Compliance costs refer to the costs incurred by individuals and businesses in complying with tax laws and regulations. Administrative costs include the expenses incurred by governments to manage and maintain the tax system. The are all too often neglected in the discussion of tax policy. They are recognized as important but usually overlooked. The direct costs of taxation coupled with their incentive or behavioural effects normally take centre stage in the discussion and formulation of tax policy.

The main objective of the study, however, is to provide an up-to-date reasonable estimate of the costs of complying with tax laws and regulations and the costs to government in managing and maintaining the tax system. The study also summarizes the limited amount of research completed in Canada and abroad on tax compliance. The results are presented in order to provide some limited points of comparison between the calculations completed for this study and estimates completed previously.