Tax

Core responsibility

To ensure that Canada's self-assessment tax system is sustained by providing taxpayers with the support and information they need to understand and fulfill their tax obligations, and by taking compliance and enforcement action when necessary to uphold the integrity of the system, offering avenues for redress whenever taxpayers may disagree with an assessment/decision.

Service

Public opinion researchiv shows that Canadians expect the Canada Revenue Agency (CRA) to care about their unique situations, to work hard to help them, and to be proactive and adaptive in meeting their evolving individual needs.

The Agency is committed to strengthening its service culture and ensuring that Canadians receive the information and support they need to meet their tax obligations. Currently, we often work in organizational silos where we do not always adequately consider the client's perspective. This can impede a people-centered approach to our program design. We need to focus on the journey of the taxpayers and benefit recipients who interact with us. To address this issue, we are developing a service agenda that will take a comprehensive view of service.

In the Agency's drive to provide Canadians with the best possible service, one key milestone during the year was the appointment of the CRA's first Chief Service Officer (CSO). The CSO is leading the development and implementation of an overarching and integrated service agenda for the Agency that will put the taxpayer and benefit recipient at the centre of program and service design.

Telephone services

During 2017-18, the CRA's call centres received in excess of 30 million tax (individual and business) calls. Our goal is to ensure that Canadians are able to access our call centres when they need them, and receive accurate and relevant answers to their questions.

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Using the Tax Administration Diagnostic Assessment Tool, the Agency found that it did not meet the TADAT standard of responding to telephone enquiries in a timely fashion.

Action Plan: The Agency has implemented a number of measures, as noted below, to improve the accessibility of its call centres. These measures have already led to some tangible improvements for callers. In 2018-19, as part of a government-wide initiative, the CRA expects to replace its aging telephone infrastructure, resulting in an improved service experience for Canadians.

The 2017 Fall Report of the Office of the Auditor General included the results from an audit of Agency call centres that identified issues with timeliness, accuracy of information provided, and performance reporting. The Agency took immediate steps to improve its call centre service and developed a three-point action plan to address the issues raised by the Auditor General's report. Leveraging the action plan, and with previous investments from Budget 2016, the CRA took a number of measures during the year to improve telephone service and accessibility.

Some key improvements made through the year include:

  • Enhanced the CRA's interactive voice response system in February 2018 by adding a new feature that allows callers to confirm their account balance and last payment details without needing to speak to an agent; over 24,000 calls were served by the new Account Balance automated service
  • Designed a new approach to training and supporting 700 newly-hired agents in 2017
  • Put in place a new national quality assurance team in February 2018 to conduct ongoing evaluations of the quality and accuracy of information that we provide to callers and identify opportunities for continuous improvement
  • Launched immediate feedback surveys, as part of the CRA's Agency-Wide Feedback model, featuring a short touch-tone questionnaire for callers who have completed their interaction with the CRA call centres; feedback from these surveys will help the CRA track call centre service satisfaction
  • Incremental increases in call wait times have allowed more callers to access the telephone system instead of receiving a busy signal.  Our wait times were increased across all business lines, from 2 minutes in 2016-17 to 5 minutes by the end of 2017-18. This has allowed us to reduce the number of call attempts needed to reach an agent or automated service, from an average of 3.3 call attempts in 2015-16 to 2.1 attempts in 2017-18.
  • Consistent with the Agency's stated goal of improving call accessibility, as well as a recommendation from the Auditor General, the CRA has taken several steps to improve Canadians' experience while interacting with our call centres. As was committed to in the CRA's response to the OAG, the CRA is consulting with Canadians through an independent market research firm to determine what Canadians expect in terms of call centre service levels.  Performance indicators, including wait time targets and service standards, will be adjusted following receipt and analysis of the Public Opinion Research study, anticipated by Spring 2019

"Improving service to Canadians is my top priority. We know that Canadians lead busy lives and doing taxes can sometimes be a challenge. This is especially the case for people with reduced mobility, people who live far from service locations and people without Internet access. The CRA is working to make it easier and simpler to find, complete and file a return. The new services we are now providing are more user-friendly and convenient."

– The Honourable Diane Lebouthillier, Minister of National Revenue

The table below provides a breakdown of how calls to our individual and business enquiries call centres were treated in 2017-18:

Breakdown of how calls to our individual and business enquiries call centres were treated in 2017-18
  Number of calls answered by an agent
Number of calls for which the caller opted to self-serve using the automated service Number of calls that were not served; these include calls for which the caller:
Did not opt to self-serve using the automated service Received a busy signal
Individual
7,565,740 5,585,685 10,073,329  955,214
Business 3,028,617 590,766 333,277 4,194,645

During the year, the CRA also took steps to make it easier for Canadians to find and understand basic tax and benefit information online at Canada.ca in order to help reduce the demand for such information placed on the call centres. For example, working in partnership with the Digital Optimization Office at the Treasury Board Secretariat, as well as other areas, the CRA worked on projects to improve web content related to GST/HST and Payroll, and Business Registration and Account Maintenance. 

Campaign pages are another way in which the CRA is making it easier for Canadians to obtain basic tax and benefit information. These pages are used to target specific audiences during relevant periods of the year. For example, the Get Readyv campaign page and Doing Your Taxesvi page to provide all the information a taxpayer needs to file a return, make a payment, and make changes to a return. Campaign pages related to life events such as movingvii, marital status changesviii, and having a childix, or being a newcomer to Canadax, were developed to provide Canadians with the information they need to take action based on these particular circumstance. For the tax-filing season, updates were made to these various campaign pages on Canada.ca.

