Financial statements

Statement of Management Responsibility Including Internal Control Over Financial Reporting

We have prepared the accompanying financial statements of the Canada Revenue Agency (CRA) according to accounting principles consistent with those applied in preparing the financial statements of the Government of Canada. Significant accounting policies are set out in Note 2 to the financial statements. Some of the information included in the financial statements, such as accruals and the allowance for doubtful accounts, is based on management's best estimates and judgment, with due consideration to materiality. The CRA's management is responsible for the integrity and objectivity of data in these financial statements. Financial information submitted to the Public Accounts of Canada, and included in the CRA's Departmental Results Report, is consistent with these financial statements.

To fulfill its accounting and reporting responsibilities, management maintains sets of accounts which provide records of the CRA's financial transactions. Management also maintains an effective system of internal control over financial reporting (ICFR) that takes into account costs, benefits and risks. It is designed to provide reasonable assurance that transactions are within the authorities provided by Parliament, and by others such as provinces and territories, are executed in accordance with prescribed regulations and the Financial Administration Act, and are properly recorded to maintain the accountability of funds and safeguarding of assets.

Financial management and the internal control system are reinforced by the maintenance of internal audit programs. The CRA also seeks to assure the objectivity and integrity of data in its financial statements by the careful selection, training, and development of qualified staff; by organizational arrangements that provide appropriate divisions of responsibility; by communication programs aimed at ensuring that its regulations, policies, standards, and managerial authorities are understood throughout the organization; and by conducting an annual assessment of the effectiveness of its system of ICFR. An assessment for the year ended March 31, 2017 was completed in accordance with the Treasury Board Policy on Internal Control and the results and action plans are summarized in the Annex.

The system of ICFR is designed to mitigate risks to a reasonable level based on an on-going process to identify key risks, to assess effectiveness of associated key controls, and to make any necessary adjustments. The effectiveness and adequacy of the CRA's financial management and its system of internal control are reviewed by the work of internal audit staff, who conduct periodic audits of different areas of the CRA's operations, and by the Board of Management which is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control and exercises this responsibility through the Audit Committee of the Board of Management. To assure objectivity and freedom from bias, these financial statements have been reviewed by the Audit Committee and approved by the Board of Management. The Audit Committee is independent of management and meets with management, the internal auditors, and the Auditor General of Canada on a regular basis. The auditors have full and free access to the Audit Committee.

The Auditor General of Canada conducts independent audits and expresses separate opinions on the accompanying financial statements which do not include an audit opinion on the annual assessment of the effectiveness of the CRA's internal controls over financial reporting.

Approved by:

Original signed 

Bob Hamilton 
Commissioner of Revenue and Chief Executive Officer of the Canada Revenue Agency   

Original signed 

Roch Huppé
Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch

Ottawa, Ontario
August 28, 2017

Canada Revenue Agency
Financial Statements – Agency Activities

Logo of the Office of the Auditor General of Canada

Independent Auditor's Report

To the Board of Management of the Canada Revenue Agency and the Minister of National Revenue

I have audited the accompanying financial statements of the Agency Activities of the Canada Revenue Agency, which comprise the statement of financial position as at 31 March 2017, and the statement of operations and agency net financial position, statement of change in agency net debt and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian public sector accounting standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial statements present fairly, in all material respects, the financial position of the Agency Activities of the Canada Revenue Agency as at 31 March 2017, and the results of its operations, changes in its net debt, and its cash flows for the year then ended in accordance with Canadian public sector accounting standards.

Original signed 

Michael B. Robichaud, CPA, CA
Principal
for the Auditor General of Canada

28 August 2017
Ottawa, Canada

Canada Revenue Agency
Statement of Financial Position – Agency Activities
as at March 31
(in thousands of dollars)

Statement of Financial Position - Agency Activities
Long description 

The Canada Revenue Agency Statement of Financial Position - Agency Activities as at March 31, 2017 (presented in thousands of dollars) is separated in 3 categories: liabilities, financial assets, and non-financial assets.

Under the liabilities section, accrued salaries for 2017 are 341,486 and for 2016 are 329,274.

Accounts payable and accrued liabilities (note 4) for 2017 are 98,756 and for 2016 are 87,790. 
Vacation pay and compensatory leave for 2017 are 212,148 and for 2016 are 189,038.
Employee severance benefits (note 5e) for 2017 573,721 and for 2016 are 604,149.
Employee sick leave benefits (note 5e) for 2017 are 253,093 and for are 253,665.

The Total liabilities for 2017 are 1,479,204 and for 2016 are 1,463,916.

Under the financial assets section, 

Due from the Consolidated Revenue Fund for 2017 are 311,560 and for 2016 are 269,109.
Accounts receivable and advances (see note 6 for additional information) for 2017 are 18,181 and for 2016 are 7,415.

Total financial assets for 2017 are 329,741 and for 2016 are 276,524.

Total Agency net debt for 2017 are 1,149,463 and for 2016 are 1,187,392.

Under non-financial assets

Prepaid expenses for 2017 are 12,769 and for 2016 are 12,454.
Tangible capital assets (note 7) for 2017 are 399,074 and for 2016 are 402,322.

Total non-financial assets for 2017 are 411,843 and for 2016 are 414,776.

Agency net financial position for 2017 are 737,620 and for 2016 are 772,616.

Contingent liabilities (see note 13 for additional information)
The accompanying notes form an integral part of these financial statements.

Original signed 

Bob Hamilton
Commissioner of Revenue and Chief Executive Officer of the Canada Revenue Agency  

Date 28 August 2017

Original signed 

Susan Hayes, LL.B.
Chair, Board of Management  

Date 28 August 2017

Canada Revenue Agency
Statement of Operations and Agency Net
Financial Position – Agency Activities
for the year ended March 31
(in thousands of dollars)

Statement of Operations and Agency Net
Long description 

The Canada Revenue Agency Statement of Operations and Agency Net Financial Position – Agency Activities as at March 31, 2017 (presented in thousands of dollars) is separated in 3 categories: expenses, non-tax revenues, and Government funding and transfers.

Under the expenses section (see note 8 for additional information)

Internal services: the 2017 planned result is 1,220,307, the 2017 actual result is 1,219,288, and the 2016 actual result is 1,143,400.
Reporting compliance: the 2017 planned result is 1,164,486, the 2017 actual result is 1,184,686, and the 2016 actual result is 1,175,996.
Collections, compliance and verification: the 2017 planned result is 858,143, the 2017 actual result is 1,006,004, and the 2016 actual result is 836,07.
Assessment of returns and payment processing: the 2017 planned result is 590,640, the 2017 actual result is 629,323, and the 2016 actual result is 600,744.
Taxpayer and business assistance: the 2017 planned result is 366,525, the 2017 actual result is 434,979, and the 2016 actual result is 379,574.
Appeals: the 2017 planned result is 244,464, the 2017 actual result is 272,144, and the 2016 actual result is 247,009.
Benefit programs: the 2017 planned result is 157,512, the 2017 actual result is 168,597, and the 2016 actual result is 154,287.
Taxpayers' Ombudsman: the 2017 planned result is 3,516, the 2017 actual result is 3,093, and the 2016 actual result 2,213.

Total expenses the 2017 planned result is 4,605,593, the 2017 actual result is 4,918,114, and the 2016 actual result is 4,539,294.

Under the non-tax revenues section (see note 9 for additional information)

Internal services: the 2017 planned result is 158,189, the 2017 actual result is 163,509, and the 2016 actual result is 167,592.
Reporting compliance: the 2017 planned result is 38,830, the 2017 actual result is 21,025, and the 2016 actual result is 20,637.
Collections, compliance and verification: the 2017 planned result is 187,484, the 2017 actual result is 257,041, and the 2016 actual result is 222,821.
Assessment of returns and payment processing: the 2017 planned result is 46,684, the 2017 actual result is 49,241, and the 2016 actual result is 40,288.
Taxpayer and business assistance: the 2017 planned result is 60,407, the 2017 actual result is 74,293, and the 2016 actual result is 62,986.
Appeals: the 2017 planned result is 22,042, the 2017 actual result is 25,922, and the 2016 actual result is 23,049.
Benefit programs: the 2017 planned result is 23,171, the 2017 actual result is 20,601, and the 2016 actual result is 22,095.
Revenues earned on behalf of Government: the 2017 planned result is (63,710), the 2017 actual result is (77,667) and the 2016 actual result is (69,543).

Total non-tax revenues: the 2017 planned result is 473,097, the 2017 actual result is 533,965, and the 2016 actual result is 489,925.

Net cost of operations before government funding and transfers: the 2017 planned result is 4,132,496, the 2017 actual result is 4,384,149, and the 2016 actual result is 4,049,369.

Under the Government funding and transfers section

Net cash provided by the Government of Canada: the 2017 planned result is 4,226,916, the 2017 actual result is 3,864,284, and the 2016 actual result is 3,558,385
Change in due from the Consolidated Revenue Fund: the 2017 actual result is 42,451 and the 2016 actual result is (12,993).
Services provided without charge from other government agencies and departments (see note 10 for additional information): the 2017 planned result is 452,471, the 2017 actual result is 512,444, and the 2016 actual result is 463,247.
Transfer of transition payments for implementing salary payments in arrears: the 2017 actual result is (44) and the 2016 actual result is (506).
Net transfers of tangible capital assets to other government departments (OGD): the 2017 actual result is 10 and the 2016 actual result is (11)

Total government funding and transfers: the 2017 planned result is 4,679,387, the 2017 actual result is 4,419,145, and the 2016 actual result is 4,008,122.

Net cost (surplus) of operations after government funding and transfers: the 2017 planned result is (546,891), the 2017 actual result is (34,996), and the 2016 actual result is 41,247.

Agency net financial position - Beginning of year: the 2017 planned result is 772,616, the 2017 actual result is 772,616, and the 2016 actual result is 731,369.

Agency net financial position - End of year: the 2017 planned result is 225,725, the 2017 actual result is 737,620, and the 2016 actual result is 772,616.

The accompanying notes form an integral part of these financial statements.

Canada Revenue Agency
Statement of Change in Agency Net Debt – Agency Activities
for the year ended March 31
(in thousands of dollars)

Statement of Change in Agency Net Debt - Agency Activities
Long description 

The Canada Revenue Agency Statement of Change in Agency Net Debt – Agency Activities as at March 31, 2017 is presented in thousands of dollars
Net cost (surplus) of operations after government funding and transfers: the 2017 planned result is (546,891), the 2017 actual result is (34,996), and the 2016 actual result is 41,247.

Under Change in tangible capital assets   

Acquisition of tangible capital assets (see note 7 for additional information): the 2017 planned result is 96,841, the 2017 actual result is 89,102, and the 2016 actual result is 93,664.
Amortization of tangible capital assets (see note 7 for additional information): the 2017 planned result is (95,613), the 2017 actual result is (89,076), and the 2016 actual result is (83,842)
Proceeds from disposal of tangible capital assets: the 2017 actual results is (78) and the 2016 actual result is (51).
Net loss on disposal/write-off of tangible capital assets: the 2017 planned result is (3,078), the 2017 actual result is (3,206), and the 2016 actual result is (853)
Net transfers of tangible capital assets to OGD: the 2017 actual result is 10 and the 2016 actual result is (11).

Total change in tangible capital assets: the 2017 planned result is (1,850), the 2017 actual result is (3,248), and the 2016 actual result is 8,907.

Change in prepaid expenses: the 2017 actual result is 315 and the 2016 actual result is (84).

Net increase (decrease) in agency net debt: the 2017 planned result is (548,741), the 2017 actual result is (37,929), and the 2016 actual result is 50,070.

Agency net debt - Beginning of year: the 2017 planned result is 1,187,392, the 2017 actual result is 1,187,392 and the 2016 actual result is 1,137,322.

Agency net debt - End of year: the 2017 planned result is 638,651, the 2017 actual result is 1,149,463, and the 201 actual result is 1,187,392.

The accompanying notes form an integral part of these financial statements

Canada Revenue Agency
Statement of Cash Flows – Agency Activities
for the year ended March 31
(in thousands of dollars)

Long description 

The Canada Revenue Agency Statement of Cash Flows – Agency Activities as at March 31, 2017 (presented in thousands of dollars) is separated in 2 categories: operating activities and capital investing activities.

Under the operating activities section

Net cost of operations before government funding and transfers: for 2017 the amount is 4,384,149 and for 2016 the amount is 4,049,369. 

Items not affecting cash

Amortization of tangible capital assets (see note 7 for additional details): for 2017 the amount is (89,076) and for 2016 the amount is (83,842)
Net loss on disposal/write-off of tangible capital assets: for 2017 the amount is (3,206) and for 2016 the amount is (853)
Services provided without charge from other government agencies and departments (see note 10 for additional details): for 2017 the amount is (512,444) and for 2016 the amount is (463,247)
Transition payments for implementing salary payments in arrears: for 2017 the amount is 44 and for 2016 the amount is 506
Change in accounts receivable and advances: for 2017 the amount is 10,766 and for 2016 the amount is (2,738)
Change in prepaid expenses: for 2017 the amount is 315 and for 2016 the amount is (84)
Change in accrued salaries: for 2017 the amount is (12,212) and for 2016 the amount is (62,248)
Change in accounts payable and accrued liabilities: for 2017 the amount is (10,966) and for 2016 the amount is 32,805
Change in vacation pay and compensatory leave: for 2017 the amount is (23,110) and for 2016 the amount is (594)
Change in employee severance benefits: for 2017 the amount is 30,428 and for 2016 the amount is 2,621
Change in employee sick leave benefits: for 2017 the amount is 572 and for 2016 the amount is (6,923)

Cash used in operating activities: for 2017 the amount is 3,775,260 and for 2016 the amount is 3,464,772
  
Under the Capital investing activities section 

Acquisition of tangible capital assets (see note 7 for additional details): for 2017 the amount is 89,102  and for 2016 the amount is 93,664
Proceeds from disposal of tangible capital assets: for 2017 the amount is (78) and for 2016 the amount is (51)

Cash used in capital investing activities: for 2017 the amount is 89,024 and for 2016 the amount is 93,613
  
Net cash provided by the Government of Canada: for 2017 the amount is 3,864,284 and for 2016 the amount is 3,558,385
  
The accompanying notes form an integral part of these financial statements

Canada Revenue Agency

Notes to the Financial Statements – Agency Activities

1. Authority and objectives

The Canada Revenue Agency (CRA) is an agent of Her Majesty in right of Canada under the Canada Revenue Agency Act. The CRA is a departmental corporation named in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of National Revenue.

The mandate of the CRA is to support the administration and enforcement of tax legislation and other related legislation. The CRA provides support, advice, and services by:

(a) supporting the administration and enforcement of program legislation;

(b) implementing agreements between the Government of Canada or the CRA and the government of a province, territory or other public body performing a function of government in Canada to carry out an activity or administer a tax or program;

(c) implementing agreements or arrangements between the CRA and departments or agencies of the Government of Canada to carry out an activity or administer a program; and

(d) implementing agreements between the Government of Canada and First Nations governments to administer a tax.

The CRA administers revenues, including income and sales taxes and employment insurance premiums, administers tax legislation, delivers a number of social benefit programs to Canadians for the federal, provincial, territorial, and First Nations governments, and administers other amounts, including Canada Pension Plan contributions, for other groups or organizations. In addition to the Canada Revenue Agency Act, the CRA is responsible for administering and enforcing the following acts or parts of acts: the Air Travellers Security Charge Act, the Children's Special Allowances Act, Part V.1 of the Customs Act, section 2 of the Energy Costs Assistance Measures Act, the Excise Act, the Excise Tax Act (including the goods and services tax (GST) and the harmonized sales tax (HST) except for GST/HST on imported goods), the Excise Act, 2001, the Income Tax Act, 2006, the Universal Child Care Benefit Act, and others including various provincial acts.

In delivering its mandate, the CRA operates under the following program activities:

(a) Internal services: Provides internal services across the CRA, such as human resources management, financial management and information technology, to support the needs of programs and corporate obligations;

(b) Reporting compliance: Verifies complete and accurate disclosure by taxpayers of all required information to establish tax liabilities;

(c) Collections, compliance, and verification: Identifies and addresses non-compliance with taxpayer filing and remittance requirements;

(d) Assessment of returns and payment processing: Processes and validates taxpayer returns; registers, establishes, and maintains taxpayer accounts; and, receives payments;

(e) Taxpayer and business assistance: Assists taxpayers in meeting their obligations under the self-assessment;

(f) Appeals: Provides a dispute resolution process for taxpayers who disagree with decisions taken by the CRA;

(g) Benefit programs: Provides Canadians certain income-based benefits, credits and other services on behalf of federal, provincial (except Québec), and territorial governments; and

(h) Taxpayers' Ombudsman: Addresses requests for reviews made by taxpayers and benefit recipients with respect to service matters.

2. Summary of significant accounting policies

For financial reporting purposes, the CRA's activities have been divided into two sets of financial statements: agency activities and administered activities. The Financial Statements – Agency Activities include those operational revenues and expenses which are managed by the CRA and utilized in running the organization. The Financial Statements – Administered Activities include those revenues and expenses that are administered on behalf of the federal, provincial, and territorial governments, First Nations, and other organizations. The purpose of the distinction between agency and administered activities is to facilitate, among other things, the assessment of the administrative efficiency of the CRA in achieving its mandate. Tax-related assets, liabilities, revenues and expenses are excluded from these financial statements because they can only accrue to a government, not to the tax agency that administers those transactions.

As required by the Canada Revenue Agency Act, the Financial Statements – Agency Activities have been prepared using accounting principles consistent with those applied in the preparation of the financial statements of the Government of Canada. The accounting principles used are in accordance with Canadian public sector accounting standards. A summary of significant accounting policies follows:

(a) Parliamentary appropriations

The CRA is financed by the Government of Canada through Parliamentary appropriations. Financial reporting of authorities provided to the CRA does not parallel financial reporting according to Canadian public sector accounting standards, as they are based in large part on cash flow requirements. Consequently, items recognized in the Statement of Financial Position and the Statement of Operations and Agency Net Financial Position may be different from those provided through appropriations from Parliament. Note 3(b) provides a high-level reconciliation between the two bases of reporting. The Future-oriented Statement of Operations – Agency Activities and its accompanying notes included in the 2016-2017 Report on Plans and Priorities are the source of information for the planned results in the financial statements.

