, 2006, the Governments of Canada and Ontario signed a memorandum of agreement to transfer the administration of Ontario's corporate income tax from the Ontario Ministry of Revenue (OMoR) to the Canada Revenue Agency (CRA). The single administration of corporate income tax was introduced in part to reduce the compliance burden on Ontario corporations. Before single administration, corporations had to deal with both OMoR and the CRA to meet their corporate income tax obligations. Under single administration, Ontario corporations would benefit from having to file only one tax return and deal with only the CRA for all matters related to corporate income tax. Single administration came into effect for tax years ending after December 31, 2008.

In 2009, the CRA engaged PricewaterhouseCoopers LLP (PwC) to conduct a study to estimate the amount that Ontario corporations would save in compliance costs each year as a result of single administration. This comprehensive study was divided into two major phases: preliminary research and a large scale survey of Ontario corporations. During the preliminary research phase, PwC reviewed CRA and OMoR project documentation and consulted CRA and OMoR representatives and PwC tax specialists. This led to the identification of the following six main compliance activities:

  1. Preparing and filing tax returns ("filing");
  2. Making instalment payments ("instalments");
  3. Providing information in response to audits ("audits");
  4. Requesting or responding to reassessments ("reassessments");
  5. Making objections or appeals ("objections and appeals"); and,
  6. Requesting rulings and technical interpretations ("rulings and interpretations").

These compliance activities were expected to account for the majority of the compliance costs and savings associated with corporate income tax. In particular, the highest overall costs and savings were expected to be associated with filing, instalments, and audits.

During the preliminary research, PwC also conducted consultations with organizations representing Ontario corporations and tax professionals, to gain the perspective of the private sector on the nature and magnitude of compliance costs and areas of potential savings. The participants agreed with the six main compliance activities and expected the majority of the costs and savings to be associated with filing, instalments, and audits.

In developing the methodology for the survey of Ontario corporations, PwC also analyzed previous research studies. This included an examination of studies from Canada and other countries, such as the United States, United Kingdom, Australia, and New Zealand. PwC found a wide variation in both the compliance costs and savings estimates and the methodologies used in these studies. This review led to important insights and allowed PwC to build upon the foundation of over 20 years of compliance cost research and develop a rigorous methodology for the survey of Ontario corporations employed in this study.

PwC's survey of Ontario corporations was administered during an eight-week period in 2010. A total of 24,810 corporations were contacted to participate. These corporations were asked to estimate their compliance costs both before and after single administration. They were also asked to report any costs incurred as a result of the transition to single administration.

The survey found that single administration will save Ontario corporations an estimated $136.7 million each year. Some of the survey's other findings are that:

  • 90% of the total savings will be realized by small corporations that operate only in Canada;
  • 73% of the total savings are associated with filing;
  • 23% of the total savings are associated with instalments; and
  • 4% of the total savings are associated with audits (for corporations with more than $15 million in annual revenue).

Very few corporations provided estimates for reassessments, objections and appeals, rulings and interpretations, and audits (for corporations with less than $15 million in annual revenue) due to the low frequency of these compliance activities. As a result, estimates could not be provided for these activities. The overall estimate of savings that Ontario corporations will realize as a result of single administration is considered conservative because it does not include the savings associated with these activities, and because single administration was relatively new at the time of the study. Additional savings will likely be realized in the coming years as corporations become more familiar with the processes and requirements of the new system.

1. Context and objective

Prior to 2008, the Ontario Ministry of Revenue (OMoR) administered its own provincial corporate income tax program. This meant that Ontario corporations had to file two tax returns and work with two separate tax administrators – OMoR for provincial taxes and the Canada Revenue Agency (CRA) for federal taxes. This led the federal and provincial governments to look for ways to reduce the compliance burden on corporations.

On October 6, 2006, the Governments of Canada and Ontario signed a memorandum of agreement to transfer the administration of Ontario's corporate income tax from OMoR to the CRA. The new single administration of corporate income tax came into effect for tax years ending after December 31, 2008.

One of the goals of this initiative was to reduce the compliance costs incurred by corporations. Under single administration, corporations would benefit from having to file only one corporate income tax return and deal with only one tax administrator for all matters related to corporate income tax.

Once the transfer had taken place, the CRA engaged PricewaterhouseCoopers LLP to conduct a study to estimate the amount that corporations would save in compliance costs each year as a result of single administration. This comprehensive study involved several components, including a large scale survey of Ontario corporations. The findings from the study are presented in this report.

2. Approach

The definition of compliance costs has continued to evolve over the past several decades with the growth of research in the area. The most frequently cited definition is the one offered by Cedric Sandford. Sandford (1989) defines compliance costs as the costs "incurred by taxpayers or by third parties, notably businesses, in meeting the requirements laid on them by a given tax structure (excluding the payment of the tax itself and any distortion arising from it)." This definition was used to guide the research and analysis in this study.

PricewaterhouseCoopers' (PwC) objective in undertaking this study was to estimate the amount that corporations would save in compliance costs each year as a result of the single administration of Ontario's corporate income tax. To meet this objective, PwC developed an approach that was divided into two major phases: preliminary research and a large scale survey of Ontario corporations.

Preliminary research

The purpose of the preliminary research phase was to gather information on the compliance activities related to corporate income tax and develop a methodology that could be used to measure the costs associated with these activities. The preliminary research consisted of several components, which are listed and described below.

  • A review of project documentation – PwC conducted an extensive review of Canada Revenue Agency (CRA) and Ontario Ministry of Revenue (OMoR) project documentation. This review identified the main compliance activities associated with corporate income tax and provided information on how these activities would be impacted by single administration.
  • Consultations with CRA and OMoR representatives and PwC tax specialists – PwC held consultations with both CRA and OMoR representatives and PwC tax specialists to obtain a greater understanding of the processes associated with each of the main compliance activities.
  • Consultations with external stakeholders – PwC conducted external consultations with organizations that represent Ontario corporations and tax professionals. The purpose of these consultations was to gain the perspective of the private sector on the nature and magnitude of compliance costs and areas of potential savings resulting from single administration.
  • A review of previous research studies – PwC examined previous research studies to gain further insight into how compliance costs have been measured in the past. This involved a review of studies from Canada and other countries, such as the United States, United Kingdom, Australia, and New Zealand.

This preliminary research enabled PwC to develop a robust methodology for the final phase of the research – the survey of Ontario corporations.

Survey of Ontario corporations

The main data collection tool in this study was a survey of Ontario corporations. The survey was administered during an eight-week period in May and June 2010. A total of 24,810 corporations were contacted to participate and an overall response rate of 5.54% was achieved. In the survey, corporations were asked to estimate their costs associated with six specific compliance activities, both before and after single administration. PwC used these estimated costs to calculate the estimated annual savings to Ontario corporations. Corporations could respond through a survey website, by fax, or by telephone with an interviewer.

