Operating context and key risks

Operating context

The CRA delivers its core responsibilities by administering tax and benefit legislation enacted by Parliament and provincial and territorial legislatures, in collaboration with the Department of Finance Canada, and in alignment with Government of Canada priorities.

Tax evasion and aggressive tax avoidance are complex global priorities for tax administrations around the world. The Government of Canada made significant investments in Budgets 2016 and 2017 to address these priorities and improve tax compliance. These investments are being used to fund new initiatives and extend existing programs that ensure our tax system is fair and equitable for all Canadians, and to increase our capacity for global collaboration.

The CRA continues to target tax avoidance schemes and the underground economy. We increased targeted research and improved our business intelligence. We used information from many external sources, including the Panama and Paradise papers to identify potential non-compliance issues.

In 2017-18, the Government continued to deliver on its commitment to study the tax gap and published a report on individual income tax non-compliance. The publication of tax gap estimates and methods provides information to the Government of Canada and the public on tax non-compliance and the Agency's compliance efforts, while helping to deliver on the Government's commitment to transparency. Understanding how and why taxpayers are non-compliant is critical to addressing that non-compliance to preserve the integrity of the tax system and protect Canada's revenue base.

We also analysed data to identify patterns and predict outcomes in order to ensure an appropriate response to technological change, protect the security of personal information, and respond to cyber threats, as well as improving digital service to assist Canadians.

Like all government departments, the Agency is also affected by the Phoenix pay system issues. While impacts on CRA employees are fewer than in other departments, they are nonetheless significant and difficult for those affected. Our compensation advisors have worked very hard to minimize the impacts of Phoenix. The CRA is also an active member of public service committees of senior officials created to monitor and correct problems related to Phoenix. We have maintained a commitment to constant communication with our employees on challenges and progress.

Focus on experimentation, Gender-based Analysis Plus, and the World-Class Tax and Benefits Administration initiative

Key risks

The CRA's mature risk management process regularly scans, identifies, and assesses key enterprise risks to manage unexpected events and seek solutions.

The table on the next page highlights some of the key risks that could impact the CRA's ability to meet its objectives and priorities owing to the influence of a number of emerging global trends. These trends include the increasing prevalence and sophistication of cyber threats, which could lead to the unauthorized use of information, global economic uncertainty, changes in digital commerce such as the adoption of digital currencies and online payment systems, and taxpayer's expectations for seamless digital interactions and services. Further on the horizon, new technologies such as cloud computing, blockchain, artificial intelligence and robotics may change Canada's economy and the CRA's way of doing business.

There are also risks in the internal environment. Continuing to enhance business intelligence though the secure management of the CRA's data assets is critical, particularly in areas such a compliance and collections. The Agency's workforce is aging, making knowledge-transfer, leadership development and training even more important. However, this trend is also a unique opportunity to reshape the workforce to meet the evolving business practices and environment of the CRA. In many ways, the pace of change of the CRA's environment is accelerating. As such the CRA is focused on its agility, ensuring that the organization works in a coordinated and horizontal fashion, so that commitments are met, expected outcomes are achieved and the CRA acts swiftly and fairly in the face of uncertainty.

Effectiveness of risk implementation strategies

The Agency Management Committee assesses the Agency's enterprise risk on an annual basis, determining the effectiveness of controls and, where necessary, risk mitigation strategies. The CRA has built a risk tolerance methodology to appropriately target resources to areas in need of more attention. The Agency follows a mature risk action plan and follow-up process to implement these strategies, based on the anticipation that they will respond to each risk effectively and reduce the risk's impact and likelihood of occurring.