(b) Net cash provided by the Government of Canada

The CRA operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the CRA is deposited to the CRF and all cash disbursements made by the CRA are paid from the CRF. The net cash provided by government is the difference between all respendable cash receipts and all cash disbursements including transactions with departments and agencies.

(c) Expense recognition

Expenses are recognized when goods are received and/or services are rendered.

(d)  Services provided without charge from other government agencies and departments

Estimates of the cost for services provided without charge from other government agencies and departments are recorded as expenses at their estimated cost.

(e)  Revenue recognition

Non-tax revenues are recognized when the services are rendered by the CRA.

Non-tax revenues that are not available for spending cannot be used to discharge the CRA's liabilities. While management is expected to maintain accounting control, it has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented as a reduction of the CRA's gross revenues.

(f) Vacation pay and compensatory leave

Vacation pay and compensatory leave expenses are accrued as the benefits are earned by the employees under their respective terms of employment. The liability for vacation pay and compensatory leave is calculated at the salary levels in effect at the end of the year for all unused vacation pay and compensatory leave benefits accruing to employees.

(g)  Employee future benefits

a) Pension benefits

All eligible CRA employees participate in the Public Service Pension Plan administered by the Government of Canada. The CRA's contributions reflect the full cost as employer. These amounts are currently based on a multiple of an employee's required contributions and may change over time depending on the experience of the plan. The CRA's contributions are expensed during the year in which the services are rendered and represent the total pension obligation of the CRA. Current legislation does not require the CRA to make contributions with respect to any actuarial deficiencies of the Public Service Pension Plan.

b) Health and dental benefits

The Government of Canada sponsors employee benefit plans (health and dental) in which the CRA participates. Employees are entitled to health and dental benefits, as provided for under labour contracts and conditions of employment. The CRA's contributions to the plans, which are provided without charge by the Treasury Board Secretariat, are recorded at cost based on a percentage of the salary expenses and charged to personnel expenses in the year incurred. They represent the CRA's total obligation to the plans. Current legislation does not require the CRA to make contributions for any future unfunded liabilities of the plans.

c) Severance benefits

Some employees are entitled to severance benefits, as provided for under labour contracts and conditions of employment. The cost of these benefits is accrued as employees render the services necessary to earn them. The severance benefits represent an obligation of the CRA that entails settlement by future payments. The liability resulting from the benefits earned by CRA employees is calculated using information from an actuarial valuation based on the projected benefit method prorated on services. Changes in actuarial assumptions and any variance between the expected and the actual experience of the severance benefits plan give rise to actuarial gains or losses. These gains or losses are not recognized immediately but amortized on a straight-line basis over the expected average remaining service life of the employees starting in the fiscal year following the one in which they arose. In addition, an unrecognized net actuarial loss is recognized immediately upon a plan amendment, up to a maximum of the related decrease in the accrued benefit obligation; similarly, an unrecognized net actuarial gain is recognized immediately, up to a maximum of the related increase in the accrued benefit obligation. The unrecognized net actuarial loss or gain, relating to the obligation that is curtailed, is recognized immediately upon a plan curtailment.

d) Sick leave benefits

Employees are eligible to accumulate sick leave benefits until retirement or termination according to their terms of employment. Sick leave benefits are earned based on employee services rendered and are paid upon an illness or injury related absence. These are accumulating non-vesting benefits that can be carried forward to future years, but are not eligible for payment on retirement or termination, nor can these be used for any other purpose. A liability is recorded for unused sick leave credits expected to be used in future years in excess of future allotments, based on an actuarial valuation using an accrued benefit method. Changes in actuarial assumptions and any variance between the expected and the actual experience of the sick leave benefits plan give rise to actuarial gains or losses. These gains or losses are amortized on a straight-line basis over the expected average remaining service life of the employees starting in the fiscal year following the one in which they arose.

(h) Due from the Consolidated Revenue Fund (CRF)

Amounts due from the CRF are the result of timing differences between when a transaction affects authorities and when it is processed through the CRF. Amounts due from the CRF represent the net amount of cash that the CRA is entitled to draw from the CRF without further authorities to discharge its liabilities.

(i) Accounts receivable and advances

Accounts receivable and advances are stated at the lower of cost and net recoverable value. An allowance for doubtful accounts is recorded where recovery is considered uncertain.

(j) Tangible capital assets

All initial costs of $10,000 or more incurred by the CRA to acquire or develop tangible capital assets are capitalized and amortized over the useful lives of the assets. Similar items under $10,000 are expensed. When conditions indicate that an asset no longer contributes to the CRA's ability to provide services, or that the value of the future economic benefits associated with the asset is less than its net book value, the cost of the asset is reduced to reflect the decline in the asset's value.

Tangible capital assets are amortized on a straight-line basis over the estimated useful lives of assets as follows:

Long description 

The table describes the asset classes and the useful life for each item.

Asset class Machinery, equipment, and furniture: Useful life of 10 years
Asset class In-house developed software: Useful life of 5-10 years
Asset class Vehicles and other means of transportation: Useful life of 5 years
Asset class Information technology equipment: Useful life of 5 years
Asset class Purchased software: Useful life of 3 years

Assets under construction/development are recorded as costs are incurred and are not amortized until completed and put into operation.

(k) Contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable, the CRA's best estimate of the contingency is disclosed in the notes to the financial statements.

(l) Foreign currency translation

Transactions involving foreign currencies are translated into Canadian dollars by applying the exchange rate in effect at the time of those transactions. Realized foreign exchange gains and losses resulting from foreign currency transactions are included in the other services and expenses category in note 8 – Segmented information – Expenses.

(m) Financial instruments

The CRA uses non-derivative financial instruments in the course of its operations. Those financial instruments gave rise to the following financial assets and financial liabilities that are measured at cost or amortized cost, as per the table below.

Long description 

The table describes the financial assets and financial liabilities and the measurement for each item.

For the accounts receivable and advances the measurement is amortized cost
For the accrued salaries the measurement is cost
For the accounts payable and accrued liabilities the measurement is cost
For the Vacation pay and compensatory leave the measurement is cost

(n) Measurement uncertainty

The preparation of these financial statements in accordance with Canadian public sector accounting standards requires management to make estimates and assumptions that affect the reported amounts of liabilities, assets, revenues, expenses and related disclosure reported on the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. Employee severance and sick leave benefits, accrued salaries, contingent liabilities, the useful life of tangible capital assets and services provided without charge are the most significant items where estimates and assumptions are used. Actual results could differ significantly from the current estimates. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the period in which they become known. The methodologies used to determine the estimates were applied consistently with the previous year.

3. Parliamentary appropriations

The CRA receives most of its funding through annual Parliamentary appropriations. Items recognized in the Statement of Financial Position and the Statement of Operations and Agency Net Financial Position in one year may be funded through Parliamentary appropriations in prior, current, or future years. Accordingly, the CRA has different net results of operations for the year on a government funding basis than on an accrual accounting basis. These differences are reconciled below.

a) Reconciliation of Parliamentary appropriations provided and used:

Long description 

The table presents parliamentary appropriations - Reconciliation of Parliamentary appropriations provided and used. The information is presented in thousands of dollars. 
 
Parliamentary appropriations — provided:

Vote 1 – Operating expenditures, contributions and recoverable expenses on behalf of the Canada Pension Plan and the Employment Insurance Act: the amount for 2017 is 3,589,124 and for 2016 is 3,268,072
Vote 5 – Capital expenditures: the amount for 2017 is 96,311 and for 2016 is 128,693
Spending of revenues received through the conduct of operations pursuant to section 60 of the Canada Revenue Agency Act: the amount for 2017 is 163,734 and for 2016 is 169,032
Spending of proceeds from disposal of surplus Crown assets: the amount for 2017 is 161 and for 2016 is 92

Statutory expenditures:  

Contributions to employee benefit plans: the amount for 2017 is 452,571 and for 2016 is 432,794
Disbursements to provinces under the Softwood Lumber Products Export Charge Act, 2006 (see footnote 1): the amount for 2017 is (110) and for 2016 is 121,481
Children's special allowance payments (see footnote 1): the amount for 2017 is 319,659 and for 2016 is 309,173
Other: the amount for 2017 is 620 and for 2016 is 1,577

Total for 2017 is 4,622,070 and for 2016 is 4,430,914 

Less:  
Appropriations available for future year (see footnote 2):  
Vote 1: the amount for 2017 is (182,214) and for 2016 is (227,536)
Vote 5: the amount for 2017 is (21,438) and for 2016 is (49,890)
Appropriations lapsed:  
Vote 1: the amount for 2017 is (28,470) and for 2016 is (6,501)
Expenditures related to administered activities (see footnote 1): the amount for 2017 is (319,557) and for 2016 is (430,661) 

Total for 2017 is (551,679) and for 2016 is (714,588) 

Total Parliamentary appropriations used: the amount for 2017 is 4,070,391 and for 2016 is 3,716,326

Followed by:

Footnotes
1. In accordance with the division of activities for financial reporting purposes outlined in note 2, the payments under the Softwood Lumber Products Export Charge Act, 2006 and the Children's Special Allowances Act are reported as federal administered expenses on the Statement of Administered Expenses and Recoveries of the CRA's Financial Statements - Administered Activities. The Softwood Lumber Agreement expired on October 12, 2015 and the CRA will continue to administer retroactive transactions in accordance with the terms set in the Agreement.

2. Pursuant to section 60(1) of the Canada Revenue Agency Act, the CRA has up to two fiscal years to utilize parliamentary appropriations once approved.

b) Reconciliation of net cost of operations before government funding and transfers to current year Parliamentary appropriations used:

Long description 

The table presents parliamentary appropriations, reconciliation of net cost of operations before government funding and transfers to current year Parliamentary appropriations used. The information is presented in thousands of dollars. 
 
Net cost of operations before government funding and transfers: for 2017 the amount is 4,384,149 and for 2016 the amount is 4,049,369
 
Expenses not requiring use of current year appropriations:
 
Amortization of tangible capital assets (see note 7 for additional information): for 2017 the amount is (89,076) and for 2016 the amount is (83,842)
Adjustment to prior years' accruals: for 2017 the amount is 1,641 and for 2016 the amount is 3,131
Loss on disposal/write-off of tangible capital assets: for 2017 the amount is (3,271) and for 2016 the amount is (899)
Services provided without charge from other government agencies and departments (see note 10 for additional information): for 2017 the amount is (512,444) and for 2016 the amount is (463,247)
Other: for 2017 the amount is (4,059) and for 2016 the amount is (489)
The sub-total for expenses not requiring use of current year appropriations: for 2017 the amount is (607,209) and for 2016 the amount is (545,346)
 
Changes to assets affecting appropriations:
  
Tangible capital assets acquisitions (see note 7 for additional information): for 2017 the amount is 89,102 and for 2016 the amount is 93,664
Less: Variation in prior years expenses capitalization: for 2017 the amount is (323) and for 2016 the amount is 486
Variation in prepaid expenses: for 2017 the amount is 315 and for 2016 the amount is (84)
Variation in salary advances and overpayments: for 2017 is 7,979 and for 2016 the amount is -
Transition payments for implementing salary payments in arrears: for 2017 the amount is 44 and for 2016 the amount is 506
The sub-total for changes to non financial assets affecting appropriations: for 2017 the amount is 97,117 and for 2016 the amount is 94,572
 
Changes in future funding requirements:

Salary, vacation pay and compensatory leave: for 2017 the amount is 1,542 and for 2016 the amount is (45,488)
Employee severance benefits: for 2017 the amount is 30,428 and for 2016 the amount is 2,621
Employee sick leave benefits: for 2017 the amount is 572 and for 2016 the amount is (6,923)
The sub-total for changes in future funding requirements: for 2017 the amount is 32,542 and for 2016 the amount is (49,790)
 
Non-tax revenues available for spending (see note 9 for additional information): for 2017 the amount is 163,792 and for 2016 the amount is 167,521
 
Total Parliamentary appropriations used: for 2017 the amount is 4,070,391 and for 2016 the amount is 3,716,326

4. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are measured at cost, the majority of which are due within 30 days of year-end.

Long description 

The table presents Accounts payable and accrued liabilities. The information is presented in thousands of dollars.

Accounts payable and accrued liabilities - External: the amount for 2017 is 58,113 and 2016 is 57,287
Accounts payable and accrued liabilities - Related parties: the amount for 2017 is 40,643 and for 2016 is 30,503

The total amount for accounts payable and accrued liabilities for 2017 is 98,756 and for 2016 is 87,790

5. Employee future benefits

a) Pension benefits

The CRA and all eligible employees contribute to the public service pension plan (The "Plan"), which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of two percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plan benefits and they are indexed to inflation.

Both the CRA and the employees contribute to the Plan. Due to the amendment of the Public Service Superannuation Act following the implementation of provisions related to the Jobs and Growth Act 2012, employee contributors have been divided into two groups – Group 1 relates to existing plan members as of December 31, 2012 and Group 2 relates to members joining the Plan as of January 1, 2013.

Each group has a distinct contribution rate. The current year expense for the CRA's contributions for Group 1 members represents approximately 1.12 times (1.25 times in 2015-2016) the contributions by employees and, for Group 2 members, approximately 1.08 times (1.24 times in 2015-2016) the contributions of employees.

The contributions to the Plan for the year were as follows: 

Long description 

The table presents employee future benefits - Pension benefits. The information is presented in thousands of dollars.  
  
CRA's contributions: for 2017 is 315,306 and for 2016 is 298,325
Employees' contributions: for 2017 is 282,328 and for 2016 is 238,747

The CRA's responsibility with regard to this Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada.

b) Health and dental benefits

The CRA contributes for all eligible employees to the Public Service Health Care Plan and Public Service Dental Care Plan, which are sponsored by the Government of Canada. The CRA's responsibility with regard to these plans is limited to its contributions (refer to note 10).

c) Severance benefits

The CRA provides severance benefits to entitled employees based on eligibility, years of service and salary upon termination of employment. These severance benefits are unfunded. Benefits will be paid from future appropriations.

On October 31st, 2016 following collective agreement negotiations, the accumulation of severance benefits for voluntary departures ceased for the last employee group eligible to accumulate severance benefits. Employees subject to these changes have been given the option to be immediately paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits on termination from the public service. As at March 31, 2017, no settlement payments have been issued relating to the curtailed benefits. This plan curtailment resulted in the immediate recognition of a previously unrecognized net actuarial loss of $11.1 million. While eliminating its accumulation of severance benefits, CRA also amended its method to calculate the severance benefit payable to its employees. The plan amendment results from the termination of severance benefits which are now calculated using the members exact service at termination, therefore partial years are now included in the calculation.  

d) Sick leave benefits

Employees are credited, based on service, a maximum of 15 days annually for use as paid absences, due to illness or injury. Employees are allowed to accumulate unused sick leave credits each year. Accumulated credits may be used in future years to the extent that the employee's illness or injury exceeds the current year's allocation of credits. The use of accumulated sick leave balance for sick-leave compensation ceases on termination of employment. These sick leave benefits are unfunded. They will be paid from future appropriations.

e) Valuation of future benefits

Annually, as at March 31 of each year, the CRA obtains an actuarial valuation of the accrued employee severance and sick leave benefit obligations for accounting purposes.

Changes from the prior year in the actuarial value of these accrued employee benefit obligations that is used to determine the related employee future benefits liabilities presented in the Statement of Financial Position as at March 31 were as follows:  

Long description 

The table presents Valuation of future benefits. The information is presented in thousands of dollars.

Accrued employee benefits obligations, beginning of year

Severance benefits for 2017: 615,028
Severance benefits for 2016: 629,399
Sick leave benefits for 2017: 239,887
Sick leave benefits for 2016: 214,600

Benefits earned

Severance benefits for 2017: 23,740
Severance benefits for 2016: 27,622
Sick leave benefits for 2017: 40,008
Sick leave benefits for 2016: 36,164

Interest on average accrued benefit obligations (see note 8 for additional information)

Severance benefits for 2017: 14,035
Severance benefits for 2016: 14,826
Sick leave benefits for 2017: 5,552
Sick leave benefits for 2016: 5,177

Benefits paid

Severance benefits for 2017: (33,323)
Severance benefits for 2016: (50,876)
Sick leave benefits for 2017: (37,017)
Sick leave benefits for 2016: (34,011)

Plan amendment

Severance benefits for 2017: 6,719
Severance benefits for 2016: -
Sick leave benefits for 2017: -
Sick leave benefits for 2016: -

Plan curtailment

Severance benefits for 2017: (49,493)
Severance benefits for 2016: -
Sick leave benefits for 2017: -
Sick leave benefits for 2016: -

Actuarial (gain)/loss

Severance benefits for 2017: (23,858)
Severance benefits for 2016: (5,943)
Sick leave benefits for 2016: (12,266)
Sick leave benefits for 2017: 17,957

Accrued employee benefits obligations, end of year

Severance benefits for 2017: 552,848
Severance benefits for 2016: 615,028
Sick leave benefits for 2017: 236,164
Sick leave benefits for 2016: 239,887

Plus: Unamortized net actuarial gain/(loss)

Severance benefits for 2017: 20,873
Severance benefits for 2016: (10,879)
Sick leave benefits for 2017: 16,929
Sick leave benefits for 2016: 13,778

Employee benefits liability

Severance benefits for 2017: 573,721
Severance benefits for 2016: 604,149
Sick leave benefits for 2017: 253,093
Sick leave benefits for 2016: 253,665

Benefit expenses (see footnote 1 for additional information) 

Benefits earned

Severance benefits for 2017: 23,740
Severance benefits for 2016: 27,622
Sick leave benefits for 2017: 40,008
Sick leave benefits for 2016: 36,164

Plan amendment

Severance benefits for 2017: 6,719
Severance benefits for 2016: -
Sick leave benefits for 2017: -
Sick leave benefits for 2016:-

Plan curtailment

Severance benefits for 2017: (49,493)
Severance benefits for 2016: -
Sick leave benefits for 2017: -
Sick leave benefits for 2016: -

Actuarial losses recognized following plan curtailment

Severance benefits for 2017: 11,099
Severance benefits for 2016: -
Sick leave benefits for 2017: -
Sick leave benefits for 2016: -

Amortization on net actuarial (gain)/loss recognized during
the year

Severance benefits for 2017: (3,205)
Severance benefits for 2016: 1,557
Sick leave benefits for 2017: (9,115)
Sick leave benefits for 2016: (2,565)

Total benefit expenses

Severance benefits for 2017: (11,140)
Severance benefits for 2016: 29,179
Sick leave benefits for 2017: 30,893
Sick leave benefits for 2016: 33,599

Footnote

1. These expenses represent the severance and sick leave benefits that are included in the Other allowances and benefits category in note 8.