Key results: Telephone services

  • The CRA improved the accessibility of its telephone services, with 48% of the calls it received during 2017-18 being answered, compared to 36% in 2016-17, as reported by the Auditor General in the Fall 2017 Report
  • We answered 16.8 million income tax and business related calls through agents and automated services
  • Through a dedicated telephone service pilot launched in 2018, tax professionals received effective responses to their complex and specialized calls (in excess of 4,200 calls between July 2017 and June 2018), helping them help their clients and freeing up the CRA's general phone lines for other enquiries
  • Over 24,000 calls were served by the new Account Balance automated service from February 2018 to the end of March 2018 as part of CRA efforts to provide Canadians with a higher standard of call centre service and more self-service options
  • More callers can now wait in queue, extending wait times – the average wait time now exceeds our service standard of 2 minutes – however the wait time has also reduced the number of call attempts attempts needed to reach an agent or automated service from an average of 3.3 attempts in 2015-16 to an average of 2.1 for 2017-18, an important service enhancement for callers
  • In an effort to make ongoing improvements to our services, we monitor caller satisfaction closely and analyze feedback monthly; overall caller satisfaction was reported at 76% (Public opinion research on the CRA's telephone enquiries service is scheduled to take place in 2018‑19 and may have an impact on the Agency's service standards.)
  • With the launch of File my Return, a new automated telephone filing service, the CRA is making it easier and simpler for Canadians with a low or fixed income that is unchanged from year-to-year to file their returns. Beginning in February 2018, over 970,000 eligible individuals were invited to use the new service and file their income tax and benefit return simply by answering a series of short questions and giving some personal information over the phone. File my Return allows all the deductions, benefits, and credits that an eligible individual is entitled to, without having to do calculations or fill out paper forms

Written correspondence

Simplifying the CRA's written correspondence with taxpayers is a significant Agency commitment to service improvement. By the end of 2017-18, the CRA was able to meet its target of simplifying the readability and improving the design of 90% of its written correspondence. Positive client feedback on the changes was received through public opinion research and user testing. The feedback indicated that, through streamlining and simplifying the look of notices, statements, and letters, the CRA had made its correspondence much easier to read and understand.

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Using the Tax Administration Diagnostic Assessment Tool, the Agency found that it does a good job in obtaining feedback through consultations with taxpayer representatives and tax practitioners, which is then taken into account in the design of administrative processes and products.

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Certain populations more vulnerable to poverty–including Indigenous Peoples, seniors and newcomers to Canada–experience barriers to tax filing, such as insufficient access to tax clinics and services, cost of commercial tax help, problems assembling documents, low literacy, and complexity of the tax system. We are making it easier for people to file their taxes and access important credits and benefits that they may not already be receiving.

Key results: Written correspondence

  • Nearly 13 million forms and publications were downloaded
  • Since 2015, 90% of all external correspondence has been redesigned to be simpler and clearer

Digital services

The Agency has developed a Digital Services Strategy to create a service experience for Canadians that is user-centric, secure, and digital from end-to-end.

During 2017-18, the Agency introduced several enhancements to our current digital services to make them even easier for Canadians to use. For example, ReFILE was launched in 2017. It allowed tax preparers to submit their T1 adjustments electronically through their tax software. In February 2018, Phase 2 of the ReFILE service was launched which expanded the service to allow individuals to submit online adjustments to previous year returns with certified NETFILE software; this is much simpler and faster compared to previous practices, where adjustments had to be submitted in paper format.

The Agency also launched a new service in partnership with Employment and Social Development Canada, where Canada Pension Plan recipients can update their direct deposit information with one organization, and their profile will be automatically updated with the other organization.

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In October 2017, the CRA launched a new application called CRA BizApp. This mobile web app offers small Canadian business owners the option to check their recent transactions and balances owing from any mobile device at any time. They can also make payment arrangements knowing that the payment is secure.

Auto-fill my return service was also expanded for the 2018 tax filing season. The service now provides individuals and their authorized representatives with the ability, using certified tax software, to automatically fill in parts of a 2017, 2016, or 2015 income tax and benefit return with the information that the CRA has available. This reduces the time needed to prepare the return, reduces time spent searching for slips and reduces the possibility of transcription errors, making tax filing simpler for clients. As of July 31, 2018, Auto-fill my return service has been used over 9.9 million times during the 2018 filing season.

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In 2017, the Agency introduced the Express NOA service to allow individuals and their authorized representatives to view the notice of assessment in their software. This service was enhanced for the 2018 season to deliver the Express NOA right after the return was received and processed by the CRA. As of July 31, 2018, there have been over 415,000 successful uses of the Express NOA service through EFILE by tax preparers and NETFILE by individuals.

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In 2017-2018, the CRA increased the number of Canadians receiving their tax and benefit correspondence online by integrating the registration for online mail into tax preparation software. The Agency also invested in an online nudge that prompted visitors to the CRA portals to register for online mail. As a result, CRA's online mail service has now delivered over 29 million pieces of correspondence to over 7.2 million individuals and businesses. This has resulted in Canadians getting access to their correspondence quickly and securely and it allows the CRA to offer the type of digital services that our clients expect. It has also allowed the CRA to reduce our paper usage and save on postage.

Recently, the CRA added new electronic options for taxpayers to easily pay their account balances, such as accepting Debit Mastercard when making a payment using CRA's electronic payment service, or using PayPal through a third party service provider.

