A new report by the Canadian Federation of Independent Business (CFIB) revealed that in 2024, small businesses spent 735 hours and $51.5 billion on regulatory compliance, with over a third attributed to unnecessary red tape.
The report, released in collaboration with Intuit QuickBooks for Red Tape Awareness Week, highlighted the significant burden of regulatory compliance on small businesses in Canada. It found that in 2024, small business owners spent 735 hours—or the equivalent of 32 business days—navigating regulations, with over a third of that time consumed by "red tape" deemed unnecessary.
The time explicitly spent on red tape has risen sharply, increasing by 35 percent since 2020. "Business owners lose an entire month's worth of productivity to filling out lengthy or redundant forms, navigating government websites, and deciphering complex jargon," said Marvin Cruz, CFIB's director of research. "This is a crucial time that could be better spent on growing businesses, training staff, or even spending time with family."
In addition to time lost, the financial cost of regulatory compliance has surged. Canadian businesses spent $51.5 billion on compliance in 2024, a 13.5 percent increase from 2020's $45.4 billion. Of this, $17.9 billion—35 percent—is attributed to red tape, up from $12.7 billion in 2020. Rising wages, professional fees, and additional compliance hours are the primary drivers of this increase.
Small businesses bear a disproportionate share of these costs. Companies with fewer than five employees spent $10,208 per employee on compliance in 2024, compared to $1,374 for businesses with 100 or more employees. Similarly, smaller firms spent 198 hours per employee on regulatory tasks, compared to just eight hours for their larger counterparts.
CFIB economist and report co-author Laure-Anna Bomal emphasized the potential gains of cutting red tape. "Eliminating unnecessary regulatory compliance would free up over 200 million hours across the economy. That's time that could be reinvested in hiring, increasing wages, expanding operations, or improving work-life balance," Bomal said.
The report outlined a 10-point plan for governments to reduce regulatory burdens. Key recommendations include using plain language, measuring the regulatory burden, and prioritizing accountability. A vast majority—87 percent—of small business owners surveyed agreed that excessive regulations significantly hamper productivity and growth.
The CFIB urged all levels of government to prioritize red tape reduction to boost Canada's economic competitiveness and foster entrepreneurship.