Subsequent to March 31, 2017, $245 million in severance payments were issued to employees who elected to have a full or partial immediate cash out of their severance benefits.

f) Actuarial assumptions

Actuarial assumptions are used to determine the severance and sick leave accrued benefit obligations and includes estimates of the discount rate and yearly salary growth. These assumptions are reviewed at March 31 of each year and are based on management's best estimate. The actuarial valuation as at March 31, 2017 for both severance and sick leave benefit obligations used a discount rate of 2.4% and salary growth of 1.9% – 2.6% (2.3% and 2.2% – 2.6% respectively as at March 31, 2016). The expected average remaining service life is 11.5 years for severance benefits and 13.19 years for sick leave benefits as at March 31, 2017 (11.6 years and 13.2 years respectively as at March 31, 2016).

g) Sensitivity Analysis

Changes in assumptions can result in significantly higher or lower estimates of the accrued employee benefits obligations. The table below illustrates the possible impact of a 1% change in the principal actuarial assumptions being the discount rate and the salary growth.

Long description 

The table presents Sensitivity Analysis. The information is presented in thousands of dollars.

Possible impact on the accrued employee benefits obligations due to:

Increase of 1% in discount rate

Severance benefits for 2017: (21,065)
Severance benefits for 2016: (52,736)
Sick leave benefits for 2017: (14,240)
Sick leave benefits for 2016: (14,647)

Decrease of 1% in discount rate

Severance benefits for 2017: 24,575
Severance benefits for 2016: 61,952
Sick leave benefits for 2017: 16,185
Sick leave benefits for 2016: 16,666

Increase of 1% in salary growth

Severance benefits for 2017: 24,324
Severance benefits for 2016: 61,192
Sick leave benefits for 2017: 18,470
Sick leave benefits for 2016: 18,937

Decrease of 1% in salary growth

Severance benefits for 2017: (21,261)
Severance benefits for 2016: (53,128)
Sick leave benefits for 2017: (16,524)
Sick leave benefits for 2016: (16,926)

6. Accounts receivable and advances

Long description

The table presents the accounts receivable and advances. The information is presented in thousands of dollars

Salary overpayments: for 2017 is 6,558 and for 2016 is 1,930

Accounts receivable - Related parties: for 2017 is 6,522 and for 2016 is 4,691
Advances to employees: for 2017 is 3,812 and for 2016 is 396
Accounts receivable - External: for 2017 is 2,207 and for 2016 is 950

The subtotal for 2017 is 19,099 and for 2016 is 7,967

Less: Allowance for doubtful accounts: for 2017 is (918) and for 2016 is (552)

Total accounts receivable and advances: for 2017 is 18,181 and for 2016 is 7,415

7. Tangible capital assets

Long description 

The table presents the tangible capital assets. The information is presented in thousands of dollars.

Cost

Machinery, equipment and furniture: the opening balance is 7,410, the acquisitions 691, the disposals and adjustments (835), the transfers to OGD (7), and the closing balance 7,259
Software (purchased and in-house developed and/or in development): the opening balance is 1,005,546, the acquisitions 87,489, the disposals (14,867), the transfers to OGD (114), and the closing balance 1,078,054
Vehicles and other means of transportation: the opening balance is 1,647, the acquisitions 88, the disposals and adjustments (182), the transfers to OGD -, and the closing balance 1,553
Information technology equipment: the opening balance is 7,509, the acquisitions 834, the disposals (115), the transfers to OGD -, and the closing balance 8,228
Total: the opening balance is 1,022,112, the acquisitions 89,102, the disposals (15,999), the transfers to OGD (121), and the closing balance 1,095,094

Accumulated amortization

Machinery, equipment and furniture: the opening balance is 4,488, the amortization expense 513 , the disposals (609), the transfers to OGD (10), and the closing balance 4,382
Software (purchased and in-house developed and/or in development): the opening balance is 608,101, the amortization expense 87,944, the disposals (11,822), the transfers to OGD (114), and the closing balance 684,109
Vehicles and other means of transportation: the opening balance is 1,153, the amortization expense 200, the disposals (169), the transfers to OGD (7), and the closing balance 1,177
Information technology equipment: the opening balance is 6,048, the amortization expense 419, the disposals (115), the transfers to OGD -, and the closing balance 6,352
Total: the opening balance is 619,790, the amortization expense 89,076, the disposals (12,715), the transfers to OGD (131), and the closing balance 696,020

Net book value
Machinery, equipment and furniture: 2017 is 2,877 and 2016 is 2,922
Software (purchased and in-house developed and/or in development): 2017 is 393,945 and 2016 is 397,445
Vehicles and other means of transportation: 2017 is 376 and 2016 is 494
Information technology equipment: 2017 is 1,876 and 2016 is 1,461
Total: 2017 is 399,074 and 2016 is 402,322

The cost of software in development, which is not amortized, is $105.5 million as at March 31, 2017 ($122.9 million as at March 31, 2016).

8. Segmented information – Expenses

Presentation by segment is based on the CRA's program activity as described in note 1 of these financial statements. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the expenses incurred for the main program activities, by major object of expense. The segment results for the period are as follows:

Long description 

The table presents the segmented information - Expenses. The information is presented in thousands of dollars.

Personnel:

Salaries: Internal services 549,617, reporting compliance 737,186, collections, compliance and verification 608,113, assessment of returns and payment processing 263,231, taxpayer and business assistance 276,890, appeals 121,870, benefit programs 85,356, taxpayers' Ombudsman 1,918, total for 2017 2,644,181, and total for 2016 2,406,841
Other allowances and benefits (including employee benefits described in note 5): Internal services 213,020, Reporting compliance 294,953, Collections, compliance, and verification 234,479,assessment of returns and payment processing 101,520, taxpayer and business assistance 104,582, appeals 47,792, benefit programs 31,915, taxpayers' Ombudsman 736, total for 2017 1,028,997, and total for 2016 966,686
Total for personnel: Internal services 762,637, reporting compliance 1,032,139, collections, compliance and verification 842,592, assessment of returns and payment processing 364,751, taxpayer and business assistance 381,472, appeals 169,662, benefit programs 117,271, taxpayers' Ombudsman 2,654, total for 2017 3,673,178, and total for 2016 3,373,527

Professional and business services: internal services 281,818, Reporting compliance 15,447, collections, compliance and verification 24,753, assessment of returns and payment processing 3,507, taxpayer and business assistance 4,615, appeals 83,042, benefit programs 1,240, taxpayers' Ombudsman 63, total for 2017 414,485, and total for 2016 375,812
Accommodation: Internal services 79,628, reporting compliance 87,020, collections, compliance and verification 87,960, assessment of returns and payment processing 38,555, taxpayer and business assistance 37,956, appeals 15,508, benefit programs 11,376, taxpayers' Ombudsman 225, total for 2017 358,228, and total for 2016 315,216
Federal sales tax administration costs by the Province of Québec: Internal services -, reporting compliance -, collections, compliance and verification -, assessment of returns and payment processing 141,821, taxpayer and business assistance -, appeals -, benefit programs  -, taxpayers' Ombudsman -, total for 2017 141,821, and total for 2016 142,275
Transportation and communications: Internal services 23,023,reporting compliance 17,205, collections, compliance and verification 16,758, assessment of returns and payment processing 36,561, taxpayer and business assistance 3,087,appeals 520, benefit programs 22,160, taxpayers' Ombudsman 40, total for 2017 119,354, and total for 2016 127,699
Amortization of tangible capital assets (see note 7 for additional details): internal services 10,517, reporting compliance 14,372,  collections, compliance and verification 21,536, assessment of returns and payment processing 32,810, taxpayer and business assistance 2,805, appeals 829, benefit programs 6,207, taxpayers' Ombudsman -, total for 2017 89,076, and total for 2016 83,843
Other services and expenses: Internal services 13,228, reporting compliance 5,703, collections, compliance and verification 3,370, assessment of returns and payment processing 2,639, taxpayer and business assistance 1,162, appeals 1,083, benefit programs 9,234, taxpayers' Ombudsman 33, total for 2017 36,452, and total for 2016 35,368
Equipment purchases: Internal services 12,684, reporting compliance 4,188, collections, compliance and verification 2,132, assessment of returns and payment processing 1,010, taxpayer and business assistance 933, appeals 188, benefit programs 111, taxpayers' Ombudsman 20, total for 2017 21,266, and total for 2016 17,461
Interest on average accrued benefit obligations (note 5): Internal services 4,068, reporting compliance 5,503, collections, compliance and verification 4,493, assessment of returns and payment processing 1,945, taxpayer and business assistance 2,034, appeals 905, benefit programs 625, taxpayers' Ombudsman 14, total for 2017 19,587, and total for 2016 20,003
Repair and maintenance: internal services 16,196, reporting compliance 662, collections, compliance and verification 45, assessment of returns and payment processing 732, taxpayer and business assistance 46, appeals 5, benefit programs 1, taxpayers' Ombudsman 1, total for 2017 17,688, and total for 2016 20,143
Materials and supplies: Internal services 8,566, reporting compliance 1,873, collections, compliance and verification 1,736, assessment of returns and payment processing 3,942, taxpayer and business assistance 621, appeals 310, benefit programs 293, taxpayers' Ombudsman 15, total for 2017 17,356, and total for 2016 19,794
Advertising, information and printing services: Internal services 2,562, reporting compliance 151, collections, compliance and verification 201, assessment of returns and payment processing 871, taxpayer and business assistance 132, appeals 7, benefit programs 52, taxpayers' Ombudsman 25, total for 2017 4,001, and total for 2016 4,865
Loss on disposal/write-off of tangible capital assets: internal services 3,271, reporting compliance -, collections, compliance and verification -, assessment of returns and payment processing -, taxpayer and business assistance -, appeals -, benefit programs -, taxpayers' Ombudsman -, total for 2017 3,271, and total for 2016 899
Equipment rentals: Internal services 1,090, reporting compliance 423, collections, compliance and verification 428, assessment of returns and payment processing 179, taxpayer and business assistance 116, appeals 85, benefit programs 27, taxpayers' Ombudsman 3, total for 2017 2,351 and total for 2016 2,389
Total expenses: Internal services 1,219,288, reporting compliance collections 1,184,686, compliance and verification 1,006,004, assessment of returns and payment processing 629,323, taxpayer and business assistance 434,979, appeals 272,144, benefit programs 168,597, taxpayers' Ombudsman 3,093, total for 2017 4,918,114, and total for 2016 4,539,294

9. Segmented information – Non-tax revenues

Presentation by segment is based on the CRA's program activity as described in note 1 of these financial statements. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2. The following table presents the non-tax revenues generated for the main program activities, by major type of non-tax revenues. The segment results for the period are as follows:

Long description 

The table presents the Segmented information – Non-tax revenues. The information is presented in thousands of dollars.

Non-tax revenues credited to Vote 1
Fees for administering the Employment Insurance Act: Internal services 29,377, reporting compliance -, Collections, compliance and verification 103,831, Assessment of returns and payment processing 13,928, Taxpayer and business assistance 38,325, Appeals 11,815, Benefit programs 783, total for 2017 198,059, and total for 2016 179,196.
Fees for administering the Canada Pension Plan: Internal services 28,007, Reporting compliance -, Collections, compliance and verification 99,774, Assessment of returns and payment processing 16,392, Taxpayer and business assistance 21,771, Appeals 6,170, Benefit programs -, total for 2017 172,114, and total for 2016 143,208.
Total for non-tax revenues credited to Vote 1: Internal services 57,384, Reporting compliance -, Collections, compliance and verification 203,605, Assessment of returns and payment processing 30,320, Taxpayer and business assistance 60,096, Appeals 17,985, Benefit programs 783, total for 2017 370,173, and total for 2016 322,404.

Non-tax revenues available for spending
Administration fees - provinces and territories: Internal services 48,571, Reporting compliance 15,921, Collections, compliance and verification 17,194, Assessment of returns and payment processing 10,182, Taxpayer and business assistance 664, Appeals 3,704, Benefit programs 16,001, total for 2017 112,237, and total for 2016 110,387.     
Services fees: Internal services 42,866, Reporting compliance 562, Collections ,compliance and verification 111, Assessment of returns and payment processing 2,346, Taxpayer and business assistance 583, Appeals -, Benefit programs 2,039, total for 2017 48,507, and total for 2016 53,722. 
Miscellaneous respendable revenues: Internal services 321, Reporting compliance 456, Collections, compliance and verification -, Assessment of returns and payment processing 5, Taxpayer and business assistance 2,231, Appeals -, Benefit programs 35, total for 2017 3,048, and total for 2016 3,412.
Total non-tax revenues available for spending: Internal services 91,758,Reporting compliance 16,939, Collections, compliance and verification 17,305, Assessment of returns and payment processing 12,533, Taxpayer and business assistance 3,478, Appeals 3,704, Benefit programs 18,075, total for 2017 163,792, and total for 2016 167,521.

Non-tax revenues not available for spending          
Recovery of employee benefit costs relating to non-tax revenues credited to Vote 1 and revenues available for spending: Internal services 14,105, Reporting compliance 4,086, Collections, compliance and verification 36,131, Assessment of returns and payment processing 6,388, Taxpayer and business assistance 10,719, Appeals 3,545, Benefit programs 1,743, total for 2017 76,717, and total for 2016 65,653.
Miscellaneous non-tax revenues: Internal services 262, Reporting compliance -, Collections, compliance and verification -, Assessment of returns and payment processing -, Taxpayer and business assistance -, Appeals 688, Benefit programs -, total for 2017 950, and total for 2016 3,890.
Total non-tax revenues not available for spending: Internal services 14,367, Reporting compliance 4,086, Collections, compliance and verification 36,131, Assessment of returns and payment processing 6,388, Taxpayer and business assistance 10,719, Appeals 4,233, Benefit programs 1,743, total for 2017 77,667, and total for 2016 69,543.

Total non-tax revenues before revenues earned on behalf of Government: Internal services 163,509, Reporting compliance 21,025, Collections, compliance and verification 257,041, Assessment of returns and payment processing 49,241, Taxpayer and business assistance 74,293, Appeals 25,922, Benefit programs 20,601, total for 2016 611,632, and total for 2015 559,468.

Revenues earned on behalf of Government: Internal services (14,367), Reporting compliance (4,086), Collections, compliance and verification (36,131), Assessment of returns and payment processing (6,388), Taxpayer and business assistance (10,719), Appeals (4,233), Benefit programs (1,743), total for 2017 (77,667), and total for 2016 (69,543).
Total non-tax revenues: Internal services 149,142, Reporting compliance 16,939, Collections, compliance and verification 220,910, Assessment of returns and payment processing 42,853, Taxpayer and business assistance 63,574, Appeals 21,689, Benefit programs 18,858, total for 2017 533,965, and total for 2016 489,925.

10. Related party transactions

The CRA is related in terms of common ownership to all Government of Canada departments, agencies, and Crown corporations. Transactions with Crown corporations entered into by the CRA are in the normal course of business and on normal trade terms applicable to all individuals and enterprises. Transactions with other Government of Canada departments and agencies are conducted on a cost recovery basis, except for transfers of tangible capital assets that are carried out at net book value.

During the year, the CRA received various services without charge from other government agencies and departments. The estimated costs for significant services provided without charge that have been recorded include:

Long description 

The table presents the related party transactions. The information is presented in thousands of dollars.

Employer's contribution to the health and dental insurance plans - Treasury Board Secretariat: for 2017, the amount is 283,421 and for 2016 is 237,736.
Information technology services - Shared Services Canada: for 2017, the amount is 179,474 and for 2016 is 179,474.
Legal services - Justice Canada: for 2017, the amount is 41,186 and for 2016 is 37,668.
Payroll services - Public Services and Procurement Canada: for 2017 4,576, the amount is  and for 2016 4,515.
Audit services - Office of the Auditor General of Canada: for 2017, the amount is 2,602 and for 2016 is 2,600.
Workers' compensation benefits - Employment and Social Development Canada: for 2017, the amount is 1,185 and for 2016 1,254.
Total: for 2017, the amount is 512,444 and for 2016 463,247.

11. Board of Management

Pursuant to the Canada Revenue Agency Act, a Board of Management is appointed to oversee the organization and administration of the CRA and the management of its resources, services, property, personnel and contracts. The expenses relating to the board's activities for the year included in the net cost of operations were as follows:

Long description 

The table presents the Board of Management. The information is presented in thousands of dollars.

Board of Management
Compensation: the amount for 2017 is 305 and for 2016 262.
Travel: the amount for 2017 is 94 and for 2016 80.
Professional services and other expenses: the amount for 2017 is 62 and for 2016 62.
Total for the Board of Management: the amount for 2017 is 461 and for 2016 404.

Other related costs
Corporate Secretariat support: the amount for 2017 is 593 and for 2016 572.
Total: the amount for 2017 is 1,054 and for 2016 976.

12. Contingent liabilities

The CRA is a defendant in certain cases of pending and threatened litigation which arises in the normal course of business of agency activities as defined in note 2. The amount to be paid in respect of the cases identified as likely to be lost has been recorded in accounts payable and accrued liabilities, based on the current best estimate of the consideration required to settle the present liabilities at the end of the reporting period, taking into account the risks and uncertainties surrounding the liabilities. The extent of these cases have not been disclosed as it could have an adverse effect on their outcome.

All other cases, excluding those assessed as unlikely to be lost, are considered contingent liabilities and the related amounts are disclosed whenever the amount of the contingency can be reasonably estimated. As at March 31, 2017, these contingent liabilities have been estimated at $91.5 million ($11.8 million as at March 31, 2016) which is based on management's best estimate determined on a case by case basis.

13. Financial risk management

The CRA uses non-derivative financial instruments in the course of its operations that give rise to financial assets and financial liabilities. Those financial liabilities comprise accrued salaries, accounts payable and accrued liabilities, vacation pay and compensatory leave. Accounts receivable and advances represent those financial assets.

The CRA is exposed to credit risk, liquidity risk and market risk in connection with its financial instruments. 