Key results: Digital services

  • We implemented a strategy to modernize the Agency's online presence and expand the use of social media
  • 1.8 million individuals registered for online mail and over 13.8 million pieces of correspondence were issued online during 2017-18
  • 150,732 businesses registered for online mail and over 934,000 correspondence items were issued online during 2017-18
  • 87.6% of individual returns were filed online for the 2018 filing season; 90% of corporation income tax returns were filed online
  • 89.2% of GST/HST returns were filed online and processed by the CRA
  • 69% of refunds to individuals were made by direct deposit
  • We processed nearly 39 million payments, totalling over $520 billion, and received 82.1% of payments electronically (including payments remitted at financial institutions)
  • We received over 168 million visits to our webpages
  • Although not a digital service, we also reviewed individual returns resulting in 263,551 individuals receiving beneficial taxpayer adjustments in the amount of $109 million

Targeted outreach, collaboration and engagement

As part of the drive to advance a culture of service at the Agency, outreach and communication activities are key to help taxpayers comply with their obligations and ensure Canadians who are entitled to benefits receive them (discussed in the "Benefits" section below). Examples of some of the CRA's targeted outreach and engagement with Canadians include the Serving You Better consultations and the Community Volunteer Income Tax Program (CVITP).

The CVITP has been a true Agency success story. Through community organizations and their volunteers, the Program offers free clinics to help prepare returns for eligible individuals who may not have the means or knowledge to prepare their own. Throughout the year, the CRA increased its targeted messaging to raise awareness of these free tax clinics to low-income Canadians. As the CVITP and outreach efforts have expanded, vulnerable Canadians increasingly have the support necessary to fulfill their tax obligations and access benefits designed to support them. This includes both Indigenous Peoples and newcomers to Canada.

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In Canada, women, youth, and newcomers report lower levels of financial literacy, including levels of comfort with managing their financial affairs. The CVITP helps these individuals, as well as those in low income situations, to file their tax returns and receive their due benefits.

As part of our efforts to reach out to the most vulnerable in Canadian society, the CRA adopted an updated three-year Strategy for Vulnerable Populations in 2017-18. The Strategy encompassed a proposal to expand the CVITP, which involved increasing the number of organizations participating in the CVITP, and supporting year-round clinics. The proposal was included in Budget 2018.

During the year, communication and outreach on the CRA's part was significantly expanded amongst Indigenous Peoples across Canada. During the 2017-18 fiscal year, the Agency, often in partnership with Service Canada, made 402 visits to Indigenous communities to provide information on taxes and on potential benefits and credits available.

The Agency has also focused its targeted outreach on communities in the North. In October 2017, a reportxi on consultations with northern residents was published. The CRA is responding to the issues identified by northern residents and collaborated on a new in-person payment service that allows northern residents to use cash or a debit card at any Canada Post location to remit taxes owed. This helps address limited northern banking and Internet capabilities. The new service was launched by Canada Post in May 2017 for individuals and in July 2017 for businesses and is available in over 3,000 northern and rural locations. 

Meanwhile, the CRA has also worked to improve service to the millions of small and medium business owners in Canada so they spend less time, money, and effort on paperwork. Since 2012, the Serving You Better consultations have been an important collaborative forum for small and medium businesses and professional accountants to share valuable insights with the Agency, which has helped to make the Agency's programs and services more attuned to their needs.

In June 2017, the results of the 2016 Serving You Better consultations were published in a Reportxii with an action plan to improve Agency programs and services for businesses. Action plan commitments completed during 2017 included the launch of the Attach-a-doc service for corporations and the launch of the T2 Auto-fill service.

The Agency also supported the small business community by allowing small business owners to send T4 slips electronically to their employees. This improves efficiency for employers and employees get their slips faster. For this initiative, the Minister received an honourable mention from the Canadian Federation of Independent Business as part of their annual Golden Scissors Award. 

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Using the Tax Administration Diagnostic Assessment Tool, the Agency found that it has taken positive steps in pursuing initiatives to reduce taxpayer compliance costs.

Important engagement with the small and medium business community continues through the Agency's Liaison Officer Program. The Program helps small business owners find the information they need and correct potential errors in their records before they file their tax returns. In  November 2017, the program was expanded to allow small unicorporated businesses across Canada to request in-person visits and group seminars. The program then added GST/HST and payroll components to its basic income tax offer of services. The Liaison Officer program conducted over 8,600 taxpayer visits and delivered 33 seminars to more than 260 taxpayers during 2017-18.

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This program helped me very much and enabled me to avoid major mistakes. The Liaison Officer was very clear, helpful and knowledgeable. I enjoyed having her visit my home, and know for a fact she helped me in preventing serious mistakes on my tax forms in the future.

– This quote was one of many submitted anonymously online through a survey of taxpayers who had received the liaison officer service.

Key results: Targeted outreach, collaboration and engagement

  • We enhanced our regional outreach activities
  • In collaboration with Service Canada, we made 402 visits to Indigenous communities
  • We increased to 246 the number of CVITP community organizations holding clinics on reserves
  • The CVITP assisted 703,463 individuals and helped complete 786,606 tax returns
  • The T2 Auto-fill service was launched and by the end of March 2018, was accessed over 35,000 times by business owners or their authorized representatives
  • The Attach-a-doc service for corporations was launched and, by the end of March 2018, 3,751 documents were submitted through the service.

Service renewal

During the year, the Agency worked to improve its service to Canadians through the Agency's Service Renewal Initiative. This major service model transformation was designed to better align the CRA's operations with its actual business activities. The majority of Canadians now turn to the Internet to file their taxes and the Agency has responded accordingly in order to meet the needs and expectations of taxpayers regarding the use of digital services. In 2017-18, 87.6% of individuals and 90% of corporations filed their tax returns online. We launched the Service Renewal Initiative in late 2016 to respond to this reality and make the transition from an organization that used to handle mostly paper-based transactions to one that now processes transactions that are primarily digital.