The survey was conducted relatively soon after the move to single administration had taken place. As anticipated, this timing had a negative impact on some of the data collected. Although most corporations had experienced the more common compliance activities under single administration, such as filing corporate income tax returns and making instalment payments, fewer corporations had experienced compliance activities that occur less frequently. However, the CRA felt it was important to proceed with the survey in May and June in order to clearly focus the respondents' attention on changes associated with single administration. It was known that on July 1, 2010, the Harmonized Sales Tax (HST) would be introduced in Ontario, and the CRA was concerned that even though deferring the survey may have resulted in more data being collected for some of the less frequent compliance activities, this benefit would have been offset by the risk that respondents would confuse these two significant tax changes when providing their responses. Despite the timing, the survey produced a robust data set from which to estimate cost savings for the three most common compliance activities facing Ontario corporations: filing corporate income tax returns, making instalment payments, and responding to audits (for corporations with more than $15 million in annual revenue). A detailed description of the survey methodology can be found in Appendix A.

3. Preliminary research – Findings

The purpose of the preliminary research phase of this study was to gain insight into the compliance activities associated with corporate income tax and to examine how the costs associated with these activities had been estimated in the past. This initial research provided valuable information which guided the development of the survey.

3.1 Main compliance activities associated with corporate income tax

During the preliminary research, PwC examined the various compliance activities that corporations undertake to meet their corporate income tax obligations. Six main compliance activities were identified that were expected to contribute to the majority of compliance costs and savings for Ontario corporations. These compliance activities are listed and described below.

  1. Preparing and filing tax returns ("filing") – involves corporations gathering financial information throughout the year and completing and filing a corporate income tax return on an annual basis.
  2. Making instalment payments ("instalments") – involves corporations estimating their taxable income and the associated taxes owed, and making monthly or quarterly instalment payments.
  3. Providing information in response to audits ("audits") – involves corporations answering queries and providing auditors with supporting documentation on the items under review.
  4. Requesting or responding to reassessments ("reassessments") – involves corporations providing supporting documentation in response to a reassessment. Corporations may also request a reassessment themselves.
  5. Making objections or appeals ("objections and appeals") – occurs when a corporation disagrees with their notice of assessment or reassessment and decides to submit a formal objection or appeal.
  6. Requesting rulings or technical interpretations ("rulings and interpretations") – occurs when corporations require further clarification on a tax law or a ruling on how a particular aspect of a tax law applies to their specific situation.

Corporations began filing harmonized corporate income tax returns for tax years ending after December 31, 2008. However, single administration was implemented such that other compliance activities were transferred to the CRA earlier, in order to allow corporations to realize compliance cost savings sooner. More specifically, corporations began remitting combined (federal and Ontario) instalment payments in February 2008. On April 3, 2008, the CRA began administering provincial audits, reassessments, objections and appeals, and rulings and interpretations for earlier tax years.

3.2 Key compliance activities in terms of costs and savings

Some compliance activities cost corporations more than others. The reasons for this are that some activities require more time and effort by the corporation and some happen more frequently than others. PwC's preliminary research suggested that the highest overall costs and savings would be associated with filing, instalments, and audits. Highlights for each of these compliance activities are summarized below.

Filing

Before single administration, corporations were required to calculate both federal and provincial taxes owed and file separate federal and provincial returns with the CRA and OMoR respectively. Under single administration, corporations use a harmonized return to calculate their federal and provincial taxes. The shift from two separate returns to one harmonized return has reduced the number of pages and fields that corporations must complete. On a typical return, the number of pages dropped by 22.4% and the number of fields dropped by 12.8%.

Instalments

Before single administration, corporations were required to make separate instalment payments to the CRA and OMoR. This involved separately estimating the federal and provincial taxes owed. Corporations sometimes spend a fair amount of time calculating the taxes owed because of the cash impact that overpayment can have on their liquidity and the penalties associated with underpayment. In addition, due to the magnitude of money owed, multiple approvals may be required within the corporation prior to issuing payment. Under single administration, corporations make only one calculation of the combined amount of federal and provincial taxes owed and make payments only to the CRA.

Audits

Before single administration, Ontario corporations could be audited by OMoR, the CRA, or both authorities in a given year. Under single administration, the CRA conducts harmonized audits of harmonized returns, meaning that a single audit covers both provincial and federal taxes. This change was expected to result in substantial savings for large corporations in particular as they are audited more frequently.

3.3 Consultations with external stakeholders

PwC conducted external consultations with organizations that work closely with Ontario corporations to gain their perspective on the impact that single administration would have on compliance costs. There were no formal criteria or methodology applied to selecting the external stakeholders that were consulted. Rather, the organizations were selected based on the CRA's perception of the organization's:

  • Knowledge of compliance cost issues;
  • Knowledge of the efforts to harmonize corporate taxation in Ontario;
  • Level of involvement with Ontario corporations; and
  • Willingness to participate.

As a result, the following organizations were consulted:

  • Canadian Federation of Independent Business;
  • Canadian Tax Foundation;
  • Joint Committee on Taxation of the Canadian Bar Association and the Canadian Institute of Chartered Accountants;
  • Ontario Chamber of Commerce; and
  • Tax Executives Institute.

Participants agreed with the six main compliance activities identified for corporations and expected the majority of the costs and savings to be associated with filing, instalments, and audits. The participants discussed how single administration would affect each of these activities. This included a general discussion on the expected magnitude of compliance costs and savings associated with each activity. For example, the majority of participants believed that the savings associated with instalments would be small, per corporation, but that the savings could be significant when applied to the entire population of corporations in Ontario.

The external consultations provided valuable information on the sources and general magnitude of compliance costs and areas of potential savings for corporations. These consultations were also beneficial in that the participants raised some questions that had not been previously considered, which led to improvements to the survey questionnaire.

3.4 Estimates of compliance costs and savings from previous research studies

PwC examined previous research studies on tax compliance costs to obtain information on previous estimates and the methodologies used to obtain these estimates. This included an analysis of studies from Canada and other countries, such as the United States, United Kingdom, Australia, and New Zealand. A wide variation in both the estimates and the methodologies was found. The most relevant studies were by Robert Plamondon (1997a, 1997b, 1998) and Brian Erard (1997b). The compliance cost ranges for small and large corporations that were found in these studies are presented in Table 1.

Table 1: Estimates from previous research studies of compliance costs associated with corporate income tax
Corporation type Estimated federal costs per corporation Estimated provincial costs per corporation Estimated total costs per corporation
Small (a) $200 – $500 (c) $100 – $250 (c) $300 – $750
Large (b) $20,000 (c)(d) $5,000 (c)(d) $25,000 (c)

(a) Less than $5 million in annual revenue
(b) Canada's largest 500 corporations (Financial Post, 1995)
(c) Plamondon (1997b)
(d) Erard (1997b)

One of the studies also estimated the total savings that would result from moving to a single administration of corporate income tax in Alberta, Ontario, and Quebec. The study estimated that corporations in these three provinces would save a total of $93 million each year (Plamondon, 1997b). Although Plamondon's study was the most similar in objective to the current one, the estimates it arrived at are ultimately not directly comparable to the ones derived from the survey of Ontario corporations conducted by PwC because of the inability to isolate costs for Ontario corporations.