The credit risk is the risk that another party owing money to the CRA would fail to discharge its obligation creating a financial loss for the CRA. The maximum exposure of the CRA to the credit risk amounted to $18.2 million as at March 31, 2017 ($7.4 million as at March 31, 2016), which is equal to the carrying value of its accounts receivable and advances. As the vast majority of the CRA's accounts receivable and advances are either with other government departments or employees, the credit risk is low.

The liquidity risk is the risk that the CRA would encounter difficulty in meeting its obligations associated with its financial liabilities. The CRA's liquidity risk is minimal given that the CRA receives most of its funding through annual Parliamentary appropriations and maintains strong controls over expenditure management.

The market risk is defined as the risk that future cash flows of a financial instrument would fluctuate because of changes in currency rates, interest rates and/or other rates. The CRA's exposure to market risk is limited to fluctuations in the currency rates and the impact of such variations on CRA's cash flows is negligible as its financial transactions in foreign currency are immaterial.

The CRA's exposure to these risks and the policies and processes to manage and measure them did not change significantly from the prior year.

14. Comparative figures

Certain comparative figures have been reclassified to conform with the presentation used in the current year.

Financial Statements Discussion and Analysis – Agency Activities (unaudited)

Introduction

This section of the financial statements provides unaudited complementary information on Agency Activities, on an accrual basis, in respect of matters reported in the audited financial statements. The Canada Revenue Agency's (CRA) management is responsible for the preparation of this financial statements discussion and analysis.

Capacity to deliver services

The CRA's workforce of approximately 40,000 employees is fundamental to the achievement of its mandate. In fiscal year 2016-17, this workforce was comprised of 77% permanent employees, 21% term employees and 2% students.

CRA employees are located throughout Canada, in the following operational regions: Ontario (30%), Headquarters (26%), Prairies (14%); Québec (12%); Pacific (10%); and Atlantic (8%). They provide services to taxpayers in multiple tax services offices and tax centers, as well as program services and internal services supporting those programs.

The CRA's information technology (IT) capacity is also critical to its ability to deliver services to Canadians. It involves an extensive IT infrastructure that is managed primarily by Shared Services Canada and includes the development and maintenance of applications across a distributed computing environment.

Risk management

The CRA recognizes that a variety of risks could have potential implications on its financial position and operations. The Enterprise Risk Management (ERM) Division of the Audit, Evaluation, and Risk Branch plays a key role in ensuring that corporate risks are identified, impacts are assessed, and strategies for risk management are adopted, notably by producing the CRA Corporate Risk Profile.

Further details on ERM at the CRA are discussed in the Departmental Results Report. This financial statements discussion and analysis will elaborate on specific financial risks throughout its content, where applicable.

Financial highlights

The CRA received incremental funding over five years to implement a number of measures announced in Budget 2016, namely $185.8 million for client-focused services for Canadians and Canadian businesses; $444.4 million for cracking down on tax evasion and combatting tax avoidance; and $351.6 million for enhancing tax collections. Budget 2016 also included funding for various smaller initiatives over the same period of time. In 2016-2017, the CRA utilized 89% of the additional funding, and achieved established targets.

On October 25, 2016, the CRA and the Union of Taxation Employees in the Public Service Alliance of Canada (PSAC) signed a new collective agreement, which applies to more than 70% of the CRA employees. The provisions of the new collective agreement covers a four-year period starting on November 1, 2012. As a result, the CRA issued in 2016-17 retroactive salary payments amounting to over $230 million to employees represented by PSAC.

The CRA has managed within its Parliamentary approved authorities for 2016-17, with a carry-forward of appropriations of $203.7 million. These unspent funds, available for use in 2017-18, were largely planned and are a crucial element of the current resource management strategy to address known financial commitments and emerging funding challenges.

A significant portion of the carry-forward is set aside to cover amounts for collective bargaining salary increases related to expired collective agreements and conditions of employment as of March 31, 2017. More specifically, it includes a provision allowing for further negotiated economic increases for the 2014 and 2015 agreed upon salary rates as per the provisions of the most recent PSAC collective agreement. It also includes provisions for salary increases in connection with the collective agreements between the CRA and the Professional Institute of the Public Service of Canada (PIPSC) and PSAC that expired in December 2014 and October 2016 respectively. Another important component of the intended use of the carry-forward of appropriations is for the internally funded strategic investment plan. Major IT projects can face challenges due to their long-term and complex nature and as such, require flexibility in the timing of resource utilization.

As part of its resource management strategy, the CRA continuously reviews and revises plans and priorities to ensure the effective and efficient use of government resources and the achievement of its core business outcomes. In 2016-17, the majority of key performance targets were met or exceeded.

Discussion and analysis

Net cost of operations before government funding and transfers

The CRA's 2016-17 net cost of operations before government funding and transfers amounted to $4,384.1 million, an increase of $334.8 million from the $4,049.4 million net cost of operations before government funding and transfers in 2015-16.

Details of the net cost of operations before government funding and transfers are illustrated below (see note 8 to the Financial Statements – Agency Activities for a further breakdown of expenses by category):

Figure 1: Details on the net cost of operations before government funding and transfers

Long description 

The table presents the figure 1: Details on the net cost of operations before government funding and transfers. The information is presented in thousands of dollars.

Personnel: the amount for 2017 is 3,673,178, 3,373,527 for 2016, and the difference is 299,651.
IT equipment and services: the amount for 2017 is 389,255, 352,817 for 2016, and the difference is 36,438.
Accommodation: the amount for 2017 is 358,228, 315,216 for 2016, and the difference is 43,012.
Professional and business services excluding IT: the amount for 2017 is 147,381, 138,004 for 2016, and the difference is 9,377.
Federal sales tax administration costs - Province of Québec: the amount for 2017 is 141,821, 142,275 for 2016, and the difference is (454).
Transportation: the amount for 2017 is 118,991, 125,796 for 2016, and the difference is (6,805).
Other: the amount for 2017 is 89,260, 91,659 for 2016, and the difference is (2,400).
Total expenses: the amount for 2017 is 4,918,114, 4,539,294 for 2016, and the difference is 378,820.
Less Non-tax revenues: the amount for 2017 is 533,965, 489,925 for 2016, and the difference is 44,040.
Net cost of operations before government funding and transfers: the amount for 2017 is 4,384,149, 4,049,369 for 2016, and the difference is 334,780.

Personnel expenses (salaries, other allowances and benefits) represent 75% of total expenses and are the CRA's primary costs. The remaining 25% of expenses are comprised of other costs such as information technology (IT) and accommodation expenses.

Personnel costs have increased by $299.7 million or 9% in 2016-17. The CRA has slightly increased its workforce in order to implement the new initiatives announced in Budget 2016, which partly explains the increase in personnel costs. Additionally, the approval of the PSAC collective agreement in October 2016 contributed to the increase with in an additional one-time vacation week, a signing bonus and retroactive salary payments that were issued to the represented employees. Increases in salary expenses impacted in turn the cost of health and dental employee benefits, that cost being also subjected to a greater insurance contribution rate in 2016-17.

Non-personnel expenses have increased by $79.2 million or 7% in 2016-17. This variance mainly results from an increase in fit-up cost as part of the workplace renewal strategy ($40.4 million) as well as an increase in IT services provided by Shared Services Canada (SSC) ($24.3 million).

Non-tax revenues increased by $44.0 million from the prior year, which is mostly attributable to the invoicing of the retroactive salary payments applicable to the administration of the Canada Pension Plan and the Employment Insurance Act.

Financial position

The change in the Agency's net financial position compared to the previous year is as follows:

Figure 2: Statement of Financial Position

Long description 

The table presents the Figure 2: Statement of Financial Position. The information is presented in thousands of dollars.

Liabilities: the amount for 2017 is 1,479,204, 1,463,916 for 2016, and the difference is 15,288.
Financial assets: the amount for 2017 is 329,741, 276,524 for 2016, and the difference is 53,217.
Agency net debt: the amount for 2017 is 1,149,463, 1,187,392 for 2016, and the difference is (37,929).
Non-financial assets: the amount for 2017 is 411,843, 414,776 for 2016, and the difference is (2,932).
Agency net financial position: the amount for 2017 is 737,620, 772,616 for 2016, and the difference is (34,996).

Liabilities

Liabilities have increased by $15.3 million in 2016-17. This was attributable in part to an increase in vacation liability due to the new one-time vacation leave introduced in the agreement reached with the PSAC ratified in October 2016. Also attributable to the increase are the provisions for salary increases for expired collective agreements and an increase in accounts payable at year-end for IT services rendered by SSC. This was offset in part, by a decrease in employee severance benefits explained by the termination of the accumulation of accrued severance benefits for the employees under the new PSAC collective agreement.

Employee severance benefits remain the CRA's most important obligation as illustrated in the table below. Employees represented by PSAC were given the option to be immediately paid their accrued severance benefits as part of the new collective agreement in 2016-17. Those who have chosen the immediate payment started receiving their severance benefit payments at the beginning of the following fiscal year, the employee severance benefit liability will consequently decrease significantly in 2017-18.

Figure 3: Liabilities by category

Long description 

Figure 3 presents the liabilities by category. The information is displayed in pie charts.   

For 2016-2017      
Accrued salaries 23%
Accounts payable and accrued liabilities 7%
Vacation pay and compensatory leave 14%
Employee severance benefits 39%
Empoyee sick leave benefits 17%

For 2015-2016     
Accrued salaries 22%.
Accounts payable and accrued liabilities 6%
Vacation pay and compensatory leave 13%
Employee severance benefits 42%
Empoyee sick leave benefits 17%

Employee sick leave and severance benefits account for 56% of the CRA total liabilities in 2016-17. These are significant liabilities that require the use of management estimates and assumptions to determine their present value as at March 31 of each year. As such, there is a financial risk of imprecision in the financial position of the CRA where actual liabilities and the related expenses may differ significantly from current estimates. To minimize this risk, the CRA uses the expertise of the Office of the Chief Actuary, who provides an actuarial valuation report on a yearly basis, presenting the actuarial assumptions and method used to determine the actuarial present value of those employee benefits. Actuarial assumptions used by the CRA are consistent with those used by the Government of Canada.

Financial assets

The increase in financial assets is correlated to specific increases in liabilities, as an account receivable is created for liabilities that are not settled at year-end, but for which appropriations were used. This account receivable, the Due from the Consolidated Revenue Fund (CRF), represents the net amount of cash that the CRA is entitled to draw from the CRF that is administered by the Receiver General for Canada without using further appropriations to discharge its liabilities. It increased by $42.5 million in 2016-17. Salary advances and overpayments arising from the transition to the Phoenix pay system also contributed to the increase in financial assets.

Non-financial assets

Non-financial assets are comprised of 97% tangible capital assets. The CRA managed a capital budget of $96.3 million for the year 2016-17 ($128.7 million for 2015-16), of which a total of $21.4 million ($49.9 million for 2015-16) remains available for use in future years in accordance with the CRA's multi-year resource management strategy.

The net book value of tangible capital assets remained fairly stable in 2016-17 with a net decrease of $3.2 million. The vast majority of tangible capital assets owned by the CRA relates to IT, specifically in-house developed software. As a large organization responsible for delivering an extensive range of tax and benefits programs on behalf of the federal and of provincial governments, the CRA has specialized software needs that are primarily fulfilled internally through the development of in-house tailored applications by CRA employees.

To prioritize investment decisions regarding in-house developed software and support the effective management of resources, the CRA Finance Committee (FC) oversees investment projects above $1 million. All projects brought to the FC require a formal attestation from the ERM Division that the CRA risk management process was followed and that sound risk information forms part of the submission. The attestation process takes place at various project development stages. Enterprise risk information is also used to inform the development of the CRA Strategic Investment Plan, a long-term plan of significant future investments. Alignment with the priorities outlined in the CRA Corporate Risk Profile is one of the considerations used to inform the priority ranking of initiatives.

Five year comparative financial information

The following tables provide a five year comparison of financial information based on the accounting policies described in note 2 to the audited financial statements.

Figure 4: Statement of Financial position

Long description 

Figure 4 presents the Statement of Financial position. The information is presented in thousands of dollars.

Liabilities

Accrued salaries: the amount for 2013 is 84,546, 129,589 in 2014, 267,026 in 2015, 329,274 in 2016, and 341,486 in 2017.
Accounts payable and accrued liabilities: the amount for 2013 is 118,466, 94,901 in 2014, 120,595 in 2015, 87,790 in 2016 and 98,756 for 2017.
Vacation pay and compensatory leave: the amount for 2013 is 187,625, 189,672 in 2014, 188,444 in 2015, and 189,038 in 2016 and 212,148 in 2017.
Employee severance benefits: the amount for 2013 is 580,511, 570,114 in 2014, 606,770 in 2015, and 604,149 in 2016 and 573,721 in 2017.
Employee sick leave benefits: the amount for 2013 is 235,200, 243,700 in 2014, 246,742 in 2015, 253,665 in 2016 and 253,093 in 2017.

Total liabilities: the amount for 1,206,348 in 2013, 1,227,976 in 2014, 1,429,577 in 2015, 1,463,916 in 2016 and 1,479,204 in 2017.

Financial assets

Due from the Consolidated Revenue Fund: the amount in 2013 is 132,003, 163,405 in 2014, 282,102 in 2015, 269,109 in 2016 and 311,560 in 2017.
Accounts receivable and advances: the amount for 2013 is 37,415, 6,678 in 2014, 10,153 in 2015, 7,415 in 2016 and 18,181 in 2017.

Total financial assets: the amount for 2013 is 169,418, 170,083 in 2014, 292,255 in 2015, 276,524 in 2016 and 329,741 in 2017.

Agency net debt: the amount for 2013 is 1,036,930, 1,057,893 in 2014, 1,137,322 in 2015, 1,187,392 in 2016 and 1,149,463 in 2017.

Non-financial assets

Prepaid expenses: the amount for 2013 is 10,350, 11,963 in 2014, 12,538 in 2015, 12,454 in 2016 and 12,769 in 2017.
Tangible capital assets: the amount for 2013 is 391,779, 386,327 in 2014, 393,415 in 2015, 402,322 in 2016 and 399,074 in 2017.

Total non-financial assets: the amount for 2013 is 402,129, 398,290 in 2014, 405,953 in 2015,414,776 in 2016 and 411,843 in 2017.

Agency net financial position: the amount for 2013 is 634,801, 659,603 in 2014, 731,369 in 2015, 772,616 in 2016 and 737,620 in 2017.

Figure 5: Segmented information – Expenses

Long description 

Figure 5 presents the segmented information - expenses. The information is presented in thousands of dollars.

Personnel:

Salaries: the amount for 2013 is 2,381,913, 2,408,276 in 2014, 2,420,180 in 2015, 2,406,841 in 2016 and 2,644,181 for 2017.
Other allowances and benefits: the amount for 2013 is 979,491, 979,750 in 2014, 995,625 in 2015, 966,686 in 2016 and 1,028,997 for 2017.

Total personnel: the amount for 2013 is 3,361,404, 3,388,026 in 2014, 3,415,805 in 2015, 3,373,527 in 2016 and 3,673,178 in 2017.

Professional and business services: the amount for 2013 368,636, 372,352 in 2014, 370,037 in 2015, 375,812 in 2016 and 414,485.
Accommodation: the amount for 2013 is 348,320, 349,810 in 2014, 331,325 in 2015, 315,216 in 2016 and 358,228 in 2017.
Federal sales tax administration costs by the Province of Québec: the amount for 2013 is 142,222, 142,772 in 2014, 142,133 in 2015,142,275 in 2016 and 141,821 for 2017.
Transportation and communications: the amount for 2013 is 126,048, 115,408 in 2014, 125,987 in 2015, 127,699 in 2016 and 119,354 in 2017.
Amortization of tangible capital assets: the amount for 2013 is 70,131, 75,040 in 2014, 79,171 in 2015, 83,843 in 2016 and 89,076 for 2017.
Other services and expenses: the amount for 2013 is 39,120, 28,726 in 2014, 42,573 in 2015, 35,368 in 2016 and 36,452 in 2017.
Equipment purchases: the amount for 2013 is 25,788, 17,056 in 2014, 18,747 in 2015, 17,461 in 2016 and 21,266 in 2017.
Interest on average accrued benefit obligations: the amount for 2013 is 24,749, 21,526 in 2014, 25,476 in 2015, 20,003 in 2016 and 19,587 in 2017.
Repair and maintenance: the amount for 2013 is 30,274, 17,102 in 2014, 21,358 in 2015, 20,143 in 2016 and 17,688 in 2017.
Materials and supplies: the amount for 2013 is 23,951, 20,094 in 2014, 19,229 in 2015, 19,794 in 2016 and 17,356 in 2017.
Advertising, information and printing services: the amount for 2013 is 8,815, 8,805 in 2014, 7,710 in 2015, 4,865 in 2016 and 4,001 in 2017.
Loss on disposal/write-off of tangible capital assets: the amount for 2013 2,789, 2,204 in 2014, 5,584 in 2015, 899 in 2016 and 3,271 in 2017.
Equipment rentals: the amount for 2013 2,755, 3,162 in 2014, 2,358 in 2015, 2,389 in 2016 and 2,351 in 2017.

Total expenses: the amount for 2013 is 4,575,002, 4,562,083 in 2014, 4,607,493 in 2015, 4,539,294 in 2016 and 4,918,114 in 2017.

Figure 6: Segmented information – Non-tax revenue

Long description 

Figure 6 presents the segmented information - Non-tax revenue. The information is presented in thousands of dollars.

Non-tax revenues credited to Vote 1
Fees for administering the Employment Insurance Act: the amount for 2013 is 182,573, 182,794 in 2014, 174,319 in 2015,179,196 in 2016 and 198,059 in 2017.
Fees for administering the Canada Pension Plan: the amount for 2013 is 147,718, 147,771 in 2014, 141,225 in 2015, 143,208 in 2016 and 172,114 for 2017.
Total Non-tax revenues credited to Vote 1: the amount for 2013 is 330,291, 330,565 in 2014, 315,544 in 2015, 322,404 in 2016 and 370,173 in 2017.

Non-tax revenues available for spending
Administration fees - provinces and territories: the amount for 2013 is 102,539, 104,115 in 2014, 108,424 in 2015,110,387 in 2016 and 112,237 in 2017.
Services fees: the amount for 2013 is 61,214, 56,496 in 2014, 54,190 in 2015, 53,722 in 2016 and 48,507 in 2017.
Miscellaneous respendable revenues: the amount for 2013 is 2,701 in 2013, 2,325 in 2014, 2,462 in 2015, 3,412 in 2016 and 3,048 in 2017.
Total Non-tax revenues available for spending: the amount for 2013 is 166,454, 162,936 in 2014, 165,076 in 2015,167,521 in 2016 and 163,792 in 2017.