As part of the Service Renewal transition, the Agency consolidated its processing activities at fewer sites. Of the nine former processing centres, four–in Winnipeg, Sudbury, Jonquière, and Summerside–were chosen to specialize exclusively in tax return processing. By the end of 2017-18, workload transfers to these sites was virtually complete. There were transitional challenges, particularly the need to ensure proper training, which led to some service delays. Nevertheless, the Agency is already starting to see the benefits of this service model transformation. Some of the benefits are being realized as a result of the three new National Verification and Collections Centres (NVCCs) created in what had previously been tax return processing centres in Surrey, Shawinigan, and St. John's. The NVCCs, where employees focus on collections and verification activities, are now helping the Agency improve its processing times and the handling of calls regarding taxpayer debt to call centres. Overall, Service Renewal is enhancing the ways in which Canadians are able to engage with the Agency.

Key results: Service renewal

  • The Agency consolidated processing activities to fewer sites and created three new National Verification and Collections Centres (NVCCs) in what had previously been processing centres
  • Through NVCCs, where employees specialize in collections and verification activities, the Agency is now helping improve its collections and verification operations

Charities

The Consultation Panel, formed to study the feedback from the public and the charitable sector regarding the rules governing political activities for registered Canadian charities, delivered its Report to the Minister on March 30, 2017. As announced in Budget 2018, the Government will respond to the Report in the coming months.

Meanwhile, on November 6, 2017, the CRA launched an outreach program called the Charities Education Program (CEP), following a successful pilot earlier in the year. The CEP is designed to conduct in-person visits with registered charities, providing them with information and assistance in understanding their tax obligations. Early support and guidance make it easier for charities to meet their obligations and maintain their registered status.

Key results: Charities

  • We processed 84,757 registered charity information returns

Cannabis taxation framework

Budget 2017 announced that a taxation framework would be implemented for recreational cannabis pending its legalization in 2018. Throughout 2017-18, the Agency worked closely with both the Department of Finance and Health Canada to ensure that a framework to assess and collect taxes on the sale of cannabis products will be ready once legislation for legalization takes effect. Proposed legislative amendments in that regard were announced in Budget 2018, and included as part of the Budget Implementation Act. To prepare for legalization and implementation of the taxation framework, the CRA:

  • hired and trained staff
  • initiated system updates
  • prepared a comprehensive communication strategy, including taxpayer outreach materials and a social media campaign
  • drafted new forms and publications
  • developed a rigorous compliance strategy that will include use of an excise stamp

Fuel charge

In Budget 2017, the Government signalled its intention to put in place a federal fuel charge system. The CRA was given the mandate to implement and administer the proposed federal fuel charge program. During the year, the Agency collaborated with the Department of Finance and Environment and Climate Change Canada to develop a program in support of the legislative and regulatory proposals related to the Government's Greenhouse Gas Pollution Pricing Act.

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Research shows that Canadians who are the most vulnerable to poverty, including Indigenous peoples in isolated or rural communities, women, children, and seniors, are less able to cope with the related effects of climate change, such as unexpected increases in the cost of heat, shelter, or food. The CRA will play an important role in administering the proposed federal fuel charge on fossil fuels, which will generate revenue for important federal and provincial government programs to improve social and economic outcomes for all Canadians.

Providing fair and impartial review

When taxpayers are not satisfied with a service or a decision they have received from the CRA, they have the option of a fair and impartial redress process. The ability to obtain an impartial review of decisions made by the CRA helps promote voluntary compliance by fostering trust in the integrity of the CRA.

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Using the Tax Administration Diagnostic Assessment Tool, the Agency found that it has independent, workable, and graduated dispute resolution processes and regularly monitors and analyzes dispute outcomes in the formulation or adjustment of policy, legislation, and administrative procedures. While the Agency acknowledges that the TADAT standard for administrative review (90% of cases completed within 30 days) is ambitious, we have improved our service standards for case resolution and will continue to challenge ourselves through internal review and external consultations.

Action Plan: The Agency will continue to monitor the timeliness of dispute resolution to confirm it continues to meet or surpass the service standard for the resolution of low-complexity objections.

During the reporting period, the Agency successfully implemented important changes to its dispute‑resolution processes, as it continued to implement its Action Plan in response to the recommendations of the 2016 Fall Report of the Auditor General. The CRA published new service standards (see link on page 75) for the resolution of low- and medium-complexity objection files, and taxpayer relief requests. The Agency improved communications to taxpayers by clarifying the appropriate channels available when seeking resolution of their complaints, and made significant advancements on its commitment to implement an electronic delivery of responses to service complaints through secure portals.

Important service enhancements have resulted from feedback received from taxpayers. For example, the CRA's webpage, "Contact the CRA about your debtxiii", was updated with a toll-free telephone number accessible to taxpayers living outside of North America, and a system enhancement was implemented that prompts taxpayers using NETFILE to update their addresses through My Account.

Key results: Providing fair and impartial review

  • We resolved 93,577 income and commodity tax objections, and reduced the inventory of outstanding regular objections by 11,025, or 21%, since March 31, 2016
  • We exceeded the service standard for the resolution of low-complexity objections within 180 days, 80% of the time
  • We cancelled or waived almost $588 million in penalties and interest for 329,486 requests (taxpayer-requested and CRA initiated)
  • We closed 2,303 CPP/EI Appeals to the Minister and 226 appeals were filed before the Tax Court of Canada
  • We resolved 7,620 service complaints, compared to 4,480 resolved in the previous year; for 2017-18, 56% of service complaints were resolved within the 30 business day service standardFootnote 1

Compliance

The Agency strives to treat taxpayers as valued clients and works to provide them with the best possible service. Our objective is to make it easier for taxpayers to comply with Canada's tax laws and make it more difficult for those who choose not to be compliant. Our aim is to administer Canada's tax system effectively and fairly by aligning our compliance approach with the gravity of non-compliance encountered.