The review of previous studies provided PwC with important insights into the strengths and weaknesses of methodologies that had been used in the past to estimate tax compliance costs. This information proved valuable in the development of the methodology used in the survey of Ontario corporations for this study. Specifically, it identified key sources of compliance costs and provided a context for evaluating the results of this survey. The survey conducted for this study is the first to obtain micro level data on compliance activities related to corporate income tax in Ontario. The results of this survey are described in detail in the next section.

4. Survey of Ontario corporations – Findings

The main data collection tool in this study was a large scale survey of Ontario corporations by PricewaterhouseCoopers LLP (PwC). The survey took place during an eight-week period in May and June 2010. A total of 24,810 corporations were contacted to participate. Corporations could provide responses through a survey website, by fax, or by phone with an interviewer.

Corporations were asked to estimate their costs associated with each of the six main compliance activities both before and after single administration. In addition, corporations were asked to estimate any costs incurred for other compliance activities, as well as any costs incurred as the result of the transition to single administration.

The survey methodology is presented in detail in Appendix A, and a copy of the survey questionnaire is provided in Appendix B.

4.1 Overall findings

The survey found that single administration will save Ontario corporations an estimated $136.7 million each year. The majority of the savings are associated with filing (73% of total savings). The remainder of the savings are associated with instalments (23% of total savings) and audits for corporations with more than $15 million in annual revenue (4% of total savings). The low frequency of other compliance activities, such as reassessments, objections and appeals, rulings and interpretations, and audits for corporations with less than $15 million in annual revenue, meant that insufficient survey data was available to estimate savings for these activities.

When calculating the savings estimates for each compliance activity, PwC identified unusually high or low estimates that could be the result of data errors or unique situations, such as mergers, acquisitions, and rapid growth or contraction. PwC undertook a detailed examination of outliers, including following up with corporations to understand the reasons behind larger than expected changes in compliance costs year over year. Through assessment of outliers and follow-up with corporations, PwC removed the top 10% and bottom 5% of savings estimates for filing. Unusually high or low savings estimates for instalments and audits were removed on a case-by-case basis. This approach yielded a conservative estimate of compliance cost savings.

The results of the survey are presented in greater detail in the remainder of this section of the report. These results are presented by operating boundary and size of the corporation as these variables were seen to have an impact on compliance costs. Corporations that operate in Canada and abroad are referred to as "foreign-operating corporations" and those that operate only in Canada are referred to as "domestically-operating corporations". Large corporations are defined as those with more than $50 million in annual revenue (or more than $15 million in annual revenue in the section on audits) and small corporations are defined as those with less than or equal to $50 million in annual revenue.

4.2 Frequency of compliance cost activities

The percentage of corporations reporting costs for a particular compliance activity varied according to the nature of the activity. For example, almost all corporations reported costs for filing because it is an annual, legislated requirement. In contrast, very few corporations reported costs for rulings and interpretations, which is an optional service available to corporations. As the external consultations and previous research suggested, the three most frequent compliance activities for corporations are filing, instalments, and audits. Table 2 presents the frequency with which corporations reported costs associated with each type of compliance activity.

Table 2: Percentage of corporations reporting costs for main compliance activities in 2003-2008
Compliance activities Large corporations
(Revenue > $50 million)
Small corporations
(Revenue = or < $50 million)
Domestically-operating Foreign-operating Domestically-operating Foreign-operating
Filing 100% 100% 87% 98%
Instalments 69% 68% 19% 42%
Audits 59% 51% 8% 25%
Reassessments 48% 40% 9% 17%
Objections and appeals 11% 22% 3% 4%
Rulings and interpretations 5% 6% 3% 4%
Other compliance activities 5% 12% 5% 6%

The number of large corporations that reported costs for audits is worth noting (i.e., 59% of domestically-operating corporations and 51% of foreign-operating corporations). PwC's preliminary research suggested that over a five-year period, 100% of corporations with more than $250 million in annual revenue would have been audited in a given year, as would have the vast majority of corporations with more than $50 million in annual revenue. However, the survey found that some large corporations did not incur audit costs because the audits were handled by their parent company. In addition, the survey data suggests that large corporations are not audited each year, but rather audited for multiple years at one time. This resulted in a lower than expected percentage of large corporations reporting audit costs.

4.3 Compliance costs and savings for filing

The survey revealed that it cost Ontario corporations an estimated $2.14 billion for filing before single administration. As a result of single administration, corporations will save an estimated $99.67 million annually. Table 3 presents the breakdown of compliance costs and savings for filing.

Table 3: Estimated compliance costs and savings for filing
Filing Large corporations
(Revenue > $50 million)
Small corporations
(Revenue = or < $50 million)
Domestically-operating Foreign-operating Domestically-operating Foreign-operating
Population of corporations 1,592 1,702 562,776 6,446
Annual compliance costs for filing before single administration
Mean filing costs, per corporation $7,968 $32,765 $3,590 $8,200
Total filing costs by corporation type $12.68 million $55.76 million $2,020 million $52.85 million
Total filing costs for all corporations $2.14 billion
Breakdown of filing costs by corporation type 1% 3% 94% 2%
Annual savings for filing resulting from single administration
Mean filing savings, per corporation $701 $1,203 $165 $588
Total filing savings by corporation type $1.12 million $2.05 million $92.72 million $3.78 million
Total filing savings for all corporations $99.67 million
Breakdown of filing savings by corporation type 1% 2% 93% 4%

Small, domestically-operating corporations were found to have the smallest savings per corporation ($165 per corporation on average). However, due to the large number of these corporations, they account for 93% of the overall savings for filing for all corporations. As corporations generate more revenue, they tend to incur more compliance costs for filing. Corporations with higher revenue were also found to experience higher savings for filing. This relationship is illustrated in Figure 1. Foreign-operating corporations have much higher costs and savings for filing than domestically-operating corporations. This is illustrated in Figure 2. The higher costs experienced by large corporations and foreign-operating corporations can be explained by the fact that their corporate income tax returns tend to be more complex and costly to prepare.

Figure 1: The effect of revenue on compliance costs and savings for filing
Figure 2: The effect of operating boundary on compliance costs and savings for filing

4.4 Compliance costs and savings for instalments

The compliance costs associated with instalments are made up of the costs associated with calculating the amount owed, reviewing and approving this amount, preparing the cheque or remitting funds electronically, and purchasing any supplies necessary (e.g., cheques, postage).