Non-tax revenues not available for spending
Recovery of employee benefit costs relating to non-tax revenues credited to Vote 1 and revenues available for spending: the amount for 2013 is 60,717, 61,834 in 2014, 63,925 in 2015, 65,653 in 2016 and 76,717 for 2017.
Miscellaneous non-tax revenues: the amount for 2013 is 2,898 1,172 in 2014, 769 in 2015, 3,890 in 2016 and 950 for 2017.
Subtotal: the amount for 2013 is 63,615, 63,006 in 2014, 64,694 in 2015, 69,543 in 2016 and 77,667 for 2017.

Total non-tax revenues before revenues earned on behalf of Government: the amount for 2013 is 560,360, 556,507 in 2014, 545,314 in 2015, 559,468 in 2016 and 611,632 in 2017.

Revenues earned on behalf of Government: the amount for 2013 is (63,615), (63,006) in 2014, (64,694) in 2015, (69,543) in 2016 and (77,667) in 2017.
Total non-tax revenues: the amount for 2013 496,745, 493,501 in 2014, 480,620 in 2015, 489,925 in 2016 and 533,965 in 2017.

Outlook

Looking ahead, the CRA will continue to innovate in order to improve the efficiency and effectiveness of its operations and programs while contributing to the Government of Canada's priorities, by continuously optimizing the use of its resources and modernizing its services and compliance activities.

Through Budget 2017, the CRA received funding of $523.9M over five years and $185.7M ongoing to build on the government's previous investments to crack down on tax cheats. This includes increasing capacity to address aggressive tax avoidance and tax evasion among large businesses, multinational businesses, and wealthy individuals (particularly those operating offshore). Going forward, the CRA will continue to invest in verification activities, hiring of auditors and specialists, business intelligence infrastructure and the quality of targeted investigative work.

As online processing grows and processing centres receive less and less paper based work, the Agency is responding to the changing environment by looking at its business differently. The Service Renewal Initiative, launched in November 2016, will change how the CRA operates so that it can improve service to Canadians, modernize collections and verification capacity, optimize its workforce to best meet priorities, and ensure the CRA maintains a continued presence in all regions.

Canada Revenue Agency
Financial Statements – Administered Activities

Office of the Auditor General logo

Independent Auditor's report

To the Board of Management of the Canada Revenue Agency and the Minister of National Revenue

I have audited the accompanying statement of administered assets and liabilities of the Canada Revenue Agency as at 31 March 2017, and the statement of administered revenues and pension contributions, statement of administered expenses and recoveries and statement of administered cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information (together "the financial information"). The financial information has been prepared by management using the basis of accounting described in Note 2.

Management's Responsibility for the Financial Information

Management is responsible for the preparation and fair presentation of this financial information in accordance with the basis of accounting described in Note 2; this includes determining that the basis of accounting is an acceptable basis for the preparation of the financial information in the circumstances, and for such internal control as management determines is necessary to enable the preparation of the financial information that is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

My responsibility is to express an opinion on the financial information based on my audit. I conducted my audit in accordance with Canadian generally accepted auditing standards. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial information is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial information. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial information, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial information in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial information.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

In my opinion, the financial information presents fairly, in all material respects, the administered assets and liabilities of the Canada Revenue Agency as at 31 March 2017, and the results of its administered operations and its administered cash flows for the year then ended in accordance with the basis of accounting described in Note 2.

Emphasis of Matter

Without modifying my opinion, I draw attention to Note 2 to the financial information, which describes the purpose and basis of accounting for reporting activities administered by the Canada Revenue Agency on behalf of others. This financial information may not be suitable for another purpose. Management prepares a separate set of financial statements to report the operational revenues and expenses of the Canada Revenue Agency.

Original signed 

Catherine Marier, CPA, CA
Principal
for the Auditor General of Canada

28 August 2017
Ottawa, Canada

Canada Revenue Agency
Statement of Administered Assets and Liabilities
as at March 31
(in thousands of dollars)

Long description 

The table describes the statement of Administered Assets and Liabilities. The information is presented in thousands of dollars
    
Administered assets

Cash on hand: the amount for 2017 is 8,117,042 and for 2016 is 7,861,143
Amounts receivable from taxpayers (see note 3): the amount for 2017 is 107,853,392 and for 2016 is 105,225,411
Amounts receivable under the tobacco civil settlements (see note 4): the amount for 2017 is 164,929 and for 2016 is 240,578
Total assets: the amount for 2017 is 116,135,363 and for 2016 is 113,327,132

Administered liabilities

Amounts payable to taxpayers (see note 5): the amount for 2017 is 55,155,945 and for 2016 is 53,701,199
Amounts payable to provinces (see note 6): the amount for 2017 is 498,997 and for 2016 is 624,017
Deposit accounts (see note 7): the amount for 2017 is 205,360 and for 2016 is 189,979
Sub-Total for administered liabilities: the amount for 2017 is 55,860,302 and for 2016 is 54,515,195

Net amount due to the Consolidated Revenue Fund on behalf of the Government of Canada and others (see note 8): the amount for 2017 is 60,275,061 and for 2016 is 58,811,937
Total liabilities: the amount for 2017 is 116,135,363 and for 2016 is 113,327,132

Contingent liabilities (see note 10)
The accompanying notes form an integral part of these financial statements.

Approved by:

Original signed

Bob Hamilton
Commissioner of Revenue and
Chief Executive Officer of the Canada Revenue Agency  

Date 28 August 2017

Original signed

Susan Hayes, LL.B.
Chair, Board of Management  

Date 28 August 2017

Canada Revenue Agency
Statement of Administered Revenues and Pension Contributions
for the year ended March 31
(in thousands of dollars)

Long description 

The table presents the Statement of Administered Revenues and Pension Contributions. The information is presented in thousands of dollars

Federal administered revenues

Income tax revenues

Individuals and Trusts: the amount for 2017 is 143,792,941 and for 2016 is 144,953,138
Corporations: the amount for 2017 is 42,215,669 and for 2016 is 41,443,831
Non-resident tax withholdings: the amount for 2017 is 7,071,620 and for 2016 is 6,505,060

Total income tax revenues: the amount for 2017 is 193,080,230 and for 2016 is 192,902,029

Other taxes, duties, and charges  

Goods and services tax (see note 11): the amount for 2017 is 12,652,993 and for 2016 is 11,214,278
Energy taxes: the amount for 2017 is 5,552,386 and for 2016 is 5,495,888
Other excise taxes and duties: the amount for 2017 is 3,638,673 and for 2016 is 3,619,059
Miscellaneous charges (see note 12): the amount for 2017 is 767,735 and for 2016 is 851,571

Total other taxes, duties, and charges: the amount for 2017 is 22,611,787 and for 2016 is 21,180,796

Employment insurance premiums: the amount for 2017 is 22,537,353 and for 2016 is 23,491,100
Interest, penalties, and other revenues (see note 13): the amount for 2017 is 4,085,117 and for 2016 is 4,346,573
Revenues administered for the Government of Canada: the amount for 2017 is 242,314,487 and for 2016 is 241,920,498

Provincial, territorial and First Nations administered revenues
Income tax revenues

Individuals and Trusts: the amount for 2017 is 65,085,151 and for 2016 is 66,859,379
Corporations: the amount for 2017 is 20,921,476 and for 2016 is 18,130,252

Total income tax revenues: the amount for 2017 is 86,006,627 and for 2016 is 84,989,631

Provincial portion of harmonized sales tax (see note 14): the amount for 2017 is 26,656,590 and for 2016 is 24,542,052
Other revenues (see note 15): the amount for 2017 is 348,748 and for 2016 is 489,217

Revenues administered for provincial and territorial governments and First Nations: the amount for 2017 is 113,011,965 and for 2016 is 110,020,900
Pension contributions, interest, and penalties administered for the Canada Pension Plan (see note 16): the amount for 2017 is 47,041,519 and for 2016 is 46,212,741
Total administered revenues and pension contributions: the amount for 2017 is 402,367,971 and for 2016 is 398,154,139

The accompanying notes form an integral part of these financial statements.

Canada Revenue Agency
Statement of Administered Expenses and Recoveries
for the year ended March 31
(in thousands of dollars)

Long description 

The table presents the Statement of Administered Expenses and Recoveries. The information is presented in thousands of dollars
    
Federal administered expenses
  
Transfers to individuals

Canada child benefit (see note 18): the amount for 2017 is 16,949,122 and - for 2016
Child tax benefits (see note 18): the amount for 2017 is 3,149,582 and for 2016 is 10,509,650
Universal child care benefits (see note 18): the amount for 2017 is 1,970,033 and for 2016 is 7,522,699
Working income tax benefit: the amount for 2017 is 1,239,887 and for 2016 is 1,241,999
Children’s special allowances: the amount for 2017 is 319,659 and for 2016 is 309,173
Refundable tax credits: the amount for 2017 is 306,741 and for 2016 is 334,245
Total transfers to individuals: the amount for 2017 is 23,935,024 and for 2016 is 19,917,766

Transfers to corporations

Refundable investment tax credit: the amount for 2017 is 1,284,786 and for 2016 is 1,350,582
Film and video tax credits: the amount for 2017 is 388,785 and for 2016 is 343,663
Total transfers to corporations: the amount for 2017 is 1,673,571 and for 2016 is 1,694,245

Other federal expenses

Doubtful accounts expense (see note 3): the amount for 2017 is 2,685,891 and for 2016 is 3,840,614
Interest expense: the amount for 2017 is 337,426 and for 2016 is 396,414
Recoveries/transfers to provinces for softwood lumber products export charge: the amount for 2017 is (110) and for 2016 is 121,481
Total other federal expenses: the amount for 2017 is 3,023,207 and for 2016 is 4,358,509

Total federal administered expenses: the amount for 2017 is 28,631,802 and for 2016 is 25,970,520

Federal administered recoveries 

Old age security benefits: the amount for 2017 is (1,483,105) and for 2016 is (1,517,042)
Employment insurance benefits: the amount for 2017 is (270,448) and for 2016 is (270,830)
Total federal administered recoveries: the amount for 2017 is (1,753,553) and for 2016 is (1,787,872)

Net expenses and recoveries administered for the Government of Canada: the amount for 2017 is 26,878,249 and for 2016 is 24,182,648

Provincial and territorial administered expenses  

Transfers to individuals  

Family benefit programs: the amount for 2017 is 1,530,710 and for 2016 is 1,358,369
Ontario energy and property tax credit: the amount for 2017 is 1,316,266 and for 2016 is 1,357,865
Ontario senior homeowners’ property tax grant: the amount for 2017 is 200,171 and for 2016 is 233,708
British Columbia low-income climate action tax credit: the amount for 2017 is 194,887 and for 2016 is 194,802
Other property tax credits: the amount for 2017 is 123,773 and for 2016 is 122,964
Other transfers: the amount for 2017 is 510,690 and for 2016 is 371,588
Total transfers to individuals: the amount for 2017 is 3,876,497 and for 2016 is 3,639,296

Transfers to corporations

Film and television production services tax credits: the amount for 2017 is 975,487 and for 2016 is 839,993
Refundable investment tax credits: the amount for 2017 is 700,040 and for 2016 is 740,872
Total transfers to corporations: the amount for 2017 is 1,675,527 and for 2016 is 1,580,865

Expenses administered for provincial and territorial governments: the amount for 2017 is 5,552,024 and for 2016 is 5,220,161
Doubtful accounts expense administered for the Canada Pension Plan (see note 3): the amount for 2017 is 75,273 and for 2016 is 93,433
Total net administered expenses and recoveries: the amount for 2017 is 32,505,546 and for 2016 is 29,496,242

The accompanying notes form an integral part of these financial statements.

Canada Revenue Agency
Statement of Administered Cash Flows
for the year ended March 31
(in thousands of dollars)

Long description 

The table presents the Statement of Administered Cash Flows. The information is presented in thousands of dollars.

Total administered revenues and pension contributions: the amount for 2017 is 402,367,971 and for 2016 is 398,154,139
  
Total net administered expenses and recoveries: the amount for 2017 is (32,505,546) and for 2016 is (29,496,242)

Revenues paid or payable directly to a province: the amount for 2017 is (300,194) and for 2016 is (436,136)

Changes in administered assets and liabilities:

Cash on hand: the amount for 2017 is (255,899) and for 2016 is (463,326)
Amounts receivable from taxpayers: the amount for 2017 is (2,627,981) and for 2016 is (8,340,381)
Amounts receivable under the tobacco civil settlements: the amount for 2017 is 75,649 and for 2016 is 70,055
Amounts payable to taxpayers: the amount for 2017 is 1,454,746 and for 2016 is (2,502,581)
Amounts payable to provinces: the amount for 2017 is (125,020) and for 2016 is 23,447
Deposit accounts: the amount for 2017 is 15,381 and for 2016 is 11,471
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada (see note 8): the amount for 2017 is 368,099,107 and for 2016 is 357,020,446

Consisting of: 

Cash deposits to the Consolidated Revenue Fund: the amount for 2017 is 499,833,196 and for 2016 is 484,790,491
Cash refunds/payments from the Consolidated Revenue Fund: the amount for 2017 is (131,734,089) and for 2016 is (127,770,045)
Net cash deposited in the Consolidated Revenue Fund of the Government of Canada (see note 8): the amount for 2017 is 368,099,107 and for 2016 is 357,020,446

The accompanying notes form an integral part of these financial statements.

Canada Revenue Agency

Notes to the Financial Statements – Administered Activities

1. Authority and objectives

The Canada Revenue Agency (CRA) is an agent of Her Majesty in right of Canada under the Canada Revenue Agency Act. The CRA is a departmental corporation named in Schedule II of the Financial Administration Act and reports to Parliament through the Minister of National Revenue.

The mandate of the CRA is to support the administration and enforcement of tax legislation and other related legislation. The CRA provides support, advice, and services by:

(a) supporting the administration and enforcement of the program legislation;

(b) implementing agreements between the Government of Canada or the CRA and the government of a province, territory, or other public body performing a function of government in Canada to carry out an activity or administer a tax or program;

(c) implementing agreements or arrangements between the CRA and departments or agencies of the Government of Canada to carry out an activity or administer a program; and

(d) implementing agreements between the Government of Canada and First Nations governments to administer a tax.

The CRA administers revenues, including income and sales taxes and Employment insurance premiums, administers tax legislation, delivers a number of social benefit programs to Canadians for the federal, provincial, territorial, and First Nations governments, and administers other amounts, including Canada Pension Plan contributions, for other groups or organizations. In addition to the Canada Revenue Agency Act, the CRA is responsible for administering and enforcing the following acts or parts of acts: the Air Travellers Security Charge Act, the Children's Special Allowances Act, Part V.1 of the Customs Act, the Excise Act, the Excise Tax Act (including the goods and services tax (GST) and the harmonized sales tax (HST) except for GST/HST on imported goods), the Excise Act, 2001, the Income Tax Act, the Universal Child Care Benefit Act, and others including various provincial acts.

In the province of Quebec, Revenu Québec (RQ) acts as an agent of the CRA in administering and enforcing the GST, except for GST in respect of selected listed financial institutions. The CRA monitors cash transfers made by RQ, reports the GST revenues administered on its behalf, and transfers funds out of the Consolidated Revenue Fund to RQ so it can issue refunds.

Under an agreement with the province of Nova Scotia, the CRA receives worker's compensation payments and transfers these to the province. The CRA's mandate for administering customs legislation is limited to the collection functions noted under Part V.1 of the Customs Act. The CRA also provides collection services to Employment and Social Development Canada for certain accounts receivable under various acts.

2. Summary of significant accounting policies

For financial reporting purposes, the CRA's activities have been divided into two sets of financial statements: agency activities and administered activities. The purpose of these administered activities statements is to give information about the tax-related revenues, expenses, assets, and liabilities that the CRA administers on behalf of the federal, provincial, and territorial governments, First Nations, and other organizations. The CRA administers individual income tax for all provinces except Quebec, and corporation income tax for all provinces except Quebec and Alberta. The Financial Statements - Agency Activities include the operational revenues and expenses that the CRA manages and uses to run the organization.

The Canada Revenue Agency Act requires the CRA to prepare financial statements in accordance with accounting principles consistent with those applied in preparing the financial statements of the Government of Canada. As a result, CRA follows those accounting principles to account for the federal administered activities. In addition, activities administered for the provincial and territorial governments, First Nations, and other organizations are accounted for on the same basis as those administered for the federal government, and may differ from the accounting principles used by those provincial and territorial governments, First Nations, and other organizations. These stated accounting policies are based on Canadian public sector accounting standards.

A summary of the significant accounting policies follows:

(a) Revenue and pension contributions recognition

Revenues and pension contributions are recognized in the year in which the event that generates the revenue or the pension contribution occurs and when the effective date of the related legislation has passed and either the legislation, regulation or by-laws have been approved by the legislature or the ability to assess and collect tax has been provided through legislative convention.

The Canadian tax system is based on self-assessment, so taxpayers are expected to understand the tax laws and comply with them. This has an impact on the completeness of tax revenues when taxpayers fail to comply with tax laws, for example, if they do not report all of their income. The CRA has implemented systems and controls to detect and correct situations where taxpayers are not complying with the various acts it administers. These systems and controls include audits of taxpayer records when the CRA decides they are necessary, but these procedures cannot be expected to identify all sources of unreported income or other cases of non-compliance with tax laws.

An assessment (or reassessment) of tax includes all decisions and other steps made or taken by the Minister of National Revenue and officials of the CRA under the federal, provincial, and territorial acts or sections of the acts the CRA administers to calculate tax payable by taxpayers. When verifying a taxpayer's return, the CRA uses the various tax acts it administers and other criteria it developed that are designed to substantially meet the provisions of these acts. Reassessments include changes to taxes previously assessed at the request of the taxpayer, for example to claim a subsequent loss carry-back, or changes the CRA initiated as a result of applying procedures to verify reporting compliance, such as taxpayer audits. An estimate of future reassessments is recorded for amounts under appeal to the various courts in accordance with the accounting policy on contingent liabilities (note 2 (h)) and for amounts under objection in accordance with the accounting policy on objections (note 2 (g)).

