2018–19 Departmental Results Report

From: Canada Revenue Agency

This report begins by addressing the operating context and risks associated with meeting our core responsibilities. It then presents our key results for tax, benefits and internal services.

Throughout this report, we highlight four areas of focus for the Canada Revenue Agency (CRA), wherever you see the following logos:

CRA at a glance

* Canada child benefits payment information was transferred to Public Services and Procurement Canada to make direct deposits or to issue cheques for distribution on the scheduled benefit payment date.
** 2019 tax-filing season
*** Returns completed by May 15, 2019

Raison d'être, mandate and role

Raison d'être

The Minister of National Revenue is responsible for the Canada Revenue Agency (CRA). The CRA administers tax, benefits, and related programs for governments across Canada. In carrying out its role, the CRA contributes to the economic and social well-being of Canadians by promoting voluntary participation in our tax system. The CRA makes sure that:

• Canadians comply with their tax obligations
• Canadians receive the benefits to which they are entitled
• Non-compliance is addressed
• Canadians have access to appropriate mechanisms for resolving disputes

Mandate and role

The CRA's mandate is to make sure that Canadians pay their required share of taxes and receive their rightful share of benefits. In fulfilling its core responsibilities, the CRA administers the Income Tax Act, the Excise Tax Act and the Excise Act; collects taxes on behalf of provinces and territories, collects certain non-tax debts for the federal government and administers legislation relating to the Canada Pension Plan and the employment insurance program.

For more general information about the CRA, see the Supplementary information section of this report. For more information on mandate letter commitments, see the Minister's mandate letter.

Operating context and key risks

Transforming service

Service is an integral part of the CRA's operations and the CRA is committed to providing Canadian taxpayers and benefit recipients with the best possible service. Advances in technology and Canada's shifting demographics are changing the ways in which Canadians expect services to be provided.

To respond to the changing needs and service expectations of its clients, the CRA embarked on a journey to become a more client-centric organization. The CRA wants to ensure that it can deliver the best possible service experience for Canadians. We aim to be trusted, fair and helpful by putting people first, whether it is in how we process and review tax returns, deliver benefit and credit payments, or provide advice and support over the phone or in writing.

The CRA's clients are telling the Agency it needs to modernize its service offerings by leveraging new technologies to meet their expectations of how the CRA will interact with them. By encouraging both continuous improvement and exploring ways to leverage emerging technologies, the Agency is innovating to maximize the quality and efficiency of its services. In keeping with the Government of Canada's policy of digital first, the Agency is enhancing its digital services to make them increasingly available anytime, anywhere and on any device. By working with clients the CRA is ensuring that its policies the CRA is ensuring that its policies, programs, and services are designed and delivered in ways that uphold its commitment to the client experience being at the centre of everything it does.

In transforming itself into a client-focused organization, the Agency is also examining its internal processes and structures closely. This involves breaking down organizational silos, improving internal communications, and taking the necessary steps to foster a productive and engaged workforce where employees feel a sense of responsibility, and are supported to serve others.

Maintaining the fairness and integrity of Canada's tax system

Trust in public institutions is vital for governments to function and serve society well. The CRA seeks to apply the law equitably to maintain the fairness of Canada's self assessment system to build trust and promote compliance with Canada's tax laws.

Significant non-compliance, including in the underground economy and with aggressive tax avoidance, can place the integrity and fairness of Canada's tax system at significant risk. Complex tax evasion and aggressive tax avoidance schemes on the international scale remained a key focus area for the CRA as it has for other tax administrations around the world. Investments from Budget 2016 and Budget 2017 helped increase the CRA's capacity to address these areas and also increase its capacity for global collaboration. The funding also helped the CRA work on initiatives to gain better data and improve our business intelligence, thus taking on a more targeted and risk based approach to compliance, and, in turn, improving how fairly we administer tax and benefits programs.

Key risks

Identifying and mitigating risk helps the CRA to optimize outcomes, prioritize strategies and adapt for the future.

The 2018–19 risk assessment results suggested that the CRA's environment was becoming increasingly uncertain. The following table highlights the key risks influenced by internal and external trends that had the potential to impact the CRA's ability to meet its objectives and priorities. It also illustrates which of the core responsibilities each risk has a potential to impact.