The survey revealed that it cost Ontario corporations an estimated $119.25 million for instalments before single administration. As a result of single administration, corporations will save an estimated $31.94 million in instalment costs annually. Table 4 presents the breakdown of compliance costs and savings for instalments.

Table 4: Estimated compliance costs and savings for instalments
Instalments Large corporations
(Revenue > $50 million)
Small corporations
(Revenue = or < $50 million)
Domestically-operating Foreign-operating Domestically-operating Foreign-operating
Population of corporations 1,592 1,702 562,776 6,446
% of corporations with instalment costs 49% 51% 14% 34%
Annual compliance costs for instalments before single administration
Mean instalment costs, per corporation $1,391 $3,349 $1,445 $1,596
Total instalment costs by corporation type $1.09 million $2.87 million $111.79 million $3.49 million
Total instalment costs for all corporations $119.25 million
Breakdown of instalment costs by corporation type 1% 2% 94% 3%
Annual savings for instalments resulting from single administration
Mean instalment savings, per corporation $219 $892 $51 $206
Total instalment savings by corporation type $0.35 million $1.52 million $28.74 million $1.33 million
Total instalment savings for all corporations $31.94 million
Breakdown of instalment savings by corporation type 1% 5% 90% 4%

The estimated savings for instalments were found to be higher for foreign-operating versus domestically-operating corporations, and higher for large versus small corporations. As was the case with filing, small, domestically-operating corporations were found to have the smallest savings per corporation for instalments ($51 per corporation on average). However, these corporations account for the majority of the total savings for instalments (90% of the total savings) because the vast majority (i.e., 98%) of Ontario corporations are small, domestically-operating corporations.

The instalment costs incurred by large corporations tend to vary based on the corporation's operating boundary. The instalment costs of large, foreign-operating corporations (i.e., $3,349) are more than twice the instalment costs of large, domestically-operating corporations (i.e., $1,391). For small corporations, operating boundary seemed to have less of an influence on instalment costs.

4.5 Compliance costs and savings for audits

The compliance costs associated with audits are comprised of the costs associated with spending time to respond to an auditor's request and preparing documents for the auditor. Insufficient information on audit costs was obtained from corporations with less than $15 million in annual revenue to be able to estimate audit costs and savings for these corporations. This result was expected because small corporations are subject to audits much less frequently than large corporations. As a result, the estimates of audit costs and savings in this report refer only to corporations with more than $15 million in annual revenue.

The survey revealed that it cost Ontario corporations with more than $15 million in annual revenue an estimated $23.08 million for audits before single administration. As a result of single administration, these corporations will save an estimated $5.06 million in audit costs each year. Table 5 presents the breakdown of compliance costs and savings for audits.

Table 5: Estimated compliance costs and savings for audits
Audits Large corporations
(Revenue > $15 million)
Domestically-operating Foreign-operating
Population of corporations 6,428 3,344
Annual compliance costs for federal audits before single administration
% of corporations reporting federal audit costs 17% 16%
Mean federal audit costs, per corporation $9,896 $22,129
Total federal audit costs by corporation type $11.10 million $11.98 million
Total federal audit costs for all corporations $23.08 million
Breakdown of federal audit costs by corporation type 48% 52%
Annual compliance costs for provincial audits before single administration
% of corporations reporting provincial audit costs 8% 9%
Mean provincial audit costs, per corporation $3,897 $9,849
Total provincial audit costs by corporation type $2.05 million $3.01 million
Total provincial audit costs for all corporations $5.06 million
Breakdown of provincial audit costs by corporation type 41% 59%
Annual savings for audits resulting from single administration
Mean audit savings, per corporation $3,897 $9,849
Total audit savings by corporation type $2,051,110 $3,009,451
Total audit savings for all corporations $5.06 million
Breakdown of audit savings by corporation type 41% 59%

The survey data indicates that the audit savings resulting from single administration is equal to the provincial audit costs before single administration. This finding is consistent with expectations expressed in the external consultations conducted for this study. With the elimination of one auditor (i.e., the OMoR auditor), the time and expense that would have been required to respond to requests from that auditor are saved.

Another finding of the survey is that corporations with more revenue incur more audit costs. This tendency can by explained by the fact that large corporations often have more diverse and geographically dispersed operations. These characteristics can increase the burden of information collection for the corporation and potentially lengthen the time an auditor may require to review all applicable documentation.

Foreign-operating corporations also tend to incur higher audit costs than domestically-operating corporations. This result is consistent with the fact that foreign-operating corporations are likely to be more complex in nature and require additional documentation related to international operations.

4.6 Other compliance costs and savings

In addition to the costs associated with filing, instalments, and audits, corporations can incur costs for reassessments, objections and appeals, rulings and interpretations, and a variety of other compliance activities. Some of the other compliance activities that were reported include negotiating payment schedules and tax planning. However, due to the low frequency of these activities, the survey produced insufficient data to be able to report on the associated costs and savings. In addition, as the situations that led to many of these activities tend to be inherently unique, there was a large variance in the reported costs. The fact that the overall estimate of savings does not include the savings for these compliance activities makes the estimate conservative in nature.

4.7 Transition costs

The survey also asked corporations to provide estimates of any transition costs they experienced in 2008 and 2009 as the result of the implementation of single administration. Table 6 presents these survey findings.

Table 6: Estimated transition costs in 2008 and 2009
Transition costs Large corporations
(Revenue > $50 million)
Small corporations
(Revenue = or < $50 million)
Domestically-operating Foreign-operating Domestically-operating Foreign-operating
Population of corporations 1,592 1,702 562,776 6,446
Transition costs in 2008
% of corporations reporting transition costs 21% 13% 24% 16%
Mean transition costs, per corporation reporting transition costs $1,167 $3,090 $1,198 $1,853
Total transition costs by corporation type $0.28 million $0.49 million $35.74 million $1.17 million
Total transition costs for all corporations $37.68 million
Breakdown of transition costs by corporation type 0.7% 1.3% 94.8% 3.1%
Transition costs in 2009
% of corporations reporting transition costs 32% 39% 28% 24%
Mean transition costs, per corporation reporting transition costs $1,152 $1,518 $1,555 $2,642
Total transition costs by corporation type $0.50 million $0.88 million $87.44 million $3.06 million
Total transition costs for all corporations $91.88 million
Breakdown of transition costs by corporation type 0.5% 1.0% 95.2% 3.3%

More corporations reported having transition costs in 2009 than 2008. As a result, the total transition costs were higher in 2009 (i.e. $91.88 million) than 2008 (i.e. $37.68 million). Large corporations were more likely to report transition costs than small corporations.

Most corporations with transition costs (58%) indicated that they had included these costs in their estimates for each of the main compliance activities (e.g., filing, instalments, and audits). Therefore, the estimated transition costs for 2008 ($37.68 million) and 2009 ($91.88 million) only reflect information received from 42% of corporations with transition costs. The inclusion of transition costs in the cost estimates also has the effect of reducing the estimated savings to corporations because transition costs in 2009 were greater than 2008.