Revenues are reported net of tax concessions. As foregone revenue, tax concessions do not give rise to assets or expenses of the taxing government. Refundable tax credits, deductions, or exemptions provided by the federal, provincial, territorial, or First Nations governments are considered tax concessions when they provide tax relief to taxpayers and relate to the types of taxes that are a revenue source administered by CRA. When the CRA does not administer the related tax revenue, these refundable tax credits, deductions, or exemptions are accounted for as transfers made through the tax system.

Revenues and pension contributions for the fiscal year include adjustments between the estimated revenues of previous years and actual amounts.

The following policies are applied for specific streams:

(i) Income taxes, Canada Pension Plan contributions, and Employment insurance premiums:

Income tax revenues are recognized when the taxpayer has earned income that is subject to tax. Income is calculated net of tax deductions and credits allowed under the Income Tax Act, including refundable taxes resulting from current-year activity.

Canada Pension Plan (CPP) contributions from employees, employers, and self-employed persons are recognized when the pensionable income is earned. Employment insurance (EI) premiums are recognized as revenue in the period the insurable earnings are earned. For non-resident taxpayers (individuals and corporations), revenues are recognized when the taxpayers receive income from which tax is withheld on active and inactive income they earned in Canada.

Income tax revenues and pension contributions are measured from amounts assessed/reassessed and from estimates of amounts not yet assessed/reassessed based on cash received that relates to the fiscal year ended March 31.

(ii) Other taxes, duties, and charges:

Goods and services tax (GST) and harmonized sales tax (HST) revenues on domestic goods and services, as well as the Quebec sales tax in respect of selected listed financial institutions are recognized at the time the goods are sold or the services provided. Revenues are reported net of input tax credits, GST/HST rebates, and the GST quarterly tax credits in the case of GST revenues. Input tax credits are the recovery of GST/HST paid or owed on purchases related to domestic and imported commercial activities of the taxpayer. Rebates are granted in various circumstances, for example to relieve the tax burden in areas where the cost of housing is very high, or to allow for the recovery of taxes on purchases where the purchaser cannot claim an input tax credit. The GST quarterly tax credit for low-income individuals and families is recorded in the period to which it relates. It is intended to offset the cost of the tax for low-income individuals and families.

For excise taxes, revenue is recognized when a taxpayer sells goods taxable under the Excise Tax Act. For excise duties, revenue is recognized when the taxpayer manufactures goods taxable under the Excise Act and the Excise Act, 2001.

These revenues are measured from amounts assessed/reassessed, and from estimates of amounts not yet assessed/reassessed based on cash received or historical information, that relate to the fiscal year ended March 31. Miscellaneous charges are recognized as revenue when they are earned.

(iii) Interest, penalties, and other revenues:

Interest, penalties, and other revenues are recorded when they are earned. Except for the portion related to CPP which is credited to the CPP account, all interest and penalty revenues are reported as revenues administered for the federal government as stated in the terms of the tax collection agreements with the provinces and territories. Interest and penalties are recorded net of amounts waived or cancelled under the various tax acts.

(b) Expenses

(i) Transfers:

Transfers are recognized in the year during which the events giving rise to them occur, provided that the transfer is authorized and all eligibility criteria have been met by the recipient, and a reasonable estimate of the amounts can be made. Transfers to provinces for the softwood lumber products export charge are recorded as an expense in the same year that the related softwood lumber products export charge revenues are recognized.

(ii) Interest expense:

Refunds may arise late, largely from the resolution of long-standing corporation tax files in favour of the taxpayer. Interest is accrued on refunds from the date that the tax instalment was initially paid to the date that the case is resolved. The CRA records the interest expense in the fiscal year to which it relates.

(iii) Administered recoveries:

Recoveries of old age security and EI benefits are recognized when assessed. Amounts not yet assessed are estimated. The CRA reports only recoveries assessed through the individual income tax system. Recoveries determined by other federal government departments are not reported in these financial statements.

(c) Cash on hand

The CRA deposits all monies received to the Consolidated Revenue Fund. Cash on hand refers to amounts received in the CRA's offices or by its agents up to March 31 but not yet deposited to the credit of the Consolidated Revenue Fund of the Government of Canada. CRA or its agents deposit funds to the Consolidated Revenue Fund on a daily basis.

(d) Amounts receivable from taxpayers

Amounts receivable from taxpayers include taxes, interest, penalties, and other revenues assessed or estimated by the CRA but not yet collected. A significant portion of the amounts receivable results from recording accrued receivables that relate to the current fiscal year but are not due until the next fiscal year.

(e) Allowance for doubtful accounts

The allowance for doubtful accounts is management's best estimate of the portion of receivable amounts that have been assessed that won't be collected, including the related interest and penalties. The allowance for doubtful accounts has two components. A general allowance is calculated based on the age and type of tax accounts using rates based on historical collection experience. A specific allowance is calculated based on an annual review of all accounts over $10 million.

The allowance for doubtful accounts is adjusted every year through the doubtful accounts expense and is reduced by amounts written off as uncollectible during the year. The annual expense is reported in the Statement of Administered Expenses and Recoveries. Except for the portion related to CPP contributions, which is charged to the CPP account, the provision is charged to expenses administered for the federal government because it assumes all collection risks, as stated in the terms of the tax collection agreements with the provinces, territories, and First Nations.

(f) Amounts payable to taxpayers

Amounts payable to taxpayers include refunds and related interest assessed or estimated by the CRA that were not paid up to March 31. A significant portion of the amounts payable results from recording accrued payables that relate to the current fiscal year but are not due for payment until the next fiscal year. They include refunds resulting from assessments completed after March 31, and estimates of refunds for individual and trust income tax and corporation income tax not yet assessed.

(g) Taxes under objection

Taxes under objection are assessed taxes for which the taxpayer filed a notice of objection. A liability is accrued and revenues are reduced if it is determined that the CRA has little or no discretion to avoid settlement. The amounts in objection are disclosed in note 9 to the financial statements.

(h) Contingent liabilities

Contingent liabilities are potential liabilities resulting from taxes assessed which have been appealed to the Tax Court of Canada, the Federal Court of Canada, or the Supreme Court of Canada. Amounts in appeal might become actual liabilities if one or more future events occurs or does not occur. If the future event is likely to occur or likely to not occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and the revenues are reduced. If the likelihood cannot be determined or an amount cannot be reasonably estimated, the contingency is disclosed in note 10 to the financial statements.

(i) Measurement uncertainty

To prepare these statements, management has to make estimates and assumptions that affect the amounts of assets, liabilities, revenues, expenses, and recoveries reported. For these financial statements items, measurement uncertainty is inherent but inestimable. Estimates are used to record unassessed tax revenues and the related amounts receivable and payable, as well as the allowance for doubtful accounts. In particular, estimates are made to determine individual and trust income tax revenues, corporation income tax revenues, non-resident tax withholdings, GST/HST revenues, energy taxes, other excise tax and duty revenues, EI premiums, CPP contributions, and the related amounts receivable and payable.

A key assumption used in estimating tax revenues is that tax instalments and historical information on refund rates, payments received upon filing tax returns, and amounts receivable assessed are good indicators of the amount of tax revenue earned to March 31 that has not yet been assessed. Another assumption is that historical tax assessment information is a good basis to allocate tax revenues between their various components (for example, between federal, provincial, and territorial tax revenues). Relevant factors such as new administered activities, legislative changes, and economic factors may also be considered. Finally, the key assumption used to estimate the general allowance for doubtful accounts is that historical collection information is a good indicator of uncollectible receivables.

Estimates are based on the best information available at the time of preparation of these statements and management believes these estimates and assumptions to be reasonable. Actual results could differ significantly from the estimates and any differences are recorded in the year the actual amounts are determined. Management monitors the accuracy of the estimates and the underlying assumptions through annual validation procedures and adjusts its estimation models as required. The methodologies used to determine the estimates were applied consistently with the previous year.

3. Amounts receivable from taxpayers

Amounts receivable from taxpayers include taxes, interest, penalties, and other revenues assessed or estimated by the CRA but not yet collected. A significant portion of the receivable balance results from recording accrued receivables that relate to the current fiscal year but are not due to be paid by taxpayers until the next fiscal year.

The following table shows details of the amounts receivable from taxpayers as reported in the Statement of Administered Assets and Liabilities. Amounts receivable from individuals and employers include Canada Pension Plan contributions and Employment insurance premiums as applicable.

Long description 

The table shows details of the amounts receivable from taxpayers as reported in the Statement of Administered Assets and Liabilities. The information is presented in thousands of dollars.
    
Income taxes 

Individuals: the 2017 gross amount is 59,810,971, the allowance for doubtful accounts for 2017 is (7,061,550), the 2017 net amount is 52,749,421, and the 2016 net amount was 53,871,984
Employers: the 2017 gross amount is 22,031,973, the allowance for doubtful accounts for 2017 is (1,181,565), the 2017 net amount is 20,850,408, and the 2016 net amount was 18,934,145
Corporations: the 2017 gross amount is 18,915,800, the allowance for doubtful accounts for 2017 is (2,813,625), the 2017 net amount is 16,102,175, and the 2016 net amount was 15,655,132
Non-residents: the 2017 gross amount is 1,728,907, the allowance for doubtful accounts for 2017 is (141,619), the 2017 net amount is 1,587,288, and the 2016 net amount was 1,378,585

GST/HST: the 2017 gross amount is 17,831,238, the allowance for doubtful accounts for 2017 is (2,354,883), the 2017 net amount is 15,476,355, and the 2016 net amount was 14,306,806
Excise taxes and duties and miscellaneous charges: the 2017 gross amount is 1,599,034, the allowance for doubtful accounts for 2017 is (511,289), the 2017 net amount is 1,087,745, and the 2016 net amount was 1,078,759

Total: the 2017 gross amount is 121,917,923, the allowance for doubtful accounts for 2017 is (14,064,531), the 2017 net amount is 107,853,392, and the 2016 net amount was 105,225,411

Changes in the allowance for doubtful accounts include the following:

Long description 

The table shows the changes in the allowance for doubtful accounts with respect to amounts receivable from taxpayers. The information is presented in thousands of dollars.

Income taxes

Individuals: the Allowance for doubtful accounts March 31, 2016 is (6,997,325), the Doubtful accounts expense is (1,017,945), the write-offs are 953,720, and the allowance for doubtful accounts March 31, 2017 is (7,061,550)
Employers: the Allowance for doubtful accounts March 31, 2016 is (1,134,713), the Doubtful accounts expense is (294,987), the write-offs are 248,135, and the allowance for doubtful accounts March 31, 2017 is (1,181,565)
Corporations: the Allowance for doubtful accounts March 31, 2016 is (2,528,528), the Doubtful accounts expense is (618,639), the write-offs are 333,542, and the allowance for doubtful accounts March 31, 2017 is (2,813,625)
Non-residents: the Allowance for doubtful accounts March 31, 2016 is (132,148), the Doubtful accounts expense is (149,805), the write-offs are 140,334, and the allowance for doubtful accounts March 31, 2017 is (141,619)

GST/HST: the Allowance for doubtful accounts March 31, 2016 is (2,522,301), the Doubtful accounts expense is (606,574), the write-offs are 773,992, and the allowance for doubtful accounts March 31, 2017 is (2,354,883)
Excise taxes and duties and miscellaneous charges: the Allowance for doubtful accounts March 31, 2016 is (449,020), the Doubtful accounts expense is (73,214), the write-offs are 10,945, and the allowance for doubtful accounts March 31, 2017 is (511,289)

Total: the Allowance for doubtful accounts March 31, 2016 is (13,764,035), the Doubtful accounts expense is (2,761,164), the write-offs are 2,460,668, and the allowance for doubtful accounts March 31, 2017 is (14,064,531)

The doubtful accounts expense of $2,761 million ($3,934 million in 2016) reported above includes an amount of $2,686 million ($3,841 million in 2016) recorded as an expense administered on behalf of the federal government (see note 2(e)) and $75 million ($93 million in 2016) charged against expenses administered on behalf of the Canada Pension Plan.

4. Amounts receivable under the tobacco civil settlements

On July 31, 2008, the federal and provincial governments entered into civil settlement agreements with two tobacco companies to resolve potential civil claims. Under the terms of the agreements, payments totalling $850 million are to be made to Canada, for Canada and the provinces. The federal government's share is $325 million and the provincial governments' share is $525 million. The settlement agreements state that the amounts will be fully paid by 2023. Up to $800 million is expected to be received in the first 10 years of the agreements and about $50 million in the following five years. These amounts are recorded at the nominal value.

The following table gives details of the amounts receivable related to the tobacco civil settlement agreements:

Long description

The following table gives details of the amounts receivable related to the tobacco civil settlement agreements in 2017 and 2016 in thousands of dollars:

It is broken down by Government of Canada share and the Provincial share for each year 2017 and 2016.
 
The 2017 Balance, beginning of year for the Government of Canada share is 128,000, the Provincial share is 112,578 and the total is 240,578.
The 2016 Balance, beginning of year for the Government of Canada share is 162,000, the Provincial share is 148,633 and the total is 310,633.

Amounts received during the year for the 2017 Government of Canada share is (34,000), the Provincial share is (41,649) and the total is (75,649). 
Amounts received during the year for 2016 Government of Canada share is (34,000), the Provincial share is (36,055) and the total is (70,055).

Total 2017 Balance, end of year for the Government of Canada share is 94,000, the Provincial share is 70,929 and the total is 164,929.

Total 2016 Balance, end of year for the Government of Canada share is 128,000, the Provincial share is 112,578 and the total is 240,578.

5. Amounts payable to taxpayers

The following table gives details of the amounts payable to taxpayers as reported in the Statement of Administered Assets and Liabilities:

Long description 

The following table gives details of the amounts payable, in thousands of dollars, to taxpayers, as reported in the Statement of Administered Assets and Liabilities for 2017 and 2016:

Individuals: 35,501,523 in 2017 and 34,321,628 in 2016
Corporations: 8,718,842 in 2017 and 8,293,710 in 2016
GST/HST: 10,777,092 in 2017 and 10,755,233 in 2016
Employers and non-residents: 108,383 in 2017 and 268,023 in 2016
Excise taxes and duties and miscellaneous charges: 50,105 in 2017 and 62,605 in 2016

Total: for 2017 is 55,155,945 and for 2016 was 53,701,199

6. Amounts payable to provinces

The following table gives details of amounts payable to provinces as reported in the Statement of Administered Assets and Liabilities:

Long description 

The following table gives details of amounts payable to provinces, in thousands of dollars, as reported in the Statement of Administered Assets and Liabilities for 2017 and 2016:

Amounts payable to Quebec:

Individual income tax withholdings: 175,284 in 2017 and 211,846 in 2016
Quebec sales tax in respect of selected listed financial institutions: 150,037 in 2017 and 159,746 in 2016
GST refunds issued by Quebec: 100,983 in 2017 and 88,983 in 2016

Provincial share of the tobacco civil settlements (see note 4): 70,929 in 2017 and 112,578 in 2016
Softwood lumber products export charge net of costs incurred by the federal government: - in 2017 and 46,994 in 2016
Other payables: 1,764 in 2017 and 3,870 in 2016 

Total: 498,997 in 2017 and 624,017 in 2016

The CRA is acting as an agent for the provinces under the tobacco civil settlements. The CRA's liability to the provinces for their expected share of the settlement amounts is limited to the amounts that will ultimately be collected from the tobacco companies.

The Department of Finance makes payments out of the Consolidated Revenue Fund to provinces, territories and First Nations for taxes which the CRA administers. These amounts payable to provinces, territories, and First Nations are not recorded in these financial statements because they are outside the CRA's responsibility.

The CRA received $272 million in Nova Scotia worker's compensation payments during the year ($270 million in 2016), these payments are transferred directly to the province. Since this is a flow through arrangement, it is not reported as administered revenues.

7. Deposit accounts

Deposit accounts are established to record cash and securities required to guarantee payment of GST for non-resident registrants and certain licensees for excise taxes, which are both payable pursuant to the Excise Tax Act. The following table shows activity on the deposit accounts as reported in the Statement of Administered Assets and Liabilities:

Long description 

The following table shows activity, in thousands of dollars, on the deposit accounts as reported in the Statement of Administered Assets and Liabilities for 2017 and 2016:

Balance, beginning of year: is 190,019 in 2017 and 178,548 in 2016

Receipts and other credits: is 44,633 in 2017 and 40,981 in 2016

Payments and other charges: is (29,252) in 2017 and (29,510) in 2016
Balance, end of year: is 205,400 in 2017 and 190,019 in 2016
Securities held in trust: is (40) in 2017 and (40) in 2016
Net deposit accounts: is 205,360 in 2017 and 189,979 in 2016

8. Net amount due to the Consolidated Revenue Fund

The net amount due to the Consolidated Revenue Fund on behalf of the Government of Canada and others is the difference between administered assets (taxes not yet received and/or deposited in the fund) and administered liabilities payable by the CRA out of the fund.

The net cash deposited in the Consolidated Revenue Fund of the Government of Canada includes amounts the CRA receives on behalf of the federal government, provinces, territories, and other organizations, less refunds and payments issued from the fund during the year.

The following table shows the change in the net amount due to the Consolidated Revenue Fund during the fiscal year:

Long description 

The following table shows the change in the net amount, in thousands of dollars, due to the Consolidated Revenue Fund during the fiscal years 2017 and 2016:

Net amount due to the Consolidated Revenue Fund on behalf of the Government of Canada and others at the beginning of the year: is 58,811,937 in 2017 and 47,610,622 in 2016

Total administered revenues and pension contributions: is 402,367,971 in 2017 and 398,154,139 in 2016

Total net administered expenses and recoveries: is (32,505,546) in 2017 and (29,496,242) in 2016

Revenues paid or payable directly to a province: is (300,194) in 2017 and (436,136) in 2016

Net cash deposited in the Consolidated Revenue Fund of the Government of Canada: is (368,099,107) in 2017 and (357,020,446) in 2016

Net amount due to the Consolidated Revenue Fund on behalf of the Government of Canada and others at the end of the year: is 60,275,061 in 2017 and 58,811,937 in 2016

9. Taxes under objection

Taxes under objection include previously assessed taxes where the taxpayer filed a notice of objection to the CRA. For cases where it has been determined that the CRA had little or no discretion to avoid settlement, the amounts to be paid have been recorded in the amounts payable to taxpayers or in reduction of the amounts receivable from taxpayers, as applicable. All other cases amount to $20.2 billion as of March 31, 2017 ($21.9 billion for 2016).