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Using the Tax Administration Diagnostic Assessment Tool, the Agency found that it does not systematically consider the impact of its compliance activities on the realization of overall outcomes, such as impact on taxpayer behaviour and sustained voluntary compliance.

Action Plan: Leverage emerging data and technology to better understand where horizontal strategies are needed to mitigate compliance risk. An integrated strategy would see common files addressed collectively by all compliance functions working together.

We support the integrity of Canada's voluntary compliance system and ensure Canadians pay their appropriate share of taxes by identifying non-compliance and pursuing individuals, corporations or trusts that do not file complete tax returns despite a legal obligation to do so. Our compliance interventions follow an escalating approach, from facilitating compliance to enforcing it. We first seek to positively influence compliance attitudes by increasing taxpayers' understanding of their tax obligations through education, targeted outreach activities, client service, social marketing, and communications. If and when these strategies prove ineffective, the Agency will pursue enforcement measures to protect Canada's revenue base, including examinations, audits, and investigations to ensure compliance with Canada's tax laws.

We focus on using tools to assess risks and then focus our activities on the areas of greatest risk. We have also expanded our specialist audit teams who focus on high net worth taxpayers. These teams are comprised of approximately 250 auditors responsible for scrutinizing high income earners and more than 800 high net worth individuals and their associated corporate structures. These experienced auditors are responsible for pursuing a comprehensive audit approach, for both domestic and offshore activities.

Using funding provided in federal budgets, the Agency's compliance and collections activities have overall, as of March 31, 2018, met/exceeded all revenue generation commitments.

Business intelligence and data analytics

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Business intelligence arises from using advanced analytical tools to transform data and information into something more meaningful, such as a better understanding of taxpayer behaviour that can help the CRA make improved strategic and operational decisions. The CRA's use of advanced data analysis techniques to mine the business intelligence it has at its disposal has allowed the Agency to more precisely target non-compliance in a timely manner. By applying business intelligence and data mining techniques, the Agency has developed predictive models that lead to better identification of potential non-compliant taxpayers. This allows the Agency to direct resources toward resolving the highest risk accounts. The ultimate goal, of course, is to foster voluntary compliance and to focus Agency resources on auditing non-compliant taxpayers while allowing compliant taxpayers to carry on their business activity with the least amount of intervention from the CRA.

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Using the Tax Administration Diagnostic Assessment Tool, the Agency found that it undertakes comprehensive intelligence gathering and research to identify compliance risks in respect of its main tax obligations.

To maintain and improve voluntary compliance, the CRA also applies behavioural science techniques through outreach strategies and reinforcement messaging. The Agency's Office Audit Letter Campaign and Industry Campaign Approach (ICA ) are good examples of the practical application of behavioural science. The Office Audit Letter Campaign provides business owners with information about tax requirements in areas of increased risk of non‐compliance. The ICA is engaging industry associations and using tailored information to help design customized tax compliance messaging for specific sectors of the economy to prevent future errors. So far, the ICA has sent customized letters to taxpayers in five different industry sectors (support services of the mining and oil and gas extraction industries, cattle ranching and dairy farming, child daycare services, graphic design services, and hardware stores) to inform and educate these groups on their tax responsibilities.

"We are pleased the Industry Campaign Approach has decided to produce a visual element to accompany the letters, as we had discussed previously. We see this infographic having several benefits – presenting a friendly service-oriented persona for the initiative, simplifying the message into something that is easy to understand and digest (acting almost as a how-to), and is memorable for business owners to refer to over time."

– Mandy D'Autremont (Director, Market Intelligence and Agri-business, Canadian Federation of Independent Business).

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We're here to help!

The Canada Revenue Agency (CRA) wants to help you and your new business get your tax affairs right from the start. By avoiding common mistakes, you can be more confident that you are meeting your tax obligations.

Here are some recommendations to help you throughout the year:

Keep track of your expenses

  • Keep personal and business expense receipts separate
  • Get a receipt for all of your expenses (including those paid in cash) and give a receipt when you sell goods or services for cash
  • Use Form T2042, Statement of Farming Activities, to calculate your farming expenses

Keep track of your depreciable property

  • Track the equipment you buy and sell during the year
  • Refer to Guide T4003, Farming and Fishing Income, at canada.ca/cra-forms-publications for details about capital cost allowance (CCA)
  • Keep your business records for at least six years from the end of the tax year they relate to

Get more information

  • You may wish to talk to a tax professional about your tax situation
  • Manage your tax affairs more efficiently with the CRA's My Account by registering your business at canada.ca/my-cra-account
  • Evaluate your financial performance on Innovation, Science and Economic Development Canada's website at http://www.ic.gc.ca/eic/site/pp-pp.nsf/eng/home
  • Find out more about the Industry Campaign Approach at canada.ca/cra-industry-campaigns

Visit canada.ca/revenue-agency or call 1-800-959-5525

Key results: Business intelligence and data analytics

  • We issued 32,500 letters through the Office Audit Letter Campaign and 21,000 letters through the Industry Campaign Approach to help taxpayers comply

International co-operation

In our global economy, effective tax compliance is best achieved when all countries are contributing and collaborating with each other on a level playing field. The CRA has led efforts to strengthen tax administration capacity in developing countries through our membership in the Organisation for Economic Co-operation and Development (OECD) Forum on Tax Administration (FTA). Since September 2017, the CRA's Commissioner has been serving as the Vice-Chair of the FTA, where he sponsors both the Capacity Building Network and the Large Business and International Programme.