Transition costs reduced the savings realized by corporations in 2008 and 2009. Specifically, savings during the transition years of 2008 and 2009 are estimated to be $99.1 million and $44.81 million, respectively. As transition costs subside annual savings are estimated to increase to $136.7 million.

5. Conclusion

This report has presented the findings of PricewaterhouseCoopers LLP (PwC) research to estimate the compliance costs and savings to Ontario corporations as the result of the single administration of Ontario's corporate income tax. The research was divided into two major phases: preliminary research and a large scale survey of Ontario corporations.

The preliminary research involved a review of Canada Revenue Agency (CRA) and Ontario Ministry of Revenue (OMoR) project documentation, consultations with OMoR and CRA representatives and PwC tax specialists, consultations with organizations representing Ontario corporations, and an analysis of previous research studies. This preliminary research resulted in the identification of the following six main compliance activities that were expected to contribute to the majority of the savings for Ontario corporations: filing; instalments; audits; reassessments; objections and appeals; and rulings and interpretations. The work undertaken during this first phase of the research provided insight into the sources and magnitude of compliance costs and potential savings, as well as insight into how these costs have been defined and measured in the past. This, in turn, led to the development of a rigorous methodology for PwC's large scale survey of Ontario corporations.

During an eight-week period in 2010, a total of 24,810 corporations were contacted to participate in the survey. Corporations were asked to estimate their costs associated with each of the six main compliance activities both before and after single administration. In addition, corporations were asked to estimate any costs incurred for other compliance activities, as well as any costs incurred as the result of the transition to single administration.

The survey results indicate that single administration is estimated to save Ontario corporations more than $136.7 million each year. The majority of the savings will be realized by small, domestically-operating corporations, with relatively higher savings per corporation being realized by large corporations. The largest source of savings is associated with filing at an estimated $99.7 million (73% of total savings). The remainder of the savings are associated with instalments (23% of total savings) and audits for corporations with more than $15 million in annual revenue (4% of total savings). The low frequency of other compliance activities, such as reassessments, objections and appeals, rulings and interpretations, and audits for corporations with less than $15 million in annual revenue, meant that insufficient survey data was available to estimate savings for these activities.

It should be noted that the estimated savings from the survey are conservative, for several reasons. First, the top 10% and bottom 5% of the estimates for filing savings were considered extraordinarily high or low and were therefore excluded from the final estimates. Second, as mentioned above, the overall savings do not include estimates for reassessments, objections and appeals, rulings and interpretations, and audits for corporations with less than $15 million in revenue. Third, single administration was relatively new at the time this study was conducted. As a result, additional annual savings will likely be realized in the coming years as corporations become more familiar with the processes and requirements of the new system. For all these reasons, it is expected that the future cost savings to corporations will exceed $136.7 million each year.


Appendix A – Survey methodology

The purpose of the survey was to obtain micro-level data from Ontario corporations on their compliance costs before and after the single administration of corporate income tax. PwC used this data to estimate compliance costs for each compliance activity before and after single administration. PwC was then able to use these estimated costs to calculate the estimated annual savings to Ontario corporations.

A.1 Survey questionnaire

The survey questionnaire was designed to obtain information on costs for filing, instalments, audits, reassessments, objections and appeals, rulings and interpretations, and other compliance activities. For each compliance activity, the following data was collected:

  1. Whether the corporation had been involved in the compliance activity at the federal and/or provincial level before single administration, and whether the corporation had been involved in the compliance activity after single administration;
  2. The most recent tax year in which the corporation had incurred costs for the compliance activity;
  3. The estimated number of hours required by management, professional, and/or clerical staff in the corporation in the given tax year to engage in the compliance activity; and,
  4. The estimated cost of materials and/or external services to engage in the compliance activity.

Corporations were also asked to report any transition costs they experienced in their 2008 and/or 2009 tax years as a result of single administration. These transition costs could potentially reduce the annual savings in the short to medium term.

Two pre-tests of the questionnaire were conducted. The first pre-test was for the paper version of the questionnaire and the second was for the online version. Interviews were carried out with pre-test participants and changes were made based on their feedback.

In order to optimize the response rate for the survey, corporations were provided multiple submission options. Respondents could provide responses:

  • Through a survey website;
  • By fax; or,
  • By phone with an interviewer.

The final mail-out questionnaire is presented in Appendix B.

A.2 Sampling strategy

A.2.1 Population

The Canada Revenue Agency (CRA) generated the database that was used for this survey from its administrative tax database. In order to be included in the survey database, the corporation was required to:

  1. File taxes in Ontario (filled in Box 750 of the T2 return as "ON", or as "MJ" if Box 13 on Schedule 5 is checked "Yes");
  2. Have filed taxes in 2008;
  3. Reside in Canada (checked "Yes" in Box 80 of T2 return); and
  4. Be active (checked "Yes" in Box 280 of T2 return).

The total population of corporations that met these requirements was 572,516.

A.2.2 Selection of strata

The population of corporations was stratified by two criteria: annual revenue and operating boundary. Corporations with higher revenues tend to be more complex. They are generally required to submit more schedules and complete more fields on their corporate income tax returns. Annual revenue was also found to be a key variable in determining the likelihood of a corporation being audited. As a result, it was expected that corporations generating more revenue would incur higher compliance costs than those generating less revenue. This was thought to be especially true for corporations with more than $50 million in annual revenue. As a result, $50 million in annual revenue was used as the threshold between large and small corporations.

It was also expected (based on consultations with CRA and Ontario Ministry of Revenue representatives) that corporations operating both in Canada and abroad ("foreign-operating corporations") were more likely to be audited than corporations operating only in Canada ("domestically-operating corporations"). In addition, the audits of foreign-operating corporations tend to be more complex than the audits of domestically-operating corporations. As a result, it was expected that foreign-operating corporations would incur higher compliance costs than domestically-operating corporations.

Small, domestically-operating corporations represent 98% of the population in this survey and account for the majority of the overall compliance costs and savings. As a result, this population was further stratified based on revenue thresholds deemed to be associated with various levels of complexity. For example, consultations with CRA representatives suggested that many corporations with more than $15 million in annual revenue would be audited over a five-year period. Therefore, the population of small, domestically-operating corporations was broken down into the following ranges of annual revenue:

  • $0 – $300,000;
  • $300,001 – $15,000,000; and
  • $15,000,001 – $50,000,000.

Applying these stratification variables resulted in the six strata presented in Table 7.

Table 7: Stratification criteria
Revenue Domestically-operating corporations Foreign-operating corporations
More than $50,000,000 (1) (2)
$15,000,001 - $50,000,000 (5) (6)
$300,001 - $15,000,000 (4)
$0 - $300,000 (3)

A.2.3 Sampling within the strata

A 100% sample was taken in Strata 1, 2 and 5 due to the relatively small size of the population compared to the targeted number of responses. A partial sample was taken in Strata 3, 4 and 6. Table 8 presents the targeted number of responses and sample size within each stratum.