10. Contingent liabilities

Contingent liabilities include previously assessed taxes where amounts are being appealed to the Tax Court of Canada, the Federal Court of Canada, or the Supreme Court of Canada. The amounts to be paid in respect of the cases identified as likely to be lost have been recorded in the amounts payable to taxpayers or in reduction of the amounts receivable from taxpayers, as applicable. The extent of these cases has not been disclosed as it could have an adverse effect on their outcome. Cases for which the likelihood cannot be determined, or for which a reasonable estimate of the potential loss cannot be made, represent $6.7 billion as of March 31, 2017 ($7.0 billion for 2016).

11. Goods and services tax revenues

The GST reported on the Statement of Administered Revenues and Pension Contributions includes the federal portion of HST. It is net of input tax credits (ITC), rebates, and the GST quarterly tax credit for low-income individuals and families that the CRA administers. It does not include GST revenues on imported goods, which are administered and reported by the Canada Border Services Agency. The CRA has sole responsibility for administering all ITC, including those claimed on imported goods. ITC relating to GST on imports are not accounted for separately from ITC relating to GST on domestic transactions.

The following table shows details of the GST revenues that the CRA administers for the Government of Canada as reported in the Statement of Administered Revenues and Pension Contributions:

Long description 

The following table shows details of the GST revenues, in thousands of dollars, that the CRA administers for the Government of Canada as reported in the Statement of Administered Revenues and Pension Contributions for 2017 and 2016:

Gross GST revenues: for 2017 269,151,004 and for 2016 260,864,228
ITC: for 2017 (212,608,532) and for 2016 (208,670,089)
Provincial portion of HST: for 2017 (33,233,362) and for 2016 (30,527,784)
GST revenues net of ITC: for 2017 23,309,110 and for 2016 21,666,355
GST rebates for 2017: (6,191,501) and for 2016 (6,094,603)
GST quarterly tax credits for low-income individuals and families: for 2017 (4,464,616) and for 2016 (4,357,474)

The total GST revenues: for 2017 12,652,993 and for 2016 11,214,278.

12. Miscellaneous charges

The following table details the miscellaneous charges that the CRA administers for the federal government as reported in the Statement of Administered Revenues and Pension Contributions:

Long description 

The following table details the miscellaneous charges, in thousands of dollars, that the CRA administers for the federal government as reported in the Statement of Administered Revenues and Pension Contributions for 2017 and 2016:

Air travellers security charge for 2017 was 767,856 and for 2016 was 721,224
Softwood lumber products export charge for 2017 was (121) and for 2016 was 130,347

the Total for 2017 was 767,735 and for 2016 was 851,571

The Softwood Lumber Agreement expired on October 12, 2015. CRA will continue to administer retroactive transactions in accordance with the terms set out in the Agreement.

13. Interest, penalties, and other revenues

Various tax legislations give the CRA the authority, under certain conditions, to assess interest related to taxes due and penalties related to non-compliance with regulations by taxpayers. Interest is charged on overdue balances using rates determined quarterly, which in most cases are based on the ninety day Treasury Bills rate rounded plus 4%. The interest rate applicable as at March 31, 2017 on most overdue balances was 5% (5% in 2016). The CRA has the authority to waive or cancel the interest and penalties that would normally be charged under certain circumstances such as processing delays caused by the CRA, financial hardship experienced by taxpayers, or other extraordinary circumstances.

Other revenues consist of miscellaneous fees and charges such as court fines and administration charges for dishonoured payments.

The following table gives details on interest, penalties, and other revenues that the CRA administers for the federal government as reported in the Statement of Administered Revenues and Pension Contributions:

Long description 

The following table gives details on interest, penalties, and other revenues, in thousands of dollars, that the CRA administers for the federal government as reported in the Statement of Administered Revenues and Pension Contributions for 2017 and 2016:

Gross interest and penalties: for 2017 4,748,490 and for 2016 4,646,250
Interest and penalties waived or cancelled under authority of the Income Tax Act and Excise Tax Act: for 2017 (670,528) and for 2016 (309,179)
Net interest and penalties: for 2017 4,077,962 and for 2016 4,337,071 
Fines imposed under various acts: for 2017 6,059 and for 2016 8,343
Other revenues: for 2017 1,096 and for 2016 1,159
Total Interest, penalties, and other revenues: for 2017 4,085,117 and for 2016 4,346,573

14. Provincial portion of harmonized sales tax

CRA administers the provincial portion of the HST for the provinces of Ontario, Nova Scotia, New Brunswick, Newfoundland and Labrador and Prince Edward Island as well as returns for the period from July 2010 to March 2013 for British Columbia. CRA recorded these revenues in accordance with the accounting policies described in note 2.

The provincial portion of HST reported on the Statement of Administered Revenues and Pension Contributions is net of input tax credits (ITC), rebates and credits accounted as tax concessions. It includes the recaptured ITC, which applies to certain types of supplies purchased by large businesses. It does not include the provincial portion of HST collected on imported goods, which is administered and reported by the Canada Border Services Agency.

The following table details the provincial portion of HST revenues as reported in the Statement of Administered Revenues and Pension Contributions:

Long description 

The following table details the provincial portion, in thousands of dollars, of HST revenues as reported in the Statement of Administered Revenues and Pension Contributions for 2017 and 2016.

Provincial portion of HST: for 2017 33,233,362 and for 2016 30,527,784
Provincial portion of HST rebates: for 2017 (1,136,535) and for 2016 (899,766)
Recaptured ITC: for 2017 343,932 and for 2016 480,221
Transitional tax: for 2017 15,266 and for 2016 21,712
HST provincial rebates: for 2017 (4,256,804) and for 2016 (4,145,471)
The total Provincial portion of HST net revenues before credits: for 2017 28,199,221 and for 2016 25,984,480
Provincial sales tax credits  
Ontario sales tax credit: for 2017 (1,304,248) and for 2016 (1,315,607)
Newfoundland and Labrador harmonized sales tax credit: for 2017 (87,242) and for 2016 (46,008)
New Brunswick sales tax credit: for 2017 (74,820) and nil for 2016
Nova Scotia affordable living tax credit: for 2017 (65,225) and for 2016 (65,625)
Prince Edward Island sales tax credits: for 2017 (7,076) and for 2016 (6,438)
British Columbia harmonized sales tax credit: for 2017 (4,024) and for 2016 (8,756)
Ontario sales tax transition benefit: for 2017 4 and for 2016 6
Total provincial sales tax credits: in 2017 (1,542,631) and for 2016 (1,442,428)
Provincial portion of HST: in 2017 26,656,590 and for 2016 24,542,052

15. Other revenues

The following table gives details of other revenues the CRA administers for provincial and territorial governments and First Nations as reported in the Statement of Administered Revenues and Pension Contributions.

Long description 

The following table gives details, in thousands of dollars, of other revenues the CRA administers for provincial and territorial governments and First Nations as reported in the Statement of Administered Revenues and Pension Contributions for 2017 and 2016.

Quebec sales tax in respect of selected listed financial institutions: for 2017 was 300,194 and for 2016 was 436,136
First Nations sales tax and GST: for 2017 was 25,583 and for 2016 was 24,717
First Nations income tax: for 2017 was 22,971 and for 2016 was 28,364
Total: in 2017 was 348,748 and for 2016 was 489,217

16. Pension contributions, interest, and penalties administered on behalf of the Canada Pension Plan

The following table shows details of the transactions the CRA administers on behalf of the Canada Pension Plan as reported in the Statement of Administered Revenues and Pension Contributions:

Long description 

The following table shows details of the transactions, in thousands of dollars, the CRA administers on behalf of the Canada Pension Plan as reported in the Statement of Administered Revenues and Pension Contributions for 2017 and 2016.
  
Pension contributions: for 2017 were 46,875,626 and for 2016 were 46,021,004
Interest and penalties: for 2017 were 165,893 and for 2016 were 191,737
Total: for 2017 was 47,041,519 and for 2016 was 46,212,741

17. Related-party transactions

The CRA is related in terms of common ownership to all Government of Canada departments, agencies, and Crown corporations. The individuals income tax, Employment insurance premiums and Canada Pension Plan contributions deducted at source from employees by federal departments and other organizations are declared and transferred to the CRA, and are included in the revenues and pension contributions administered by CRA. Employment insurance premiums include the federal government employer share.

The GST collected by federal government departments and other organizations is declared and transferred to the CRA, and included in the GST revenues and the provincial portion of HST. The GST administered by the CRA includes the GST that federal departments and some organizations pay to their suppliers on domestic purchases.

The CRA administers corporation's income tax payable by certain Crown corporations. Finally, the CRA also administers a refund set-off program that provides for individuals tax refunds to be used to pay debts owed under federal, provincial, or territorial programs. These transactions all take place in the normal course of business based on the provisions of the Income Tax Act, Excise Tax Act and established directives and procedures.

In addition to the above transactions, which are included in these financial statements, the CRA provides collection services to the Canada Border Services Agency under Part V.I of the Customs Act. It also provides collection services to Employment and Social Development Canada for certain accounts receivable under the Canada Education Savings Act, the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Canada Pension Plan, and the Old Age Security Act. The related payments are made directly to either the Canada Border Services Agency or Employment and Social Development Canada, who are responsible for their deposits to the Consolidated Revenue Fund, as well as their accounting and reporting. These payments are not recorded in the CRA's accounts.

18. Canada child benefit and phasing out of the child tax benefit and the universal child care benefit

As of July 1st 2016, the CRA has begun to administer the Canada child benefit (CCB) announced in the federal budget, which was tabled in Parliament on March 22, 2016. It replaced the child tax benefit (CTB) and the universal child care benefits (UCCB). Similar to the CTB, the CCB is paid monthly and benefits are income tested and not taxable.

The CRA will also continue to administer retroactive payments for the CTB and the UCCB for a period of 10 years after the original entitlement period.

19. Comparative figures

Certain comparative figures have been reclassified to conform to the presentation used in the current year.

Financial statements discussion and analysis – administered activities (unaudited)

Introduction

The Financial Statements – Administered Activities reflect the total assets and liabilities, tax and non-tax revenues, expenses and recoveries, and cash flows administered by the Canada Revenue Agency for the Government of Canada, provinces, territories, First Nations, and other government organizations. Revenues and expenses are recognized on an accrual basis

Tax revenues

The Canada Revenue Agency collects the majority of federal tax revenues. Other agencies and departments, such as the Canada Border Services Agency, account for the balance of total federal tax revenues reported in the Public Accounts of Canada. For further information on revenues collected by the Government of Canada as a whole, please refer to the Annual Financial Report of the Government of Canada, available at www.fin.gc.ca/purl/afr-eng.aspxviii.

Revenues administered for the Government of Canada

Long description 

This table  shows the total revenues administered for the Government of Canada in 2017 and 2016, the difference in the revenue numbers between the two years, as well as the percentage difference.

Federal administered revenues in thousands of dollars

Income tax revenues 

Income tax revenues for individuals and trusts in 2017 were 143,792,941, for 2016 were 144,953,138, the difference is (1,160,197), the percentage difference is (0.8%)

Income tax revenues for corporations in 2017 were 42,215,669, for 2016 were 41,443,831, the difference is 771,838, the percentage difference is 1.9%
Income tax revenues for non-resident tax withholdings for 2017 were 7,071,620, for 2016 were 6,505,060, the difference is 566,560, and the percentage difference is 8.7%

Total income tax revenues for 2017 were 193,080,230, for 2016 were 192,902,029, the difference is 178,201, and the percentage difference is 0.1%

Other taxes, duties, and charges

Goods and services tax: for 2017 were 12,652,993, for 2016 were 11,214,278, the difference is 1,438,715, and the percentage difference is 12.8%
Energy taxes: for 2017 were 5,552,386, for 2016 were 5,495,888, the difference is 56,498, and the percentage difference is 1.0%
Other excise taxes and duties: for 2017 were 3,638,673, for 2016 were 3,619,059, the difference is 19,614, and the percentage difference is 0.5%
Miscellaneous charges: for 2017 were 767,735, for 2016 were 851,571, the difference is (83,836), and the percentage difference is (9.8%)

Total revenue for other taxes, duties, and charges: for 2017 were 22,611,787, for 2016 were 21,180,796, the difference is 1,430,991, and the percentage difference is 6.8%

Employment insurance premiums: for 2017 were 22,537,353, for 2016 were 23,491,100, the difference is (953,747), and the percentage difference is (4.1%)
Interest, penalties, and other revenues: for 2017 were 4,085,117, for 2016 were 4,346,573, the difference is (261,456), and the percentage difference is (6.0%)

Revenues administered for the Government of Canada: in 2017 were 242,314,487, for 2016 were 241,920,498, the difference is 393,989, and the percentage difference is 0.2%

Revenues administered for the Government of Canada were $242.3 billion in 2017, approximately $394.0 million higher than in 2016. Revenues increased as a result of the growth in goods and services tax (GST), corporations income tax revenues, and non-resident tax withholdings, offset by lower individuals and trusts income tax revenues, lower employment insurance premiums, and lower interest, penalties, and other revenues.

Individuals and trusts income tax

Individuals and trusts income tax revenues decreased by $1.16 billion or 0.8%. The decrease is due to legislative changes introduced in 2016 which included a reduction in the middle class tax rate, offset in part by a new higher tax rate on high income earners. Revenues were also negatively impacted by the tax planning observed in fiscal year 2015-2016. This was offset in part by higher employment and wages.

Corporations income tax

Corporations income tax revenues increased by $772 million or 1.9%. The increase came mostly from the financial, retail, and information/cultural sectors, offset in part by lower revenues in the resource and manufacturing sectors.

Non-resident tax withholdings

Non-resident tax withholdings revenues increased by $567 million or 8.7%. The increase is consistent with the growth in foreign investment in Canada.

Goods and services tax

GST revenues increased by $1.44 billion or 12.8%. The increase is due to the growth in retail sales and relatively low input tax credits related to GST on imports.

Energy taxes

Energy taxes revenues increased by $56 million or 1.0%. The increase is due to slightly higher gasoline consumption.

Other excise taxes and duties

Other excise taxes and duties revenues increased by $20 million or 0.5%. The increase reflects higher tobacco production, offset in part by lower liquor/spirits and beer duty revenues.

Miscellaneous charges

Revenues from miscellaneous charges decreased by $84 million or 9.8%. The decrease is mostly due to lower revenues from softwood lumber products export charges as a result of the expiration of the softwood lumber agreement. This was offset in part by higher revenues from air traveler security charges.

Employment insurance premiums

Employment insurance premiums revenues decreased by $954 million or 4.1%. The decrease results from the reduction in the employment insurance premium rate in 2017, offset in part by the growth in employment and wages.

Interest, penalties, and other revenues

Interest, penalties, and other revenues decreased by $261 million or 6.0%. The decrease reflects the reversal of arrears interest and transfer pricing penalties and the change in presentation for interest and penalty cancellations which are now netted against revenues. This was offset in part by a general increase in arrears interest.

Figure 1 – Direct tax revenues

Long description 

Figure 1 shows total percentage of Direct Tax Revenues for 2017 and 2016 broken down by individuals and trusts, corporations and non-residents.

2017 Direct Tax Revenues

Individuals and trusts are 74.5%.
Corporations are 21.9%.
Non-residents are 3.6%.

2016 Direct Tax Revenues

Individuals and trusts are 75.1%.
Corporations are 21.5%.
Non-residents are 3.4%. 

As shown in Figure 1, the distribution of direct tax revenues remained stable in 2017.

Figure 2 – Indirect tax revenues

Long description 

Figure 2 shows total percentage of indirect tax revenues for 2017 and 2016 broken down by goods and services tax, energy taxes, other excise taxes and duties, and miscellaneous charges

2017 Indirect Tax Revenues

Goods and services tax is 56%.
Energy taxes are 24.6%.
Other excise taxes and duties are 16.1%. 
Miscellaneous charges are 3.3%.

2016 Indirect Tax Revenues

Goods and services tax is 52.9%.
Energy taxes are 25.9%.
Other excise taxes and duties are 17.1%. 
Miscellaneous charges are 4.1%.

As shown in Figure 2, the proportion of GST revenues increased, and the proportion of energy taxes revenues and other excise taxes and duties revenues decreased in 2017.

Revenues administered for provincial and territorial governments, First Nations, and the Canada Pension Plan

Long description 

This table shows the total revenues administered for provincial and territorial governments and First Nations in 2017 and 2016, the difference in the revenue numbers between the two years, as well as the percentage difference.

Provincial, territorial, and First Nations administered revenues, in thousands of dollars

Income tax revenues
Individuals and trusts: in 2017 65,085,151, for 2016 66,859,379, the difference is (1,774,228), the percentage difference is (2.7%)
Corporations: in 2017 20,921,476, for 2016 18,130,252, the difference is 2,791,224, the percentage difference is 15.4%

Total Income tax revenues: for 2017 86,006,627, for 2016 84,989,631, the difference is 1,016,996, and the percentage difference is 1.2%

Provincial portion of harmonized sales tax: for 2017 26,656,590, for 2016 24,542,052, the difference is 2,114,538, and the percentage difference is 8.6%
Other revenues: for 2017 348,748, for 2016 489,217, the difference is (140,469), and the percentage difference is (28.7%)

Revenues administered for provincial and territorial governments and First Nations: in 2017 113,011,965, for 2016 110,020,900, the difference is 2,991,065, and the percentage difference is 2.7%

Revenues administered for the provincial and territorial governments and First Nations (FN) were $113.0 billion in 2017, approximately $3.0 billion higher than in 2016.

Individuals and trusts income tax

Individuals and trusts income tax revenues decreased by $1.8 billion or 2.7%. The decrease is due to the impact of the tax planning observed in fiscal year 2015-16, as well as various provincial legislative changes. This was offset in part by higher employment and wages.

Corporations income tax

Corporations income tax revenues increased by $2.8 billion or 15.4%. The increase came mostly from the financial, retail and information/cultural sectors.

Provincial portion of harmonized sales tax (HST)

Provincial HST revenues increased by $2.1 billion or 8.6%. The increase reflects the growth in retail sales and slight increases in provincial tax rates.

Other revenues

Other revenues decreased by $140 million or 28.7%. The decrease is due to lower Quebec sales tax in respect of selected listed financial institutions resulting from high accrual estimates in 2016.