The external environment is rapidly changing, and as the CRA advances in a world that is becoming more digital and connected, there is a need to remain proactive in addressing current and new sophisticated cyber threats. Global economic uncertainty and changes in digital commerce, such as the adoption of digital currencies and online payment systems can also impact the CRA's ability to deliver services, while its vast information holdings make it a target for cybercrime.  

Taxpayer Bill of Rights

This Taxpayer Bill of Rights represents the CRA's commitment to providing clients with the best possible service. At all times, clients can expect to see us uphold these rights. They have the option of communicating with the Office of the Taxpayer's Ombudsman when the CRA's formal channels are not sufficient.

Service

Our clients rely on the CRA's service offerings to fulfill their tax obligations. In 2018–19, we embarked on a service transformation journey, adopting a client-focused approach to the design and delivery of our internal and external programs and services. This journey involved engagement sessions with employees and the creation of an external advisory panel on service, comprising experts from public, private and not-for-profit sectors, to advise on emerging trends and practices. The feedback we collected from these consultations is assisting us in effectively designing and delivering programs and services. This ongoing effort is intended to lead to a better client experience, which will make it easier for clients to meet their tax obligations.

Telephone services and written correspondence

Many Canadians rely on traditional methods, like telephones and written correspondence, to communicate with us. In his 2017 report, the Auditor General of Canada indicated clients had trouble getting through our phone lines, and when they did, sometimes received inaccurate answers to their questions.

To address the Auditor General's findings and ensure Canadians received timely and accurate information that is easy to understand, in 2018–19, we:

• modernized our individual tax, business and benefits enquiries telephone systems to provide a better service experience to callers, using technology that offers many features, including:
  • providing callers with estimated wait times so they can make an informed decision about whether to stay on the line to speak to a CRA agent, use our automated service system, or call back
  • creating national queues so that callers can speak to the next available agent, anywhere in the country
• reviewed call recordings to improve the quality and accuracy of responses given to callers
• improved the service given to northern residents through two dedicated telephone lines, one for individuals and one for businesses, serviced by CRA agents familiar with northern tax matters

Throughout the year, we pursued improvements to our written correspondence. We delivered on our ongoing commitment to simplify the wording of letters we send to clients, making it easier to understand tax matters and for them to voluntarily comply. We also made it easier to access correspondence we send to clients online.

Proactive outreach, collaboration and education

The CRA uses proactive outreach and education to inform Canadians of their tax obligations and how to access our services. In 2018–19, we collaborated with our clients to find out what they need to make it easier to comply. We also collaborated with other government departments to implement new legislation.

The Government of Canada recognized the value of the important partnership with community organizations across the country. Budget 2018 allocated significant investments in the Community Volunteer Income Tax Program (CVITP). This allows us to work with community organizations and train volunteers to file tax returns to help more people meet their tax obligations.

In 2018–19, the CRA expanded the Liaison Officer Service following a successful pilot that included visits and seminars related to carrying on business in northern Canada. This service also continued to offer in-person support and guidance to small businesses and self‑employed individuals nationally. This helps them understand their tax obligations and avoid common errors that could end up costing time and money.

In 2018–19, we:

• expanded the CVITP and outreach programs by providing support to community organizations to hold free CVITP clinics year-round and by conducting more outreach activities to vulnerable population segments
• partnered with applicable provinces and territories to administer, on their behalf, carbon pricing rebates for eligible individuals and deliver the climate action incentive payment with the 2018 income tax and benefit returns filed by residents of Saskatchewan, Manitoba, Ontario, and New Brunswick in the 2019 tax filing season

• produced ten webinars from January 2018 to March 2019, including "Canada Pension Plan (CPP) Enhancement and You," which are available on the Canada.ca website
• produced four podcasts, including a two-part series on the Small Business Deduction
• conducted the 2018 Serving You Better consultations with small and medium businesses and their service providers, encouraging them to share their feedback on ways the CRA could improve programs and services by making them more streamlined and client-focused; we will implement recommended improvements by 2021