Table 8: Target number of responses and sample size per stratum
Strata Population Targeted responses Sample size (a) # of sampled corporations per targeted response
Strata 1 – Domestically-operating; annual revenue of more than $50,000,000 1,592 278 1,570 1 in 5.7
Strata 2 – Foreign-operating; annual revenue of more than $50,000,000 1,702 278 1,695 1 in 6.1
Strata 3 – Domestically-operating; annual revenue of $0 - $300,000 395,420 262 2,643 1 in 10
Strata 4 – Domestically-operating; annual revenue of $300,001 - $15,000,000 162,519 262 2,636 1 in 10
Strata 5 – Domestically-operating; annual revenue of $15,000,001 - $50,000,000 4,837 736 4,836 1 in 6.6
Strata 6 – Foreign-operating; annual revenue of $0 – $50,000,000 6,446 262 3,187 1 in 12.2
Total 572,516 2,076 16,567 N/A

(a) Although a 100% sample was taken of Strata 1, 2 and 5, missing data points meant that there was a slight difference between the total population and sample size counts.

When sampling corporations within strata, corporations were ordered according to their industry and then by the actual revenue they generated in 2008, as these two factors were found to influence compliance costs to the greatest extent within a given stratum. Once ordered, a systematic random sampling technique was applied. This minimized the potential bias associated with relatively more corporations being selected at the upper or lower threshold of a particular revenue range and relatively more corporations being selected in one industry over another. This reduced the chance that revenue or industry representation in the sample would influence estimates.

A.3 Survey administration strategy

There were three main components associated with the administration of the survey: the mail-out of a paper version of the questionnaire; the collection of data through the online questionnaire; and follow-up emails and telephone calls to corporations. These components are described below.

  • Mail-out of the questionnaire – By mailing the questionnaire, potential respondents had an advanced look at the questions. This gave them a chance to respond when it was convenient for them. They could provide their responses by fax, through the survey website, or by phone with an interviewer.
  • Online questionnaire – The online questionnaire offered respondents a quick and efficient way to complete the survey. It also allowed them to skip questions that did not apply. Total compliance costs were calculated in real time as respondents filled out sections.
  • Follow-up emails and telephone calls – As no email addresses were initially available, follow-up telephone calls were required to foster an increased response rate. The purpose of the calls was to: (1) remind corporations to complete the survey (either online or by using the paper version); (2) collect email addresses in order to forward the online questionnaire to the potential respondents and send follow-up reminder emails (3) collect survey data over the telephone; and/or (4) validate outlying data and identify errors in the data. These follow-up calls increased the response rates and improved the quality of the data.

A.3.1 Response rates

A total of 24,810 corporations were contacted to participate in the survey and an overall response rate of 5.54% was achieved. This excludes those corporations that had invalid or missing telephone numbers in the database. However, it does not exclude mailed surveys that were returned to sender, as these corporations may have been contacted later by telephone. See Table 9 for response and refusal data by strata.

Table 9: Response and refusal data by strata
  Strata 1 Strata 2 Strata 3 Strata 4 Strata 5 Strata 6 Total
Domestically-operating, revenue
$50,000,000+
Foreign-operating, revenue
$50,000,000+
Domestically-operating, revenue
$0-$300,000
Domestically-operating, revenue
$300,001-$15,000,000
Domestically-operating, revenue
$15,000,001-$50,000,000
Foreign-operating, revenue
$0-$50,000,000
Population 1,592 1,702 395,420 162,520 4,836 6,446 572,516
Corporations sampled 1,564 1,692 7,736 7,787 4,814 6,265 29,858
Blocked or missing phone numbers (a) 173 174 1,596 1,533 593 979 5,048
Total corporations contacted 1,391 1,518 6,140 6,254 4,221 5,286 24,810
Refusals
Total refusals 317 268 1,610 1,491 1,190 1,242 6,118
Refusal rates 22.79% 17.65% 26.22% 23.84% 28.19% 23.50% 24.66%
Responses
Sample 1 response rate 9.42% 10.08% 5.87% 5.95% 6.82% 6.72% 7.15%
Sample 2 response rate N/A N/A 3.79% 4.72% N/A 5.99% 5.24%
Sample 3 response rate N/A N/A 2.18% 2.39% N/A N/A 2.29%
Total responses (b) 131 153 227 240 228 336 1,375
Total response rate by strata 9.42% 10.08% 3.70% 3.84% 6.82% 6.36% 5.54%

(a) Also includes those respondents who did not speak English or French.
(b) Includes partial respondent data that was also deemed to be valid.

The highest response rates came from large, domestically-operating corporations (9.42%) and large, foreign-operating corporations (10.08%). This may reflect the fact that large corporations are more able to discern the amount of time and resources they dedicate towards corporate income tax compliance and, therefore, were more capable of completing the survey.

The lowest response rates came from small, domestically-operating corporations and small, foreign-operating corporations. To attempt to garner additional responses, a second sample of strata 3, 4, and 6 was drawn, and a third sample of strata 3 and 4 was drawn. For these additional samples, only telephone calls were made (i.e., no survey was mailed). Given the shorter time in the field, the response rates were lower in the additional samples than those for the initial sample.

A.3.2 Refusal rates

It was important to consider the characteristics of corporations that were contacted but refused to respond to the survey. This allowed for an assessment of whether one type of corporation was more likely to refuse, such as a corporation with higher or lower compliance costs. This information allowed for the determination of whether the estimates were biased.

Large corporations (strata 1 and 2) had a refusal rate between 18% and 23%, while small corporations (strata 3, 4, 5, and 6) had a slightly higher refusal rate at between 24% and 28%. This explains part of the lower response rate for small corporations.

For all corporations, the most common reasons for refusal were time (17% of total refusals) and the individual not being interested (11% of total refusals). There were some minor variations in the reasons for refusal within the various strata. For example, there were more incidences of large corporations not answering the survey due to company policy. In fact, this represented over 10% of total refusals for large corporations (strata 1 and 2).

PwC investigated a number of potential reasons for refusal to determine if the responses were biased. However, it was not common in any of the strata to have refusals for reasons such as having negligible compliance costs, being an inactive corporation, or having responsibility for multiple corporations (i.e., were more complex and therefore likely to have higher compliance costs). Therefore, refusal rates by strata are not seen to bias the estimates in this study.

A.4 Data challenges

One of the data challenges identified during the analysis of survey responses was the movement of corporations across revenue ranges from one year to the next. For example, it was found that it is possible for a corporation to move from generating revenue in excess of $250 million in one year to generating $300,000 or less in the next year. This occurred for 4.28% of corporations generating more than $250 million in revenue in 2008. It was also possible to move up multiple revenue ranges, although this was much less likely. For example, 0.02% of corporations generated $300,000 or less in revenue in 2008, but more than $250 million in 2009.

