Red Tape Review Progress Report: Minister of Finance and National Revenue Portfolio

Cutting red tape: supporting investment and growth in the Canadian economy

The government launched a Red Tape Review of regulations in early July, implicating all federal departments and agencies with regulatory responsibilities. Ministers were asked to review regulations in their portfolio and propose actions and measures to eliminate red tape, including:

• removing outdated regulation
• reducing duplication with provincial rules
• making it easier to access and deliver services

As a first step, departments and agencies were requested to publicly report on progress within 60 days.

The Minister of Finance and National Revenue is responsible for the overall stewardship of the Canadian economy. This includes a wide range of responsibilities under many different Acts such as the Income Tax Act and the Financial Administration Act, as well as financial institutions statutes, including the Bank Act, the Insurance Companies Act, and the Trust and Loan Companies Act. The Minister also has direct responsibility for the development of the policy framework for taxation, tariffs and the financial sector.

The Minister is supported by the Department of Finance Canada, which provides the analysis and advice needed to enact the government's economic agenda. Among other things, the responsibilities of the Department of Finance Canada include:

• preparing the annual federal budget
• managing federal borrowing on financial markets
• developing economic policy, including legislation and regulation

The Acts (legislation) define the overall policy intent of laws and provide the government with the authority to make regulations in areas that include federally regulated financial institutions, taxation, financial administration, and major transfers to provinces and territories.^{Footnote 1} Specifically, the Minister makes regulations under these Acts (see List of Acts and Regulations). These regulations include:

Financial sector oversight and regulation

• Details, among other things, pertaining to the operational, licensing and market conduct requirements for federally incorporated financial institutions such as banks, insurance companies, trust and loan companies, and federal credit unions
• Requirements on payment service providers to comply with requirements related to operational risk management, reporting, safeguarding payment activities and safeguarding end-user funds
• Requirements for pension plans sponsored by employers in federally regulated industries (for example, telecommunications, banking and interprovincial transportation) as well as private sector employment in the three territories and some federal Crown corporations
• Anti-money laundering obligations requiring financial service providers and other reporting entities (such as accountants, casinos and money service businesses) to identify clients, monitor business relationships, and report suspicious and large transactions

Taxation and trade compliance

• Details on excise taxes and on how to compute income, sales or other amounts subject to tax and how to claim any deductions or credits that may apply
• Requirements for customs and tariffs, including country of origin and preferential tariffs for countries with which Canada has a free trade agreement

Public finance and intergovernmental transfers

• Details on how payments to provinces and territories are calculated
• Details on the financial management and prudent and effective use of public resources
• Details pertaining to mortgage insurance rules such as minimum down payment requirements, maximum loan amortization periods, minimum credit scores, maximum borrower debt service ratios, and the maximum insurable property value limit

The administration and interpretation of regulations are the responsibility of a portfolio of arms'-length agencies and Crown corporations. These Finance portfolio entities can issue guidance that outlines best practices for regulatory compliance. They are accountable to Parliament by reporting to the Minister of Finance and National Revenue.

Consistent with the Red Tape Review, the Department of Finance Canada and other Finance portfolio entities, namely, the Bank of Canada, the Canada Revenue Agency (CRA), the Canada Deposit Insurance Corporation (CDIC), the Financial Consumer Agency of Canada (FCAC), the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and the Office of the Superintendent of Financial Institutions (OSFI), have taken stock of their recent progress on eliminating red tape and identified areas for further improvement.

This report outlines their progress, plans and priorities, divided into four sections:

1. Cutting red tape through sound policy development
2. Reducing red tape by modernizing regulatory guidance
3. Cutting red tape through clarity and collaboration
4. Eliminating redundant or outdated red tape

A total of 33 completed or planned red tape reduction initiatives have been identified by the Department of Finance Canada and the nine entities for which the Minister of Finance and National Revenue has primary statutory authority.

1. Cutting red tape through sound policy development

A sound policy development process is essential to developing effective regulations that meet clearly defined objectives and are proportionate to the issue being addressed. The Department of Finance Canada regularly develops and consults on proposed regulatory changes that can help reduce red tape. This ensures that regulations are not unnecessarily burdensome for individuals and businesses or difficult to enforce for other Finance portfolio agencies.

Completed initiatives

The Department of Finance Canada is collaborating with the Treasury Board of Canada Secretariat to explore ways to make the regulatory approval process more efficient. Simplifying processes for lower-risk, less complex issues will accelerate decision-making and provide affected stakeholders with greater certainty about regulatory rules.

The Department of Finance Canada regularly reviews tax regulations to reduce reporting and record-keeping requirements that are imposed by the related legislation. Examples include:

• A simple reporting process for catch-up contributions and for refunds of over-contributions was introduced during the pandemic, which reduced the compliance burden for errors in contributions made to defined contribution pension plans. The new rules make it simpler and quicker for pension plan administrators to address contribution errors.
• A simplified GST/HST registration and remittance framework was introduced during the pandemic for eligible businesses; this supported compliance with new GST/HST e-commerce requirements while mitigating burden on impacted businesses.