• collaborated with other departments and industry representatives to:
  • develop and implement an excise duty taxation regime in support of the Government of Canada's framework on cannabis legalization
  • assist the cannabis industry in getting ready for October 17, 2018, the date of legalized cannabis; by year-end, the CRA had licensed 148 sites to produce or package cannabis products
  • develop and implement a fuel charge regime in support of the Government of Canada’s commitment on carbon pollution pricing
  • engage industry representatives through webinars, publications, meetings and outreach activities to ensure members were aware of their obligations under the Greenhouse Gas Pollution Pricing Act, and assist the industry in getting ready for the April 1, 2019, implementation date; the CRA has registered more than 8,100 accounts under this Act, as of March 31, 2019
  • establish the permanent Advisory Committee on the Charitable Sector, made up of stakeholders from the charitable sector, which will provide advice to the CRA on important and emerging issues facing charities on an ongoing basis
  • support the amendments to the Income Tax Act that limit the non‑partisan political activities of charities
  • implement the Charities Education Program, conducting in-person education visits to registered charities and providing them with information and assistance in understanding their obligations under the Income Tax Act

Digital services

Many Canadians prefer to access services digitally, and they expect those services to be easy to use. To meet their expectations in an ever-evolving environment, this year we launched new digital services, and enhanced existing ones, with the goal of simplifying the tax filing experience for Canadians. We also made other improvements to streamline how clients interact with us. In 2018–19, we:

• introduced the "Find a tax clinic" application on Canada.ca, making it easier for taxpayers to find a CVITP clinic
• introduced the ability to use "Auto-fill my return" with the tax-filing software we provide to CVITP volunteers, simplifying the process of filing returns and improving accuracy by automatically filling in parts of returns with information the CRA has on hand
• enhanced options for clients to request or submit documents electronically:
  • business owners and authorized representatives can now create their own filing and balance confirmation letters online to obtain a compliance summary for all their program accounts
  • tax preparers can submit business authorization requests, which are validated and processed in real time, providing tax preparers immediate access to their clients' accounts
  • taxpayers who use goods and services tax/harmonized sales tax (GST/HST) Internet File Transfer software can register for online mail
  • taxpayers can digitally file for GST/HST new housing rebates
  • Canadian business owners going through a trust account examination can submit their books and records electronically through My Business Account and Represent a Client portals

• continued collaborating with Employment and Social Development Canada on the direct deposit address information sharing initiative for over 647,787 Canada Pension Plan (CPP) recipients; this initiative is an example of simplifying access to services for clients
• merged the online mail and Account Alerts services to improve email notifications for Canadians; registered users will receive email notifications when there is new mail to view in My Account and in My Business Account, and when important changes are made to their account
• launched a new and improved My Account in October 2018, based on user experience design and testing; this redesigned secure online portal makes it easier for clients to find the information they need and to interact with the CRA

• continued to provide new online payment methods, adding Interac eTransfer and PayPal as options this year, ensuring individuals and businesses can use the method they find most convenient and safe
• improved content on Canada.ca for clients' tasks related to GST/HST, payroll, business registration and account maintenance to help them find the correct information and successfully complete their tasks

Fair and impartial review

Clients have the right to disagree with the decisions we make regarding their tax situation, and they should be able to use a simple, fair process to request impartial review. In addition, when dissatisfied with the level of service the CRA provides, clients can lodge complaints related to service and expect to receive a response that directly addresses their concerns. The CRA can also grant relief by cancelling or waiving penalties and interest to help clients who may not be able to meet their tax obligations because of circumstances beyond their control. To improve these processes for our clients, in 2018–19 we:

• established a new service standard for the resolution of medium-complexity objections to give clients greater certainty about when they can expect their objection to be resolved
• revised the cancellation or waiver of penalties and interest form in June 2019, to make it easier for clients to complete their request

• implemented a continuous improvement approach to Canada Pension Plan and employment insurance disputes that reduced duplication and internal delays by eliminating the number of steps in some processes by as much as 62%
• implemented digital delivery of responses to service complaints through the My Account and My Business Account secure portals; since the launch of this service and as of March 29, 2019, we have issued 900 letters through our portals

Compliance

The CRA's compliance programs continue to focus on taxpayers who are most likely not to comply with their tax obligations. In 2018–19, the CRA used significant investments from Budget 2016 and Budget 2017 to support its compliance efforts. Better data and more advanced analytics have allowed the CRA to target its audits on the files with the greatest fiscal impact for Canadians, while at the same time reducing the total number of compliance activities it undertakes. As indicated in the graphic titled "Compliance", the CRA conducted 23% fewer audits in 2018–19 compared to four years ago, while re-assessing a record $14.4B in additional gross taxes, including penalties. Over $8.6 billion, or 60% of these results came from audits of large multinational enterprises and high-net-worth individuals, including those engaged in aggressive tax planning using offshore structures.