The tendency for corporations to move across revenue ranges suggests that the revenue ranges do not comprise a highly homogeneous set of corporations. It also suggests that there are some corporations in each revenue range that probably have significantly higher compliance costs than other corporations, either because they are larger than the revenue range indicated in 2008, or because of unique situations, such as mergers, acquisitions, and high levels of growth or contraction. Depending on the frequency with which these situations were present in the sample of respondents, it could have an impact on the overall cost and savings estimates.

The fact that single administration had only recently been implemented at the time of this study was also seen to have an impact on compliance costs and savings. The annual cost savings may not have been fully apparent to corporations at the time of the survey. This contributes to the conservative nature of the overall savings estimate.

A.5 Survey data methodology

The survey data was processed in four key steps.

Editing – The purpose of the editing stage was to improve the quality of the data. This involved an extensive examination of the data to identify corporations with uncharacteristic compliance costs or savings. PwC contacted these corporations to verify the data and made manual revisions as required. In addition, responses with very limited data in all activities were omitted from further analysis. In total, 1,143 responses (of the 1,375 responses) were found to contain sufficient data for further analysis.[Note 1] The editing process also involved bringing all dollar values up to 2010 dollars using Bank of Canada consumer price index estimates.

Note 1: Corporations with more than $300,000 in annual revenue that reported filing costs of $0 were excluded from further analysis. It was deemed that all corporations generating more than $300,000 in revenue must incur some filing costs.

Imputation – The purpose of the imputation process was to impute, or estimate, data values that respondents had either left blank or indicated that they 'did not know.' This was done using average values to generate ratios for those corporations with available data and then applying those ratios to estimate missing values. When calculating average values, outlier values were removed. Outliers were considered to be the top 10% and bottom 5% of estimates within each stratum, with respect to savings associated with filing returns. Outlying estimates for the other compliance activities were removed on a case-by-case basis. Once imputation had been completed, 171 out of 1,143, or roughly 15% of responses, were excluded from further analysis. The total number of respondents used to estimate compliance costs and savings was therefore 972.

Analysis – The analysis of survey data was an ongoing and essential component of the methodology.

This analysis enabled PwC to identify trends and relationships in the data (identified through cross-tabulations and regression analysis), highlight outlier values, check for bias in response patterns, and make preliminary estimates of compliance costs and savings by compliance activity and by strata.

Much of the data is presented in this report by corporation size and operating boundary. While estimates were frequently not statistically significant across strata (due mostly to low sample sizes and hence precision levels for large corporations), the consistency of the patterns by revenue and operating boundary suggest that this analysis is meaningful. Furthermore, the trends in differences by revenue and operating boundary were also observed in median values.

Weighting – The purpose of weighting is to ensure that responses within a given revenue range and operating boundary are appropriately represented in the aggregate estimates of compliance costs and savings. For example, because there are a substantially higher number of small corporations than large corporations, those observations in the sample had to be given more weight. Weights were calculated using the total population counts by revenue range and boundary (7 revenue ranges and 2 boundaries, meaning 14 weights were applied). The total number of observations by revenue range and boundary are presented in Table 10.

Table 10: Population and survey sample and weights
Revenue range Population Respondent sample (a) Weight
Domestically-operating Foreign-operating Domestically-operating Foreign-operating Domestically-operating Foreign-operating
1 - $0-$300,000 395,420 1,508 142 55 2,785 27
2 - $300,001-$800,000 79,651 371 77 8 1,034 46
3 - $800,001-$3,000,000 58,720 945 66 27 890 35
4 - $3,000,001-$15,000,000 24,149 1,980 32 75 755 26
5 - $15,000,001-$50,000,000 4,836 1,642 202 72 24 23
6 - $50,000,001-$250,000,000 1,332 1,171 77 71 17 16
7 - Over $250,000,000 260 531 26 42 10 13
Subtotal 564,368 8,148 622 350 564,368 8,148
Total 572,516 972 572,516

(a) Respondent sample is after the omission of erroneous data and outliers.

A.6 Probability estimates

As mentioned in the body of the report, single administration is estimated to save Ontario corporations $136.7 million each year. There is a 90% probability that the estimated overall savings are +/− 19% of this estimate. This means that there is a 90% probability that the estimated overall savings are greater than $111.9 million.

The overall savings estimate is made up of the following savings estimates for filing, instalments, and audits:

Filing – Corporations will save an estimated $99.67 million each year for filing. There is a 90% probability that estimated filing savings are +/- 13% of this estimate. This means that there is a 90% probability that estimated filing savings are greater than $86.72 million.

Instalments – Corporations will save an estimated $31.94 million each year for instalments. There is a 90% probability that estimated instalments savings are +/- 33%. This means that there is a 90% probability that estimated instalments savings are greater than $21.3 million.

Audits – Corporations will save an estimated $5.06 million each year for audits. There is a 90% probability that estimated audit savings are +/- 24% of this estimate. This means that there is a 90% probability that estimated audit savings are greater than $3.84 million.

The low frequency of other compliance activities, such as reassessments, objections and appeals, rulings and interpretations, and audits for corporations with less than $15 million in annual revenue, meant that insufficient survey data was available to estimate savings for these activities.


Appendix B – Compliance cost savings survey questionnaire

PricewaterhouseCoopers LLP

99 Bank Street, Suite 800
Ottawa, Ontario
Canada K1P 1E4

May 5, 2010

Dear

As you may be aware, in 2009, the administration of Ontario's corporate income tax moved from the Ontario Ministry of Revenue to the Canada Revenue Agency (CRA). The CRA now administers corporate income tax on behalf of the Province of Ontario for taxation years ending after December 31, 2008. This single administration is expected to reduce the costs to corporations of complying with corporate income tax requirements.

PricewaterhouseCoopers LLP (PwC) has been hired by the CRA to estimate the cost savings to corporations associated with the single administration of Ontario's corporate income tax. In order to do so, PwC is conducting a survey of Ontario corporations. Your corporation's participation is voluntary. However, your responses will provide the CRA with important information on the compliance costs facing Ontario corporations and help the CRA plan for future reductions in the compliance burden. All information provided is strictly confidential and is being collected by EKOS Research Associates. Individual responses will not be provided to the CRA. PwC will use the information collected only for the purpose of this study and will not retain the information after the end of the project.

You may participate by visiting www.ekos.com/pwctaxsurvey and following the posted instructions using the following User ID and Access Code:

User ID:
Access Code:

For your convenience, a copy of the survey is attached. It will take approximately 10 to 30 minutes for most corporations to complete the survey. If you wish to complete the survey by hand, please fax a copy of your responses to 613-691-1058. Please complete the survey by June 21st, 2010.

If you are not the right person to complete the survey, please provide this letter to the person in your company who is most familiar with your company's tax matters.

