The purpose of the CFIB Tax Research Program is to provide a series of studies to help develop a better understanding of how the tax system can be improved to promote the growth and competitiveness of Canadian businesses. [...] The tax compliance cost includes the money businesses spend to prepare, compute and remit taxes to the three levels of government and reflects the complex nature of the Canadian tax system. [...] Given that the SME sector represents roughly half of the private economic activity in Canada and employs close to six out of ten Canadian workers, a clearer understanding of the tax compliance burden on SMEs is of prime importance to the smooth functioning of the overall economy and to ensuring global competitiveness. [...] In a recent survey of business owners conducted by the Canadian Federation of Independent Business (CFIB), the major factors contributing to tax compliance costs were the amount of paperwork involved, the complexity of the federal and provincial tax systems, as well as frequent changes to tax legislation (see Figure 1). [...] To bring the issue of tax compliance costs to the forefront of tax policy formulation and to gain a better appreciation of their impact on the Canadian economy, the first step is to understand the magnitude of the problem.