The Department of Finance Canada strengthened federal-provincial-territorial taxation coordination for cannabis and vaping taxation by implementing, through legislation, regulations and administration, a common duty framework, and a product base. This coordination avoids duplicative requirements and results in businesses not having to comply with separate federal and provincial tax systems or deal with different tax administrators. Most recently, five additional provinces and territories decided to join the coordinated vaping taxation system, effective January 1, 2025.

The Department of Finance Canada works to align the corporate governance framework that applies to federally regulated financial institutions, where possible, with rules that apply under the Canada Business Corporations Act. This harmonization ensures consistency across federally regulated sectors and helps simplify compliance for financial sector corporations. Most recently, legislative and regulatory amendments have been made for matters such as virtual-only meetings, form and context on proxy documents, and electronic communication of documents to shareholders, to mirror amendments made to the Canada Business Corporations Act regime.

The Department of Finance Canada is planning on reviewing and possibly eliminating most of the existing large cash transaction reporting obligations, as Bill C-2 proposes a prohibition on the acceptance of cash payments, donations or deposits of $10,000 or more. The reduction of large cash transaction reporting would result in reduced red tape and cost savings for the vast majority of businesses and professionals with anti-money laundering and anti-terrorist financing obligations.

Planned initiatives

The Department of Finance Canada will establish a working group under the Senior Advisory Committee (SAC) with other Finance portfolio agencies to identify and implement approaches that will further reduce regulatory burden and enhance transparency for stakeholders in the financial sector.

The Department of Finance Canada and other portfolio agencies are developing an approach to better coordinate and communicate planned stakeholder consultations, with a view to eliminate duplication, reduce overlap, and increase the predictability of federal consultations for financial sector stakeholders.

2. Reducing red tape by modernizing regulatory guidance

Finance portfolio entities regularly modernize their regulatory guidance to ensure their relevancy in a changing environment. For Canadians, this modernization can minimize delays, facilitate faster decision-making and foster innovation. For regulators, it allows them to focus on areas of highest risk and importance.

Completed initiatives

The CRA's SimpleFile, consisting of an invitation-based, automated method of filing for modest-income individuals, is a free, fast and secure service, with no forms to fill out or calculations to do. This year, the CRA expanded the number of eligible invited participants, mailing out 2 million invitation letters for SimpleFile by phone service, and nearly 100,000 invitation letters for SimpleFile Digital.

The CRA simplified the initial My Account portal registration by introducing a new digital identity validation option, enabling Canadians to use real-time identity validation when completing the log-in process for the first time. To date, the service has enabled an over 50% decrease in CRA security codes issued by mail and streamlined the user experience.

The CRA developed an automated solution that helped successfully deliver the Canada Carbon Rebates for eligible small and medium-sized businesses. This resulted in over $2.45 billion returned to around 680,000 eligible Canadian-controlled private corporations and supported the government's commitment to return a portion of federal fuel charge proceeds directly to eligible small and medium-sized businesses.

The CRA launched an authenticated online chat for users logged into My Account, allowing for faster, tailored answers to account-specific questions. The CRA also launched an improved chatbot with a more accessible design, available 24/7.

The CRA's new AI-powered chatbot entered public beta testing this year. The chatbot answers general questions about CRA web content and provides clear responses with helpful links such as tax deadlines or eligibility details. This tool will help reduce wait times and make support more accessible whenever clients need it.

FINTRAC has consolidated its sanctions and terrorist property reporting forms in 2024 and 2025, allowing for more streamlined reporting of property owned or controlled by a terrorist group, or a person or entity subject to sanctions.

Planned initiatives

CDIC will consult member institutions to modernize the Eligible Financial Contracts By-law, which requires parties to indicate agreement with the Canada Deposit Insurance Corporation Act. If adopted, the modernization would narrow the scope of eligible financial contracts by exempting contracts with certain counterparties. These changes will better align Canada with peer jurisdictions, making it easier for financial institutions to comply with CDIC's Eligible Financial Contracts By-law.

The CRA will progressively increase the number of Canadians eligible to use the SimpleFile digital service so that more people can automatically complete and submit their tax returns, ensuring access to the benefit and credit payments designed to support them.

FCAC will work with industry to migrate mandatory filings to a secure portal, which will allow for more reliable reporting, reduce administrative burden and improve information security.

FCAC is automating the data-gathering and analysis process needed for its risk assessment of compliance with market conduct obligations for certain entities it regulates. This will make the reporting process faster, less burdensome and enable standardized data collection.

FINTRAC intends to streamline and modernize its existing guidance and related publications, which will make it easier for reporting entities to comply with the relevant money-laundering and anti-terrorist financing legislative and regulatory obligations. This longer-term initiative will make it easier for reporting entities to understand the regulatory requirements they are subject to.