We have provided the survey in English according to the preferred language of correspondence indicated on your company's T2 return. You may obtain a French copy of the survey by visiting www.ekos.com/sondagedesimpots or by contacting EKOS Research Associates at 1-800-388-2873.

Thank you for participating. If you have any questions about the survey, please contact EKOS Research Associates at 1-800-388-2873. If you have any questions about the study, please contact Brett Gutoskie, PwC at 1-877-340-8531 ext. 2140.

Sincerely yours,

[Signée par]

Lois McCarron-McGuire, Partner
Tax Services
PricewaterhouseCoopers LLP
Joanne Johnson, Associate Partner
Advisory Services
PricewaterhouseCoopers LLP

Corporate Tax Administration for Ontario (CTAO): Study of compliance cost savings 25 "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate legal entity.


Compliance Cost Savings Study for the Canada Revenue Agency

Corporation Name:
User ID:
Access Code:

1) Please complete the following tables:

General information
Respondent Name   Year of Incorporation  
Email Address   Phone Number  

2) Please fill in the tables below according to the following instructions:

  • Internal labour costs – estimate the approximate labour costs associated with the compliance activity. To calculate labour costs, estimate the average hourly wage by level in Table 1. Then in Table 2, estimate the total number of hours spent by employees at each level on related compliance activities, such as retrieving and reviewing information, completing forms, making submissions, training staff, and communicating with financial/tax professionals, officials of the Canada Revenue Agency (CRA), or officials of the Ontario Ministry of Revenue (OMoR).

Table 1: Hourly wage by level (2010 dollars)

Table 1: Hourly wage by level (2010 dollars)
Internal labour costs Management $/hour
Professional (e.g. internal lawyers, accountants, engineers) $/hour
Clerical $/hour
  • Cost of external services and software – estimate the cost of services, such as accountants, tax specialists, and legal counsel, as well as the cost of software.
  • Cost of materials – estimate the cost of materials, such as stationery, cheques, and postage.

Table 2: Compliance cost estimates

Preparing and filing corporate income tax returns
  Federal
Fiscal year ending 2008
Ontario
Fiscal year ending 2008
Harmonized (Federal/Ontario)
Fiscal year ending 2009
Did you file in the period?
(Please circle Yes or No)
Yes Yes Yes (Estimate cost incurred) No (Estimate expected costs)
Internal labour costs Management $/hour $/hour $/hour
Professional $/hour $/hour $/hour
Clerical $/hour $/hour $/hour
Cost of external services and software $ $ $
Cost of materials (e.g. paper, postage) $ $ $
Making corporate income tax instalment payments (if applicable)
  Federal
Feb 1, 2003-Feb 1, 2008
Ontario
Feb 1, 2003-Feb 1, 2008
Harmonized (Federal/Ontario)
Post Feb 1, 2008
Did you make an instalment payment in the period?
(Please circle Yes or No)
Yes / No Yes / No Yes (Estimate cost incurred) No (Estimate expected costs)
Most recent tax year in which this occurred      
Provide cost estimate for the most recent tax year
Internal labour costs Management hours hours hours
Professional hours hours hours
Clerical hours hours hours
Cost of external services and software $ $ $
Cost of materials (e.g. cheques, postage) $ $ $
Providing information in response to corporate income tax audits (if applicable)
  Federal
Apr 3, 2003-Apr 2, 2008
Ontario
Apr 3, 2003-Apr 2, 2008
Harmonized (Federal/Ontario)
Post Apr 2, 2008
Did you have an audit in the period?
(Please circle Yes or No)
Yes / No Yes / No Yes (Estimate cost incurred) No (Estimate expected costs)
Most recent tax year in which this occurred      
Provide cost estimate for the most recent tax year
Internal labour costs Management hours hours hours
Professional hours hours hours
Clerical hours hours hours
Cost of external services, software, materials $ $ $
Making requests for, or responding to, reassessments of corporate income tax (if applicable)
  Federal
Apr 3, 2003-Apr 2, 2008
Ontario
Apr 3, 2003-Apr 2, 2008
Harmonized (Federal/Ontario)
Post Apr 2, 2008
Did you request or respond to a reassessment in the period?
(Please circle Yes or No)
Yes / No Yes / No Yes (Estimate cost incurred) No (Estimate expected costs)
Most recent tax year in which this occurred      
Provide cost estimate for the most recent tax year
Internal labour costs Management hours hours hours
Professional hours hours hours
Clerical hours hours hours
Cost of external services, software, materials $ $ $
Making objections or appeals related to corporate income tax (if applicable)
  Federal
Apr 3, 2003-Apr 2, 2008
Ontario
Apr 3, 2003-Apr 2, 2008
Harmonized (Federal/Ontario)
Post Apr 2, 2008
Did you file an objection or appeal in the period?
(Please circle Yes or No)
Yes / No Yes / No Yes (Estimate cost incurred) No (Estimate expected costs)
Most recent tax year in which this occurred      
Provide cost estimate for the most recent tax year
Internal labour costs Management hours hours hours
Professional hours hours hours
Clerical hours hours hours
Cost of external services, software, materials $ $ $
Requesting rulings and interpretations related to corporate income tax (if applicable)
  Federal
Apr 3, 2003-Apr 2, 2008
Ontario
Apr 3, 2003-Apr 2, 2008
Harmonized (Federal/Ontario)
Post Apr 2, 2008
Did you request a ruling or an interpretation in the period?
(Please circle Yes or No)
Yes / No Yes / No Yes (Estimate cost incurred) No (Estimate expected costs)
Most recent tax year in which this occurred      
Provide cost estimate for the most recent tax year
Internal labour costs Management hours hours hours
Professional hours hours hours
Clerical hours hours hours
Cost of external services, software, materials $ $ $
Other compliance costs related to corporate income tax (if applicable)
  Federal
Apr 3, 2003-Apr 2, 2008
Ontario
Apr 3, 2003-Apr 2, 2008
Harmonized (Federal/Ontario)
Post Apr 2, 2008
Did you experience other compliance activities?
(Please circle Yes or No)
Yes / No Yes / No Yes (Estimate cost incurred) No (Estimate expected costs)
Please describe the type of compliance activity (such as negotiating payment schedules, etc.)  
Most recent tax year in which this occurred      
Provide cost estimate for the most recent tax year
Internal labour costs Management hours hours hours
Professional hours hours hours
Clerical hours hours hours
Cost of external services, software, materials $ $ $

3)  Please indicate the transition costs (e.g. training, reviewing new requirements) incurred as a result of the harmonization process.

Transition costs (e.g. training, reviewing new requirements) incurred as a result of the harmonization process
  For fiscal year ending 2008 For fiscal year ending 2009
Internal labour costs Management hours hours
Professional hours hours
Clerical hours hours
Cost of external services, software and materials $ $


Appendix C – References

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