Working with its international counterparts within the Capacity Building Network, the CRA has developed a digital platform prototype to help developing countries increase their knowledge and expertise when it comes to tax administration. When completed, the Knowledge Sharing Platform will provide governments around the world with access to virtual classrooms, networks of experienced tax administrators, and a growing library of global best practices, which will be particularly useful to developing countries. The platform will complement other international tax co‑operation efforts, improving the fairness of the global tax system and promoting growth that works for everyone, including Canadians.

The CRA also plays a lead role in the Large Business and International Program, with an emphasis on co-ordinating work to support the OECD and the Group of 20 Base Erosion and Profit Shifting (BEPS) Project. Through our participation in the FTA and other international fora, our leadership in using data to risk assess large multinationals has been recognized. Also, the CRA has been able to share worthwhile insights and best practices on how to address issues related to base erosion and profit shifting and aggressive tax planning by multinational corporations.

In 2017‑2018 the CRA made preparations to host the 52nd Inter-American Center of Tax Administrations (CIAT) General Assembly. Close to 200 delegates from almost 50 countries and numerous international tax organizations met in Ottawa to discuss the conference theme of World Class Tax Administration – "Fostering successful relationships with key stakeholders both domestically and internationally".

The CRA is also a member of the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), a network of 38 of the world's national tax administrations. JITSIC provides a platform for advanced tax administrations to share intelligence and work together to tackle common risks and help facilitate effective responses to key emerging issues for tax administrations. Through JITSIC, the CRA is working extensively with international partners to promote and coordinate strategies and actions, including joint compliance action, to ensure that individuals and multinationals are paying their fair share of tax.

Common reporting standard

The automatic exchange of information with respect to financial accounts held by non-residents—under the framework of the Common Reporting Standard (CRS) developed by the OECD—is an important tool to promote compliance, combat international tax evasion and aggressive tax avoidance, and ensure that taxpayers are reporting their income from all sources. Canada's legislation to implement the CRS entered into force as of July 1, 2017. Since that date, financial institutions have had to identify reportable accounts held by or for non-residents, and to report these accounts to the CRA on an annual basis.

Canada's first exchanges of CRS information with other countries began in September 2018. Information filed relates to foreign account holders and includes details such as taxpayer names, addresses, birth information, tax identification numbers, and account balances. The confidentiality of exchanged information is protected by the inclusion of safeguards to ensure the information is used only by tax authorities and only for tax compliance purposes.

Canada's exchanges of CRS information allow the CRA to gain easier access to information on Canadians' overseas bank accounts. With the implementation of CRS, Canada and over 100 other countries will be exchanging financial account information. This information will help us connect the dots and identify instances where Canadians hide money in offshore accounts to avoid paying taxes.

Base erosion and profit-shifting Project

The OECD defines Base erosion and profit-shifting (BEPS) as tax planning by multinational enterprises that exploits gaps in tax rules. Work is currently underway with international partners and the government is collaborating on the action plan for the OECD/G20 BEPS project. One of the key initiatives that Canada helped to implement in 2017‑18 is country-by-country reporting.

The objective of country-by-country (CbC) reporting is to increase transparency of the global operations of large multinational enterprises. CbC reports are generally filed in the jurisdiction of the tax residence of the ultimate parent entity of the multinational enterprise group, then shared between jurisdictions through the automatic exchange of information, in accordance with government-to-government agreements.

By the end of January 2018, 68 countries had signed an agreement on the exchange of CbC reports—the Multilateral Competent Authority Agreement (MCAA). Canada has activated the CbC reports/MCAA with 46 jurisdictions to date and received its first CbC reports in November and December of 2017. Canada began its first exchange of CbC reports with other jurisdictions in 2018. By sharing information with our partners, we are making it more difficult for corporations to shift their profits offshore to avoid paying their fair share.

International, large business, and offshore compliance activities, including aggressive tax avoidance

To help combat tax evasion and aggressive tax avoidance, the Government made a combined investment of over $1 billion in the 2016, 2017, and 2018 federal budgets. This unprecedented investment has allowed the CRA to continue to expand the tools it has to target those who try to aggressively avoid paying their fair share of tax, thus taking resources away from the services that improve the quality of life of all Canadians.

With our new systems, we are increasingly able to automatically access and review all international electronic funds transfers (EFT) over $10,000 entering or leaving the country. This represents over 1 million transactions each month. Reviewing these transfers helps us identify transactions on which taxes should potentially have been paid, and better risk-assess individuals and businesses.

Since January 1, 2015, financial institutions have been required to report to the CRA all international EFTs of $10,000 or more. As of March 31, 2018, the CRA had analysed over 187,000 EFTs, worth over $177 billion, related to eight jurisdictions or financial institutions of concern. 

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Strengthening the Agency's approach to tax avoidance can indirectly impact levels of public social spending to improve outcomes for the most vulnerable low-income segments of the Canadian population, particularly for women in Canada generally, and female single-parents in particular, whose earnings are more likely than their male counterparts to include non-employment income, such as government benefits and transfers.

The Agency's review of the Panama Papers has already identified over 3,330 offshore entities with 2,670 possible beneficial owners that have some link to Canada. The Agency has reviewed and risk-assessed over 80% of these possible beneficial owners. The Agency is currently auditing over 1,100 taxpayers with offshore links, and 10% of these relate to the Panama Papers.

As of March 31, 2018, the Agency had 50 cases of offshore tax evasion under investigation. These include several related to the Panama Papers, whereby multiple search warrants have been executed.

Building on the foundation established in addressing the Panama Papers, the Agency has begun to review the more recent Paradise Papers. For both sets of Papers, the CRA will share information with treaty partners and take appropriate actions to ensure compliance with tax laws. These actions include conducting criminal investigations into tax evasion, tax fraud, and other serious violations of tax laws, and, where warranted, referring files to the Public Prosecution Service of Canada (PPSC) for criminal prosecution. Upon conviction, tax evaders face court imposed fines, jail time, and publicity of their conviction, in addition to having to pay the taxes they tried to evade, plus interest and penalties.