OSFI will continue to modernize its policies and guidance, including:

• removing the requirement for actuarial peer review for insurance companies
• postponing the release of the draft corporate governance and accountability guideline and instead taking a narrower focus on board and senior management accountability
• streamlining and clarifying credit risk management guidance

3. Cutting red tape through clarity and collaboration

Finance portfolio entities also reduce red tape by improving the clarity of their regulatory guidance and by collaborating closely with stakeholders. When Canadians understand their rights and obligations, it makes compliance easier and reduces the need for enforcement. When Finance portfolio entities collaborate with stakeholders, including providing opportunities for input, it allows for a better implementation of regulations.

Completed initiatives

The Bank of Canada undertook a formal public consultation on its supervisory guidelines for retail payments in 2024 to limit the impact on stakeholders. It also held sessions to help payment service providers understand regulatory requirements, supervisory policies and guidelines, reducing the burden on them to interpret the material.

The CRA increased its outreach efforts to make it easier for Indigenous people to file their income tax and benefit returns with the introduction of "Simple File: Let us help you get your benefits!", a paper-based simplified filing option made available to all Indigenous communities.

The CRA improved the client experience for executors by designing and publishing a new brochure called Doing taxes for someone who died. Using plain language and a user-friendly design, the brochure presents an overview of the steps to settle the taxes of a deceased person. A simplified form is also available to notify the CRA of a death.

OSFI began hosting regular industry days in 2024, providing stakeholders the opportunity to ask questions or share comments on recent initiatives, and adopted a quarterly policy release schedule to improve the predictability of regulatory changes. This initiative fosters closer collaboration with industry and helps industry better interpret regulatory expectations.

FINTRAC modernized its outreach and engagement efforts over 2024–25 and:

• began hosting webinars on emerging topics of interest for stakeholders
• developed videos to synthesize certain guidance and key information on statutory requirements
• reintroduced a public-private forum for consulting on guidance and outreach material

This initiative makes it easier for stakeholders to interpret and comply with FINTRAC requirements.

Planned initiatives

CDIC launched public consultations in 2025 on proposed changes that will ensure depositors continue to receive timely, accurate and accessible information about deposit insurance in a rapidly evolving landscape where new products, digital-only banks and third-party partnerships are changing how they interact with deposit-taking institutions.

The CRA conducted public consultations with individuals, representatives and tax intermediaries to hear about their recent service experiences with the CRA. A summary report will be published later this year, which will inform future service improvements, such as streamlining its services, strengthening the integration of its programs and making processes simpler for clients, to reduce red tape and make it easier for Canadians to meet their obligations and get their benefits and credits.

4. Eliminating redundant or outdated red tape

Regulatory guidance administered by Finance portfolio entities is regularly reviewed to eliminate requirements that are outdated or duplicative, create unnecessary burdens for Canadians, or limit innovation. These regulations can make it difficult for regulated entities to remain compliant and result in higher administrative costs.

Completed initiatives

In 2024, FCAC simplified 10 separate payment card industry documents into two guidelines and one bulletin and merged two branch closure guidelines for financial institutions into a single, unified resource. These updates:

• eliminated outdated and overlapping materials
• reduced the compliance burden
• enabled FCAC and regulated entities to focus on market conduct issues with greater consumer impact

FCAC introduced a risk-based triage process during the pandemic to assess which compliance issues warrant investigation. Previously, all reported compliance issues were investigated. Under the new risk-based approach, 30% to 40% of cases have been assessed as not requiring further investigation, which has reduced regulatory burden for industry and allowed resources to be directed toward higher-risk issues.

OSFI rescinded 20 guidance documents that it identified as outdated, redundant or no longer fit for purpose, effective April 2025. This reduced the compliance burden and allowed OSFI and the financial institutions it supervises to focus on issues with more material risks.

Planned initiatives

The working group reporting to the Senior Advisory Committee referenced earlier will also conduct periodic reviews of regulation to identify opportunities to eliminate rules that are no longer fit for purpose.

Next steps

Finance portfolio entities regularly review regulatory frameworks and guidance (for example, financial sector and tax) and consult to ensure that they support a competitive and productive economy. This includes the multi-year legislative review of financial institutions statutes recently finalized, through which the Department of Finance Canada receives substantive input from stakeholders that helps ensure rules remain effective and responsive to the evolving needs of Canadians.

In addition, a variety of collaborative forums exist with provincial and territorial governments, as well as other partners, to advance policy and technical issues. These forums help ensure better coordination on policy development, implementation and enforcement across various areas under the responsibility under the Minister of Finance and National Revenue portfolio.

Looking ahead, the Department of Finance Canada and other Finance portfolio entities will increase their efforts to ensure that regulation is as efficient and effective as possible, and that outdated rules are removed or modernized. Through a new working group under the Senior Advisory Committee, the Department of Finance Canada and other portfolio agencies responsible for the oversight of the financial sector will seek to identify effective and innovative ways to support the economy by eliminating red tape and reducing the regulatory burden on financial institutions. Similarly, the Department of Finance Canada will continue to regularly release and consult on proposed tax legislative and regulatory changes, including in respect of proposals that relate to tax simplification and the reduction of red tape.

Further progress as part of these efforts to improve the regulatory environment for businesses and individuals in Canada will be included in the next annual Red Tape Review Progress Report.