Figure 3 – Revenues administered for the provincial and territorial governments and First Nations

Long description 

2017 Provincial, territorial and First Nations

Income tax for individuals and trusts is 57.6%.
Income tax for corporations is 18.5%.
Harmonized sales tax is 23.6%.
Other revenues is 0.3%.

2016 Provincial, territorial and First Nations

Income tax for individuals and trusts is 60.8%.
Income tax for corporations is 16.5%.
Harmonized sales tax is 22.3%.
Other revenues is 0.4%.

As shown in Figure 3, the proportion of income tax- individuals and trusts decreased, and the proportion of income tax-corporations and harmonized sales tax increased in 2017.

Pension contributions, interest, and penalties administered for the Canada Pension Plan

Long description 

This table shows the pension contributions, interest, and penalties administered for the Canada Pension Plan in 2017 and 2016, the difference between the amounts for the two years, and the percentage difference.

The total amounts, in thousands of dollars, for pension contributions, interest, and penalties administered for the Canada Pension Plan in 2017 47,041,519, for 2016 46,212,741, the difference is 828,778, and the percentage difference is 1.8%

Pension contributions, interest, penalties, and other revenues administered for the Canada Pension Plan were $47.0 billion in 2017, $829 million more than in 2016. The increase results from the growth in employment and wages.

Expenses and recoveries administered for the Government of Canada

Long description 

This table shows the expenses and recoveries administered for the Government of Canada in 2017 and 2016, the difference between the expenses and recoveries for the two years, and the percentage difference.

Federal administered expenses and recoveries in thousands of dollars

Federal administered expenses: in 2017 28,631,802, for 2016 25,970,520, the difference is 2,661,282, and the percentage difference is 10.2%
Federal administered recoveries: in 2017 (1,753,553), for 2016 (1,787,872), the difference is 34,319, and the percentage difference is (1.9%)

Net expenses and recoveries administered for the Government of Canada: in 2017 26,878,249, for 2016 24,182,648, the difference is 2,695,601, and the percentage difference is 11.1%

Net expenses and recoveries administered for the Government of Canada

Federal administered expenses increased by $2.7 billion or 10.2%. The increase reflects the new Canada child benefit program which replaced the child tax benefit and the universal child care benefit programs in July 2016. Federal administered recoveries decreased by $34 million or 1.9%. The decrease reflects a slight reduction in taxable income.

Expenses administered for provincial and territorial governments and the Canada Pension Plan (CPP)

Long description 

This table shows the expenses administered for provincial and territorial governments and the Canada Pension Plan in 2017 and 2016, the difference between the expenses for the two years, and the percentage difference.

Provincial and territorial administered expenses and doubtful accounts expense administered for the Canada Pension Plan, in thousands of dollars

Provincial and territorial administered expenses: in 2017 5,552,024, for 2016 5,220,161, the difference is 331,863, and the percentage difference is 6.4%
Doubtful accounts expense administered for the Canada Pension Plan: in 2017 75,273, for 2016 93,433, the difference is (18,160), and the percentage difference is (19.4%)

Expenses administered for provinces, territories and the CPP: in 2017 5,627,297, for 2016 5,313,594, the difference is 313,703, and the percentage difference is 5.9%

Expenses administered for provincial and territorial governments

Expenses administered for provinces and territories increased by $332 million or 6.4%. The increase is due to the implementation of the Alberta climate leadership adjustment rebate in January 2017 and the implementation of the Alberta child benefit in July 2016. The increase also results from higher Ontario and British Columbia production services tax credits, offset in part by lower refundable investment tax credits for Saskatchewan and Ontario.

Summary of the assessment of effectiveness of the system of internal control over financial reporting and the action plan of the Canada Revenue Agency

Fiscal Year 2016-2017

1. Introduction

This document provides summary information on the measures taken by the Canada Revenue Agency (CRA) to maintain an effective system of internal control over financial reporting (ICFR), including information on internal control management, assessment results, and related action plans.

Detailed information on the CRA's authority, mandate, and program activities can be found in the Departmental Results Reportxvi and the Report on Plans and Prioritiesxvii.

2. CRA system of internal control over financial reporting

2.1 Internal control management

The CRA has a well-established governance and accountability structure to support the CRA's assessment efforts and oversight of its system of internal control. A CRA internal control management framework, approved by the Commissioner and the Board of Management, is in place and includes:

  • organizational accountability structures as they relate to internal control management to support sound financial management, including roles and responsibilities of senior managers in their areas of responsibility for control management;
  • values and ethics;
  • ongoing communication and training on statutory requirements and policies and procedures for sound financial management and control; and
  • regular updates on internal control management as well as the provision of related assessment results and action plans to the Commissioner, senior management and the Audit Committee of the Board of Management.

The CRA Finance Committee provides support to the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) in relation to control activities. It is chaired by the CFO and has representatives from each branch and region at the executive level.

In addition, the Audit Committee of the Board of Management provides advice on the adequacy and functioning of the CRA's risk management, control and governance frameworks and processes.

2.2 Service arrangements relevant to financial statements

The CRA relies on other organizations for the processing of certain transactions that are recorded in its financial statements as follows:

Common Arrangements

  • Public Services and Procurement Canada centrally administers the payments of salaries and the procurement of some goods and services in accordance with the CRA's Delegation of Authority and provides accommodation services.
  • Treasury Board of Canada Secretariat provides the CRA with information used to calculate various accruals and allowances.
  • Department of Justice provides legal services to the CRA.
  • Shared Services Canada provides information technology (IT) infrastructure services to the CRA in the areas of data centres and network services. The scope and responsibilities are addressed in the interdepartmental arrangement between Shared Services Canada and the CRA.

Specific Arrangements

  • Revenu Québec is responsible for the joint administration of the goods and services tax and Quebec sales tax for businesses in the Province of Quebec.
  • Department of Finance Canada provides the CRA with the federal and provincial shares of Goods and Services Tax/Harmonized Sales Tax (GST/HST) revenues that are used to determine provincial payments for the HST.
  • Canada Border Services Agency provides the CRA with the amount of GST revenues collected from importers, which is used in the calculation of the provincial portion of the HST revenues.
  • Department of Finance Canada and Employment and Social Development Canada provide estimates of Canada Pension Plan and Employment Insurance revenues respectively for the months of January to March.

Other government departments rely on the CRA for the processing of certain transactions or information that affect financial statements as follows:

  • Canada Border Services Agency for information technology services such as commensurate internal controls testing for general computer controls, as well as collection services on their behalf for duties, taxes, fees, penalties, or other amounts owing under the Customs Act, Customs Tariff, Excise Tax Act, Excise Act 2001, and/or related regulations;
  • Department of Finance Canada for the determination of tax receivables and payables under Tax Collection Agreements (TCAs) with provincial and territorial governments and First Nations; and
  • Employment and Social Development Canada for the collection of its accounts receivable and the administration of a number of activities related to the Canada Pension Plan and Employment Insurance Operating Account.

3. CRA assessment results during fiscal year 2016-2017

3.1 Design effectiveness testing of key controls

In 2016-2017, the CRA completed the design effectiveness testing of the Individual Income Tax (T1) Program, which includes an initial review of the controls around reassessments processed under the T1 system redesign. Furthermore, the CRA completed design effectiveness testing of the administration of Benefits and Disbursements, which included the general computer controls related to these program areas.

As a result of the T1, Benefits and Disbursements design effectiveness testing, the CRA identified the following required remediation:

  • Implementation of the final phases of the CRA action plan relating to the granting and monitoring of system access is scheduled for June 2017. The phases of the action plan related to preventing segregation of duty conflicts was completed as of March 31, 2017. The segregation of duties project was completed subsequent to the control assessments for these engagements and therefore remains noted for fiscal year 2016-2017. Testing of the new controls will occur in fiscal year 2017-2018 for all programs covered by the action plan.

3.2 Ongoing monitoring of key controls

In 2016-2017, the CRA completed planned ongoing monitoring of the following processes:

1. Entity-level controls;
2. General computer controls; and
3. All other business processes:

a. PayrollNote 1
b. Procurement to pay
c. Capital assets
d. Budgeting
e. Financial close and reporting

As a result of ongoing monitoring, the CRA identified the following required remediation:

  • Implementation of the final phases of the CRA action plan relating to the granting and monitoring of system access is scheduled for June 2017. The phases of the action plan related to preventing segregation of duty conflicts was completed as of March 31, 2017.The segregation of duties project was completed subsequent to the control assessments for these engagements and therefore remains noted for fiscal year 2016-2017. Testing of the new controls will occur in fiscal year 2017-2018 for all programs covered by the action plan.
  • The processing of payroll changes, including the correction of errors identified during the monitoring process, must be made on a timely basis to ensure accurate reporting and payment of salaries.

4. CRA Action Plan

4.1 Progress during fiscal year 2016-2017

The CRA continued to make progress in assessing and improving its key controls. The following table summarizes the CRA's progress based on the plans identified in the previous fiscal year's Annex.

Progress during fiscal year 2016-2017
Element in previous year's action plan Status
Agency Activities ongoing monitoring  Ongoing monitoring testing was completed for entity-level controls, general computer controls, and Agency business processes including payroll, procurement to pay, capital assets, budgeting, and financial close and reporting process.
Benefits and Disbursements Program  The control framework was established and testing of the design and implementation of controls was completed and action plans were developed to address all findings.
Individual Income Tax (T1) Program  Testing of the design and implementation of the controls was completed and action plans were developed to address all findings.
Corporation Income Tax (T2) Program  The T2 control framework for return collection and entry, assessing and reassessing and master data maintenance was updated to align with the new framework used for TCA engagements. Testing of the operating effectiveness in accordance with the updated framework is in progress.
Follow-up of activities requiring remediation from previous assessments 

The CRA has followed up on action plans from the:

  • 2015-2016 Agency Activities testing as part of ongoing monitoring;
  • T2 design effectiveness assessment and OAG audit report as at November 30, 2008;
  • T1 design effectiveness assessment and OAG audit report as at November 30, 2010;
  • T2 operating effectiveness assessment and OAG audit for the six-month period ending March 31, 2013;
  • T1 Unapplied Taxes as part of the Individual Income Tax Program design effectiveness assessment and OAG audit report as at January 31, 2014;
  • GST/HST design effectiveness assessment as at March 31, 2014; and
  • Non-resident income tax design effectiveness assessment as at March 31, 2016.

Overall results have been positive and the majority of the recommendations made have been implemented. However, the following items that were identified in prior years remain:

  • Granting and monitoring system access is scheduled for completion June 2017; and
  • Implementation of a system control with respect to recording and modifying non-financial information in the Non-Resident Source Deductions system is scheduled for May 2018.

4.2 Status and action plan for the next fiscal year and subsequent years

The CRA has continued to make progress on assessing its internal controls over financial reporting throughout the numerous programs that the CRA administers. It is recognized that implementation for all its processes requires multi-year initiatives. After design effectiveness and operational effectiveness testing are complete, the CRA will be applying its rotational ongoing monitoring plan to reassess control performance on a risk basis across all control areas, with the exception of those under the scope of TCA assessments as explained in Note 4.

Status and action plan for the next fiscal year and subsequent years
Key control areas Design effectiveness testing
and remediation
Operational effectiveness testing
and remediation
Ongoing monitoring
rotationNote 2
Administered Activities under the Tax Collection Agreements with the provinces and territories
T1 individual income tax (legacy system) Complete    
T1 unapplied taxes/source deductions Complete    
T1 individual income tax (including T1 System Redesign)Note 3 Complete Future yearsNote 3 N/ANote 4
T2 corporation income tax Complete  2017-2018  N/ANote 4
T3 trust income tax Complete  2018-2019 N/ANote 4
Other Administered Activities
GST/HST Complete 2018-2019Note 5 Future years
Non-resident income tax Complete Future years Future years
Benefits Complete Future years Future years
Disbursements Complete Future years Future years
Excise Tax 2017-2018 2018-2019Note 5 Future years
Collections 2017-2018 Future years Future years
Agency Activities
Entity level controlsNote 6 Complete Complete 2017-2018
IT general controls under CRA managementNote 6 Complete Complete 2017-2018

Agency Activities:

  • PayrollNote 1
  • Procurement to pay
  • Capital assets
  • Budgeting
  • Financial close and reporting
Complete Complete 2017-2018

Note 1: In April 2016, the CRA transitioned to the new Government of Canada Phoenix pay system. Some CRA payroll processes and controls were modified in consequence.

Note 2: The frequency of the ongoing monitoring of key control areas is risk-based and occurs over a three-year cycle with the exception of high risk areas, which are tested on an annual basis, or controls with prior year exceptions which are tested in the following fiscal year.

Note 3: The legacy T1 system is being upgraded through the T1 System Redesign initiative. This initiative is a multi-year project resulting in a significant modification to the systems and business processes related to the processing of T1 returns. Due to the magnitude of these changes, it was determined that design effectiveness testing of the new processes and systems would be appropriate as a next step.

Note 4: TCA-related control assessments do not go into a regular ongoing monitoring phase. Instead, complete reassessment engagements are conducted to fully test all control activities to ensure that the selected income tax program is still designed and operating effectively.   

Note 5: Due to the similarities in the GST/HST and Excise Programs, these engagements are being combined into one framework following the initial design and implementation testing of the assessing controls for the Excise Program.

Note 6: Entity level controls and IT general controls under CRA management are also evaluated through the Administered Activities projects.

Financial performance information – Parliamentary appropriations

Introduction

This section provides the details of the CRA's resource management performance for the purpose of reporting to Parliament on the use of appropriations in 2016-2017. This complements the information provided in the spending profile sections under each program and satisfies the reporting requirements set for annual reports to Parliament.

Financial reporting methodologies

The CRA's funding is provided by Parliament through annual appropriations (modified cash accounting basis) and, in this section, the CRA reports its expenditures and performance, together with details on the management of Parliamentary appropriations on the same basis. In addition to its reporting requirements, the CRA also has to prepare its annual financial statements in accordance with the accounting principles applied in preparing the financial statements of the Government of Canada (which conform with Canadian public sector accounting standards). Accordingly, the audited Statement of Operations and Agency Net Financial Position – Agency Activities on page 118 includes certain items such as services received without charge from other government departments and federal agencies. A reconciliation can be found in Note 3 on page 127.

The CRA prepared and included future-oriented financial statements in the 2016-17 Report on Plans and Priorities. As directed by the Treasury Board of Canada Secretariat, this future-oriented financial information was prepared on an accrual basis to strengthen accountability and improve transparency and financial management. As part of the analysis of net cost of operations, this report compares actual results to the initial future-oriented financial statements contained in the 2016-17 Report on Plans and Priorities.  

CRA financial information

Activities of the CRA 2016-17 (dollars) (FTEs)
Main EstimatesFootnote 1
4,085,718,183
Planned SpendingFootnote 2 4,085,718,183 37,878
Total AuthoritiesFootnote 3 4,622,069,709
Actual Spending 4,389,947,763 38,728

The Financial Statements – Agency Activities reports total Parliamentary appropriations used as $4,070.4 million (Note 3b on page 127 shows the reconciliation to the net cost of operations). The difference from the $4,390.0 million noted above is primarily explained by two items reported in the Financial Statements – Administered Activities, namely statutory disbursements to provinces under the Softwood Lumber Products Export Charge Act, 2006, -$0.1 million; and children's special allowance payments, $319.7 million.

Overview

For 2016-2017, Parliament approved $4,085.7 million through the Main Estimates, as shown in the CRA's 2016-17 Report on Plans and Priorities.

The 2016-2017 Main Estimates were adjusted to include:

  • $277.4 million for the carry-forward from 2015-2016
  • $144.8 million for the implementation and administration of various measures announced in the 2016 Federal Budget
  • $98.4 million for collective bargaining increases
  • $65.6 million for severance payments, parental benefits and vacation credits
  • $30.7 million in payments under the Children's Special Allowance Act for eligible children in the care of agencies and foster parents
  • $30.0 million for the administration of the goods and services tax
  • $10.2 million transferred from Public Services and Procurement Canada as a result of a reduction in CRA's accommodation requirements
  • $7.5 million for the implementation and administration of various measures announced in the 2015 Federal Budget
  • $1.8 million for government advertising programs
  • $0.7 million for court awards and Crown assets disposal
  • $0.3 million for contributions to employee benefit plans

These increases were offset by the following reductions:

  • $128.1 million for disbursements to provinces under the Softwood Lumber Products Export Charge Act, 2006
  • $2.9 million in the spending of revenues received through the conduct of the CRA's operations

This resulted in total approved authorities of $4,622.1 million for 2016-2017, representing an in-year increase of 13.1% over the Main Estimates.

Of the $4,622.1 million total authority, CRA's actual spending totaled $4,390.0 million resulting in $232.1 million remaining unexpended at year-end. After deducting unused and/or protected resources related primarily to accommodation and real property services, a reduction in funding for professional services, advertising, and travel announced as part of Budget 2016, contributions to the back-office transformation initiative, and employee benefit plan costs associated with converting operating costs to personnel costs, the remaining $203.7 million is available for use by the CRA in 2017-2018 under its statutory two-year spending authority.

A two-year spending authority enables the CRA to be more strategic in using public funds by taking a multi-year view of plans and budgets. The CRA's financial flexibility in 2016-2017 decreased by nearly $74 million from the previous fiscal year as a result of the settlement of the collective agreement for employees represented by the Public Service Alliance of Canada (PSAC) bargaining unit in October 2016. Collective agreement provisions that had been established to fund the retroactive payments for periods under the operating budget freeze were expended in 2016-2017. The carry-forward from 2016-2017 forms part of the CRA's strategy to address unfunded operating pressures in 2017-2018. This includes the remaining provisions set aside in anticipation of wage settlements for the period under the operating budget freeze for the Professional Institute of the Public Service of Canada bargaining unit as well as the wage re-opener clause for the 2014 and 2015 rates for the PSAC bargaining unit.

Revenues administered by the CRA

Total revenues administered by the CRA amount to $402.4 billion in 2016-2017, an increase of 1.1% from the $398.2 billion administered in 2015-2016.

(dollars) 2016-17 2015-16
Federal government 
242,314,487,000 241,920,498,000
Provincial, territorial governments and First Nations  113,011,965,000  110,020,900,000
Canada Pension Plan  47,041,519,000 46,212,741,000
Total  402,367,971,000 398,154,139,000
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