The accountancy sector in Canada is growing at a fast pace, increasing the need for advanced technologies to streamline tax processes. According to the International Trade Agency (ITA), in 2020, US exports to Canada in accounting services were valued at US$ 335 million, and US imports from Canada were valued at US$ 450 million. The entire accountancy industry is witnessing the emergence of cloud computing and automation amid the digital revolution. Cloud accountancy has widely transformed how accountants work regularly and communicate with their customers. Cloud-based solutions enable accountants to run accounting tasks from any location. According to Xero Corporation, accounting firms using cloud accounting have reported a 15% growth in year-over-year revenue. Also, the accounting practices using cloud accounting have managed to gather and serve five times more customers than those who do not use this process.
The accountancy industry in Canada is performing strongly due to long-term investments and a sustained ability to attract high-quality talent, leading to one of the highest concentrations of accountancy professionals. Several major global firms are headquartered in the country, which makes the country a leading market for accountancy.
Moreover, the use of AI technology by accounting firms is increasing to boost productivity and flourish the accounting industry. According to Compunet InfoTech, accountants in Vancouver, British Columbia, are using advanced tools to increase productivity and make more informed decisions. The use of technologies such as AI will help accounting firms generate more insight and reduce expenditures. According to the Sage Group, 55% of accountants are likely to use AI for automation in the coming years, which will rise the demand for tax software in the country.
AI helps improve services such as automated tax filing and helps educate taxpayers through the procedure of tax filing. Moreover, AI can be implemented for identifying tax evasion, extracting key data from tax documents, and automatically feeding information into accounting software to lower the load on tax professionals.
The coming years are about automating business processes by making labor-intensive activities such as tax preparation, banking, audits, and payroll less time-consuming. Using automation would allow accounting firms to reduce the overall time required to complete processes and reduce the number of errors. Thus, automation and cloud technologies are expected to be the most significant trends in the accounting industry, rising the demand for tax software in Canada.
Tax Type Segment Dominated by Sales Tax in Canada Tax Software Market
Sales tax software streamlines, automates, and integrates sales tax calculation, management, and reporting. The software meant for this tax type features abilities such as value-added tax and tax return filing. The software finds and calculates sales tax rates precisely with advanced validation technology. It helps remove complications. With technological advancements in the country, various companies and individuals have begun to file returns and pay taxes electronically with the help of sales tax software. Various companies that sell products are focusing on managing sales tax. Hence, they are implementing solutions such as sales tax software that automate the tax process, such as calculating returns filing. In August 2023, Stripe—a provider of financial infrastructure platforms for businesses in Canada—launched Stripe Tax for platforms, enabling platforms using Stripe Connect to offer Stripe Tax as a service to their customers. Stripe Tax helps automatically calculate and collect the correct sales tax, VAT, and GST. Thus, the presence and launch of such solutions ease the process of managing the sales tax, rising the demand for tax software in the country.
Canada Tax Software Market: Segmental Overview
Based on product, the tax software market is segmented into software and service. The software segment recorded the largest tax software market share in 2022 and is anticipated to register the highest CAGR during the forecast period. Based on tax type, the market is segmented into sales tax, income tax, corporate tax, and others. The sales tax segment registered the largest share of the Canada tax software market in 2022, whereas income tax segment is anticipated to record the highest CAGR during the forecast period. Based on deployment type, the market is segmented into cloud and on-premise. The cloud segment recorded the largest share in the tax software market in 2022 and is anticipated to register the highest CAGR during the forecast period. Based on end users, the market is segmented into individual and commercial. The commercial segment recorded the largest tax software market share in 2022 and is anticipated to register the highest CAGR during the forecast period. Based on enterprise size, the market is segmented into small enterprises, medium enterprises, and large enterprises. The large enterprises segment registered the largest share of the Canada tax software market in 2022 and is anticipated to record the highest CAGR during the forecast period. Based on industry vertical, the Canada tax software market is segmented into BFSI, government, IT & telecom, healthcare, retail, and others. The IT & telecom segment recorded the largest share in 2022, whereas retail segment is anticipated to register the highest CAGR during the forecast period.
Canada Tax Software Market Analysis: Competitive Landscape and Key Developments
Sage Group Plc, Thomson Reuters Corp, Xero Ltd, IRIS Software Group Ltd, Wolters Kluwer NV, Intuit Inc, HRB Digital LLC, Wealthsimple Technologies Inc, SAP SE, and CloudTax Inc are among the key Canada tax software market players that are profiled in the report. Several other essential Canada tax software market players were analyzed for a holistic view of the market and its ecosystem. The market report provides detailed market insights to help major players strategize their growth.
- In August 2023, Right Networks, offering the only intelligent cloud purpose-built for accounting firms and professionals, announced a new partnership with Thomson Reuters (TSX/NYSE: TRI), a global content and technology company, to offer cloud hosting of its tax and accounting solutions in the United States.
- In June 2023, Thomson Reuters Corp, a global content and technology company, announced a series of updates to its ONESOURCE tax solutions. Enhancements across the product suite support simplified tax data management and customizable workflows to ensure on-time filing and compliance – helping corporate tax departments stay ahead of regional and global tax reform and regulatory changes.