Key results: International, large business and offshore compliance activities, including aggressive tax avoidance

  • We completed almost 5,600 international and large business audits, which includes over 2,700 aggressive tax planning audits and 235 offshore audits
  • Our international and large business audit activities identified almost $8 billion in fiscal impactFootnote 2, including $2.9 billion from our efforts to combat aggressive tax planning
  • As part of our budget investments, we have significantly exceeded our target results of $319.5 million and identified $500 million in additional taxes
  • We levied more than $189 million in transfer-pricing penalties
  • We levied approximately $21 million in income tax third party penalties
  • We received 196 calls and 93 written submissions through our Offshore Tax Informant Program
  • We received approximately 14.9 million reports of electronic funds transfers over $10,000

GST/HST Program

There are over 3.5 million GST/HST registrants in Canada and each year the CRA receives approximately 2 million GST/HST refund and rebate claims totalling about $47 billion, some of which are false.

Funding from Budget 2016 has allowed the CRA to hire more auditors and acquire enhanced technology and business intelligence tools to identify and profile questionable or abusive GST/HST schemes. From April 1, 2016, to March 31, 2017, additional audit resources were assigned to identify unwarranted GST/HST refunds, as well as to counter the organized abusive schemes used by GST/HST registrants. Over $223.9 million in refunds were denied and an additional $302.4 million in GST/HST was assessed for a total fiscal impact of $526.4 million as a result of Budget 2016 funding.

Key results: GST/HST Program

  • We completed over 70,000 GST/HST audits and examinations
  • The fiscal impact of our GST/HST audits was $3.5 billion
  • We prevented over $1.27 billion in unwarranted GST/HST refunds being paid, which is included in the $3.5 billion in fiscal impact
  • We completed 79 GST/HST accounts involving carousel / missing trader schemes and assessed $168.1 million, an amount that also includes gross negligence penalties
  • We assessed over $64 million in gross negligence penalties, and one third party civil penalty of $27.5 million

Underground economy

The underground economy (UE) consists of economic activity or transactions in goods and services that are partially or entirely hidden from the government in order to avoid paying taxes and other government reporting obligations (such as employment insurance and Canada Pension Plan contributions).

In 2013, the last year for which the UE was estimated, UE activity totalled $45.6 billion in Canada, or about 2.4% of gross domestic product (Statistics Canada Study on the Underground Economy in Canada, 1992-2013xiv). One of the ways the CRA gains insight on the UE is by consulting with industry groups through the Minister's Underground Economy Advisory Committee. Input from the Advisory Committee has helped to inform the development of a strategy on the UE. In 2017-18, the Agency completed the third year of its three-year UE strategy, Reducing Participation in the UE. The next three-year UE strategy will focus on three broad themes, which will direct the Agency's approach to tackling UE activities from 2018-19 to 2020-21. These themes are:

  1. Social acceptability and engaged citizenship
  2. Leveraging third party data and information
  3. New business models and transacting in the digital age

Meanwhile, the CRA is currently exploring new initiatives/policy changes that may result in a quicker response from participants compared to traditional methods to deter participation in the underground economy (UE). These initiatives are currently at the proposal stage.

Key results: Underground economy

  • We conducted over 4,100 income tax and GST/HST audits related to the UE and identified $1.8 billion in unreported income
  • Our income tax and GST/HST audits resulted in additional taxes assessed of $683 million, including over $96 million in penalties
  • In addition to audits, initiatives focusing on non-filers resulted in almost 40,000 assessed returns totalling close to $454 million
  • We held two meetings (November 2017 and May 2018) with the Minister's Underground Economy Advisory Committee

Real estate transactions

For several years the CRA has conducted compliance activities across the country regarding real estate transactions, where a risk of tax non-compliance has been identified. While the CRA has no influence over the market-based or economic forces that influence the cost of housing and associated rising real estate prices, there is an increased risk of non-compliance in real estate transactions, which the Agency continues to pursue.

Over a three year period, from April 2015 to March 2018, the CRA completed close to 31,000 real estate files in British Columbia and Ontario, which resulted in almost $600 million in audit assessments.

In an effort to better identify tax non-compliance in real estate transactions, the CRA issued unnamed persons requirements to property developers and builders that have information about buyers involved in an assignment sale. This information is being used to identify taxpayers who may not be reporting correctly for both income tax purposes and GST/HST purposes. Since 2015, the CRA issued 48 unnamed persons requirements to various developers in high-risk areas of Ontario and British Columbia, and successfully identified unreported income associated with assignment sales.

The CRA provides quarterly updates on the results that it is achieving in combatting real estate tax non-compliance on its websitexv

Voluntary Disclosures Program

The Voluntary Disclosures Program (VDP) helps taxpayers by giving them the opportunity to voluntarily come forward and correct a tax return previously filed, or file a return that should have been submitted.

In 2017, the CRA undertook a comprehensive review of the VDP in response to the Sixth Report of the Standing Committee on Finance—The CRA, Tax Avoidance and Tax Evasion: Recommended Action. This review also benefitted from advice and recommendations from the Minister's Offshore Compliance Advisory Committee (OCAC). On March 1, 2018, changes to the VDP came into effect, making it more difficult for those who intentionally avoid their tax obligations to use the VDP. 

Details about the new requirements under the VDP can be found on the following Canada.ca webpage: Voluntary Disclosures Programxvi.