This trend of improved results was corroborated by findings from the Office of the Auditor General of Canada (OAG). In its 2018 Fall Report on Compliance Activities—Canada Revenue Agency, the OAG found that while we have opportunities to enhance timeliness and consistency in our audits, the additional revenues from CRA compliance activities had increased by almost 60%^{Footnote 1} from 2013–14 to 2017–18.

Addessing aggressive tax planning and offshore non-compliance

The CRA seeks to prevent anyone from avoiding their tax obligations through aggressive tax planning or by using bank accounts outside Canada. In 2018–19, we:

• assessed over $750 million in additional gross federal taxes through audit programs focusing on offshore non-compliance, aggressive tax planning, and high-net-worth individuals and their economic entities
• reviewed and risk-assessed over 80% of the beneficial owners listed in the "Panama Papers" who may have ties to Canada
• published a report in the CRA's Tax Gap series, titled "International Tax Gap and Compliance Results for the Federal Personal Income Tax System", presenting the CRA's estimation of the extent of potential revenue loss from hidden offshore investments, and the CRA's activities that aim to reduce the international tax gap

Criminal investigations

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

In June 2018, Canada hosted the inaugural meeting of the Joints Chiefs of Global Tax Enforcement (J5), an international group formed to tackle enablers and promoters of international tax crime composed of tax experts from five countries: Australia, Canada, the Netherlands, the United Kingdom and the United States. In 2018–19, we:

• continued to develop a performance indicator that measures the impact of our focus on the most complex criminal investigations (involving international schemes, potential money laundering, etc.), which we intend to include in future Departmental Results Reports
• researched and explored international tools for training investigators to detect financial crimes on the dark web
• executed search warrants in relation to a $77 million offshore tax evasion case; this investigation is one of 52 international and offshore tax evasion cases that the CRA undertook
• continued to publish enforcement notifications and news releases to keep Canadians informed of the execution of search warrants, convictions, and the laying of criminal charges against tax evaders and money launderers
  • On February 12, 2019, the CRA published an enforcement notification announcing that it had collaborated with the Royal Canadian Mounted Police on Project Collecteur, an investigation of a major money laundering network; the joint investigation led to the execution of search warrants and the arrest of 17 individuals in the greater Montreal and Toronto areas

The underground economy

The underground economy (UE) includes any business activity in Canada that is not reported to the CRA in full, including sales that are paid for under the table. In October 2018, Statistics Canada estimated that underground economic activity in Canada totalled $51.6 billion, or 2.5% of gross domestic product. UE activity negatively affects economic growth in Canada and reduces tax revenues for all levels of government, which puts pressure on their ability to provide the services that Canadians enjoy and expect. Over the last four years, the CRA identified over $4 billion in unreported income related to the UE, resulting in over $1.6 billion in gross taxes assessed, including over $250 million in penalties. Specifically in 2018–19, we:

• continued to educate Canadians on the negative impacts of participation in the UE and address the most severe cases of non-compliance through ongoing traditional audit activities, including our focus on real estate
• renewed our UE Strategy with increased focus on the growing use of cryptocurrencies and platform economies (for example, accommodation sharing platforms), the use of third party data, and continued efforts on education
• conducted over 4,000 income tax and GST/HST audits related to the UE and identified $2 billion in unreported income
• assessed additional taxes of $786 million, including over $104 million in penalties, as a result of these income tax and GST/HST audits
• developed a targeted third party data strategy to enhance insight of non-compliant taxpayer populations such as those operating in the UE
• continued the partnership with Ontario Ministry of Finance to provide enhanced verification resources to address non-compliant tax practices and protect Canada's tax base

Collections and managing tax debt

During 2018–19, the CRA resolved just under $68 billion in outstanding tax debt, which represents an increase of 17.6% over what was resolved in 2017–18. Of this total, $64.7 billion was collected and $3.3 billion was written-off^{Footnote 2} by the Collections programs. The CRA continued to maximize its use of Budget 2016 funding ($7.4 billion over five years) by resolving an additional $1.9 billion in outstanding tax debt, exceeding the expected recovery of $1.84 billion by 3.6%.

