Compliance costs for Canadian businesses totalled $51 billion in 2024

Owners of small and medium-sized businesses (SMBs) had to spend an average of 735 hours on regulations in 2024, up 9% on 2020. Almost 35% of this time was required to deal with red tape – paperwork that could be eliminated without compromising the public interest.

The estimate was released on Jan. 27 by the Canadian Federation of Independent Business (CFIB) as part of Red Tape Awareness Week. The 7th edition of Canada’s Red Tape Report, The cost of regulation to small business, was produced by CFIB in collaboration with Intuit Quickbooks. CFIB has been documenting the situation since 2005.

The number of hours devoted to regulation reached 677 in 2020, of which 189 hours were devoted to red tape. The 256 hours devoted to dealing with red tape in 2024 represents a 35% increase in four years.

"Business owners lose an entire month's worth of productivity to filling out lengthy or redundant forms, navigating mazes of government websites, and deciphering government jargon," stated Marvin Cruz, CFIB director of research. " 

In his view, the elimination of regulatory obstacles should be a priority for governments wishing to boost productivity. In its report, CFIB states that 87% of SMB owners consider that excessive regulation significantly reduces their company's productivity. 

"If Canada wants to improve its productivity and economic competitiveness, it must put a renewed focus on cutting red tape," adds Laure-Anna Bomal, CFIB economist and co-author of the report.

In 2024, the annual cost of compliance was estimated at about $51.5 billion, up 13.5% on 2020 (see table below). Some $17.9 billion of that figure is spent on red tape. This represents about 268 million hours, or around 137,000 full-time jobs, that could be devoted to more productive, growth-oriented activities.

A heavier burden  

For smaller companies, regulatory compliance represents more time per employee, as well as higher annual costs, per employee. In 2024, this cost amounted to $10,208 per employee for companies with fewer than 5 employees, compared with $1,374 for companies with 100 or more employees.

“Regulatory demands shape how entrepreneurs view the business climate and even influence the advice they would give to aspiring business owners,” states the CFIB report, which adds that only 18% of entrepreneurs would recommend that someone start their own business right now.

The organization points out that justified regulation has real value, as it supports market efficiency, protects businesses and consumers, and safeguards public health and safety. “Red tape, on the other hand, encompasses excessive government regulation (i.e., unfair, overly costly, poorly designed, or contradictory rules and regulations), unnecessary delays, and poor government customer service,” the report contends.

According to CFIB, excessive regulation causes stress and discourages entrepreneurship. In Canada, 90% of small business owners say it adds significant stress to their lives. “With fewer resources tied up in compliance, business owners could focus on growth, improve their work-life balance, and reinvest in their workforce and operations.”

Most business owners doubt the will of governments to cut red tape. They have slightly more confidence in the provincial government to do so (15%) than in municipal government (14%) or the federal government (6%). These confidence levels have dropped since the previous 2020 report.

Small business owners in Alberta are by far the most convinced of their provincial government's willingness to cut red tape, at 39%, compared to just 7% of entrepreneurs in Quebec and 4% of their counterparts in British Columbia.

What can be done? 

The CFIB proposes a 10-point plan for effective regulatory reform:

- Measure regulatory burden.

- Institutionalize the measure by reporting on it regularly to the public 

- Create a budget for regulation: one proposal is to require the government to eliminate a regulatory requirement every time it adopts a new one.

- Make regulatory accountability a political priority and appoint a designated minister. In the case of municipal governments, a permanent body similar to a standing committee should include designated seats for elected council officials, to ensure political accountability. 

- Simplify regulatory compliance and improve customer service. 

- Create permanent avenues for citizens to provide suggestions for red tape reduction. 

- Carefully consider the need for all new regulation and plan for its review. 

- Keep compliance flexible and provide basic examples and guidelines for what constitutes compliance and non-compliance. 

- Improve online options. For example, considerable time would be saved if companies could make tax remittances to the Canada Revenue Agency through their accounting software, or send Records of Employment from their payroll software. 

- Improve accountability for regulators by instituting such measures as reverse onus guidelines for timeliness and communication. Regulators, usually have no specific timelines imposed on them for when decisions will be made or permits approved, says the report. 

Paperweight Awards 

The worst examples of excessive regulation were reported by CFIB in its 2025 Paperweight Awards, presented on Jan. 28. Three winners in particular were singled out.

The “winner” is the Government of Manitoba, for introducing Bill 16, Regulatory Accountability Reporting Act and Amendments to The Statutes and Regulations Act. 

"For six years, Manitoba was a leader in regulatory accountability, showing other jurisdictions what's possible when governments take red tape reduction seriously," stated Ryan Mallough, Vice-President of Legislative Affairs. "With Bill 16, the government has wiped away that hard-won progress." 

The temporary GST/HST holiday granted by the federal government just before the holidays was “a logistical nightmare”, according to the Federation. SMEs had only two weeks to prepare for the change, at a time when most businesses are experiencing their busiest period of the year. “It's a textbook example of good intentions gone awry due to poor planning and a total lack of understanding of the day-to-day operations of small businesses across the country,” said Emily Boston, CFIB Senior Policy Analyst.

In Quebec, Les Cèdres, a municipality in the Vaudreuil-Soulanges MRC in the Montérégie region, stands out by imposing “an outrageous new requirement: children must fill out paperwork to play outside.” Signatures from two-thirds of the adults living on their street are required on the form, which is submitted to the recreation director. Not doing so could result in a fine of up to $1,000.

"This kind of overreach doesn't just create unnecessary headaches; it stifles community spirit," said Boston. "It's red tape at its most absurd." 

Two other “honourees” are mentioned by CFIB. It denounces ridiculous rules imposed on dog-walking businesses in Toronto. It also deplores the $28 fee charged in Winnipeg to residents and businesses to see their property tax assessments.