Key results: Voluntary Disclosures Program

  • We received more than 19,000 voluntary disclosures and generated more than $1.3 billion in previously unreported income through voluntary disclosures; more than $573 million of that amount resulted from offshore disclosures

Criminal investigations

The CRA's criminal investigators work closely with other federal law enforcement agencies to make sure the most serious cases of tax evasion and fraud are thoroughly investigated and referred to the Public Prosecution Service of Canada (PPSC) for criminal prosecution.

Over the years, tax crimes have evolved in their level of sophistication and complexity; this means the CRA has had to adapt and undertake new techniques and methods to detect and deter criminal non-compliance and protect Canada's revenue base.

To demonstrate the Agency's commitment to transparency with its criminal investigations, a number of steps were taken to enhance communications:

  • publishing news releases for all convictions on canada.caxvii
  • increasing public reporting of efforts to crack down on tax evasion
  • publishing short videos to raise awareness on the seriousness and consequences of tax evasion
  • using social media to increase the visibility of convictions  

As of March 31, 2018, there were 50 ongoing criminal investigations related to offshore financial structures. These numbers demonstrate the extent to which focused resources, improved selection of cases, and better techniques and tools, are addressing the concerns of Canadians relating to money and assets hidden offshore and promoters of tax schemes that negatively impact taxpayers.

Key results: Criminal investigations

  • From April 1, 2017 to March 31, 2018, working with the CRA's Criminal Investigations Program, federal prosecutors achieved a 95% conviction rate, compared to 89% in 2016-17
  • During this same period, the work of CRA criminal investigators led to the conviction of 27 taxpayers for tax evasion, involving over $45 million in federal tax evaded, and more than $3.1 million in criminal fines imposed. The courts sentenced 14 taxpayers to prison terms totalling 40.7 years
  • In addition, there were:
    • 269 cases referred for criminal investigation
    • 172 search warrants executed
    • 52 files where criminal charges were laid under the Income Tax Act, Excise Tax Act, Excise Act and/or Criminal Code
    • 12 investigations resulted from joint-forces operations with law enforcement agencies

Collections

Managing tax debt is critical to protecting Canada's revenue base and providing governments across Canada with the revenue needed to support programs and priorities.

For 2017-18, the CRA resolvedFootnote 3 just under $58 billion in tax debt, which represents an increase of 11% of tax debt resolved compared to 2016-17. Of this total, $55.2 billion was tax collected and $2.7 billion was written-off. The Agency continued to maximize its use of Budget 2016 funding by resolving an additional $1.1 billion in outstanding tax debts. It is expected that funding from that Budget will lead to the resolution of an additional $7.4 billion in tax debt by 2020-21. The rate of growth in the tax debt remained relatively stable year-over-year at 5.63%, despite intake increasing from an historic 7% to over 13% in 2017-18. The Agency will continue to address the challenge of managing the tax debt given the significance that tax revenues have in sustaining Canada's many programs and services. 

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Using the Tax Administration Diagnostic Assessment Tool, the Agency found that the debt is projected to continue to grow and age for the foreseeable future. The tax debt represents about 11% of total tax revenues and almost 60% of the calculated tax debt is over 12 months in age.

Action Plan: The Agency's plans are outlined below.

To improve the accessibility of the Agency to taxpayers who wish to discuss resolving a debt, taxpayers can now arrange for a call from an agent at a time that is convenient for them. This new service contributes to achieving our goal to improve service and encourages taxpayers to resolve their tax debts in a timely manner.

Key results: Collections

  • We collected an additional $1.1 billion in debt in 2017‑18 as a result of 2016 Federal Budget investments

Tax performance indicators

Departmental result: Canadians comply with tax obligations, non-compliance is addressed, and Canadians have access to appropriate mechanisms for resolving disputes

Tax performance indicators
Departmental Result indicator
Target 2017-18 result 2016-17 result 2015-16 result
Percentage of filers who have filed an individual tax return by the due dateFootnote 4
90% 91% 91% 92.8%
Percentage of known businesses registered for GST/HST
90%
94.9% 94.9% 94%
Percentage of reported taxes (including instalments) and source deductions that are paid on time
90%

92.4%Footnote 5

84.8%Footnote 6

93.1%Footnote 5

84.4%Footnote 6

94%Footnote 5

85.8%Footnote 6

Percentage of external service standards targets that are met or mostly metFootnote 7 90%
80% 85% 91.5%
Public Perception IndexFootnote 8: score compared to baseline
Maintain or increase 6.28 (Decrease) 6.73 (Increase) N/A
Percentage of total volume of improved correspondence (i.e. changes to structure, design, language, and format)
90%
90% 75% N/A
Percentage of services available online
77%
77% N/A N/A
Number of Community Volunteer Income Tax Program returns completedFootnote 9   
800,000
786,606 768,349 749,963
Complete an online consultation open to charities and the public   
March 2018
N/A Completed in March 2017 N/A
Incremental revenue resulting from federal budgetFootnote 10 investments
$1.1BFootnote 11
$1.6B N/A N/A
Incremental debt collected (resolved) resulting from Budget 2016 investments
$7.4B over 5 years
$1.1BFootnote 12 $0.47B N/A

Tax spending and human resources

Budgetary financial resources (dollars)
2017-18
Main Estimates
2017-18
Planned spending
2017-18
Total authorities available for useFootnote 13
2017-18
Actual spendingFootnote 14 (authorities used)
2017-18
Difference (Actual spending minus Planned spending)
2,737,078,407 2,737,078,407 3,169,626,064 3,145,344,608 408,266,201
Human resources (full-time equivalents)Footnote 15
2017-18
Planned full-time equivalents
2017-18
Actual full-time equivalents
2017-18
Difference (Actual full-time equivalents minus
Planned full-time equivalents)
30,104 30,399 295
Supporting information on planned expenditures, human resources, and results related to the CRA's Program Inventory is available in the GC InfoBasexix.
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