Business intelligence and data analytics

The strategic use of business intelligence and data analytics is helping the CRA to more precisely target non-compliance in a timely manner and direct resources toward addressing the highest risk cases. In 2018–19, in relation to our use of data analysis and business intelligence, we:

• implemented an Agency data program, under the leadership of a Chief Data Officer, that provides a business-led coordinated approach to the acquisition, governance and use of data; this program increases the CRA's ability to curate existing and new data and to use it better
• launched an awareness campaign that takes a targeted approach to sectors of the population that are non-compliant, which includes using nudge letters and automated phone messages to emphasize the importance of filing to get benefits and credits
• received over 16.3 million reports of international electronic transactions over $10,000, to help identify wealthy individuals and their related entities who may be engaged in aggressive tax planning
• undertook our first exchanges under the Common Reporting Standard (CRS) in the fall of 2018, now with over 80 jurisdictions; the CRS allows the CRA to know when non-resident individuals hold financial accounts in participating countries

• issued unnamed persons requirements to property developers and builders in high-risk markets in British Columbia and Ontario, to identify buyers who might not be reporting their real estate transactions
• began to automate the process of matching and risk‑assessing electronic funds transfer records that do not contain a client identifier with existing CRA taxpayer data
• used advanced analytics to develop predictive models for identifying small and medium enterprises at high risk of not meeting their income tax obligations
• implemented a solution to identify abusive GST/HST schemes and prevent the payment of unwarranted GST/HST refunds
• developed a new forecasting model to further understand the impacts that the Canadian economy has on the tax debt; an additional model to help the Agency better understand the trends that affect collection intakes is currently under development

International collaboration

The CRA's partnerships to advance compliance extend beyond Canada's borders. Our engagement at the OECD is particularly vital. Our Commissioner is Vice Chair of the OECD Forum on Tax Administration (FTA), which brings 50 countries together to improve tax administration and enhance compliance activities. In 2018–19, the CRA:

• continued to build a common approach to transfer pricing through the FTA's Joint Audit Project, and participated in the development of a global risk register that participating tax administrations can access to facilitate mutual understanding of key tax risks, through the first phase of the Comparative Risk Assessment project
• completed multilateral risk assessments of eight large multinational enterprises through a pilot of the OECD's International Compliance Assurance Program (ICAP); the ICAP will allow the CRA and other tax administrations to provide early tax certainty to multinational enterprises who are willing to engage actively and transparently, and to better target compliance resources where action is most needed
• continued to contribute to the work of the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), a network of over 37 countries, to share information about intergroup transactions; the CRA leads JITSIC expert working groups in developing strategies to identify and stop promoters of abusive tax schemes

• began the automatic exchange of Country-by-Country (CbC) reports as part of the OECD's Base Erosion and Profit Shifting  action plan, providing the CRA with information about how multinational enterprises allocate their income across the globe and their taxes paid to participating countries; over 65 countries have activated CbC agreements with Canada
• deployed the cloud-based Knowledge-Sharing Platform for Tax Administrations, part of Canada's 2016 commitment in support of the G20 international tax agenda, which allows governments around the world to access networks of experts and a growing library of global best practices

Tax performance indicators

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

The CRA administers many ongoing benefits and one-time payment programs for federal, provincial and territorial governments. These benefits support the economic and social well-being of Canadians of all walks of life. In some cases, our clients depend on their benefit payments as a significant part of their household income. Our role of reaching out to clients and ensuring they know how to access their benefits and providing them with the services needed is critically important.

Proactive outreach and assistance

Budget 2018 provided the CRA with an additional $9 million annually to help vulnerable Canadians get benefits and tax credits to improve their quality of life. This funding allowed the CRA to help its clients access their benefits and credits, by finding out directly from them what obstacles they face in accessing benefits and credits (for example not being able to complete their own tax return or not being able to afford to have their taxes completed by a tax firm or accountant), and to help ensure equal and tailored service for all. During the 2018–19 fiscal year, we:

• opened three northern service centres in the territorial capitals, Whitehorse, Yellowknife and Iqaluit, in time for the 2019 tax season, to better support individuals and businesses in the territories with their tax and benefit enquiries

• extended services to CVITP organizations and volunteers on a year-round basis
• partnered with Revenu Québec to develop and set up training seminars, prepare for recognition events and develop the CVITP Memorandum of Understanding; thanks to this partnership, nearly 4,000 volunteers and more than 550 organizations participated in the program and helped approximately 170,000 people receive the proper credits and benefits
• re-established the Disability Advisory Committee to provide the CRA with a formalized means of engaging with stakeholders
• issued 205,425 Non-Filer Benefit Letters to Canadians with low or no tax recovery potential, promoting filing so that they can receive the benefits and credits for which they are eligible; a total of 25,621 returns were filed by February 8, 2019, amounting to $13.3 million in tax refund payments and $19.2 million in credits or benefits paid out
• implemented the "Call Me First" initiative whereby, before making an adjustment to their benefits, the CRA calls Canadians who did not respond to the initial benefit review letter
• conducted focus groups to better understand why individuals are not responding to benefit review letters and determine what the CRA can do to encourage clients to respond
• collaborated with various municipal, provincial and national law enforcement and government partners to increase Canadians' knowledge and awareness of various fraudulent schemes and scams; we used social media and technical briefings, and worked with the media and Canadian retailers

The CRA also attributed a sizeable portion of the funding from Budget 2018 to conducting outreach activities to Canadians so they are better prepared to comply with their tax obligations. For more information, see the Tax section.

Digital services

The CRA is committed to providing the best possible service to its clients by making our digital services easy to use and accessible to all. Digital services make it easier for clients to understand their benefit and credit eligibility, to quickly apply for benefits and credits and to easily access their payment information. For instance, we:

• worked with the Yukon and Nunavut in offering their residents access to our Automated Benefits Application, a simple online form already in place in all provinces and the Northwest Territories that allows clients to quickly and easily apply for the Canada child benefit (CCB)
• enhanced the MyBenefits CRA mobile app, implementing features to improve ease of use
• made applying for the disability tax credit easier, by offering Canadians the ability to submit their Disability Tax Credit Certificate, and any supporting documents, through the submit documents service in My Account or Represent a Client portal; from February 2019 to March 31, 2019, we received 2,787 submissions

To find out more about our work related to digital services designed to help clients meet their tax obligations, see the Tax section.

Telephone services

Telephone enquiry lines constitute a valuable service for clients who cannot find an answer to their question online or simply prefer that means of communication. Furthermore, a number of the CRA's clients live in rural areas with limited Internet access, making the CRA's telephone services their preferred method of getting information about their benefits and credits. To help our clients, we made many improvements to all our phone lines, including the benefit enquiries line. We improved self-service options for callers and updated training for call centre agents, thus increasing the accuracy of responses to clients' questions. We also launched an enhanced telephone service for clients who call with questions regarding the disability tax credit. To find out more about the improvements to the CRA's telephone services, see the Tax section.

Benefits performance indicators

Outcome: Canadians receive their rightful benefits in a timely manner.

The CRA's renewed focus on service is essential for all clients, both external and internal. Through internal services, we manage one of the largest, most sophisticated and secure information technology environments in Canada's public service, and provide our external clients with assurance their matters are handled with integrity and respect for their privacy.

Our people

Our people play a vital role in delivering our services to our clients. We want to equip them with what they need to help the CRA achieve the goal of being a world-class tax and benefit administration and ensure the CRA's workforce is representative of the diverse community it serves. We view our employees' contributions and well-being as essential, and their diversity as our strength. That is why we worked on recruiting strategically, maintaining a healthy, inclusive and respectful workplace, and identifying and resolving issues that affect our employees' pay with Public Services and Procurement Canada. In 2018–19, we:

• mobilized resources and continued to make progress in addressing the backlog of pay issues and enquiries
• developed our corporate communications strategy and prevention approach on discrimination and harassment, which includes the development of mandatory online training
• continued to modernize training and learning at the Agency by developing innovative solutions using technology such as interactive videos
• introduced the employee Well-Being Network, to promote awareness of well-being support services and resources
• implemented year two of the Strategy for the recruitment, inclusion and retention of Indigenous peoples, including:
  • advancing the CRA Indigenous student employment program through universities, career fairs, local communities, social media and CRA employee networks
  • creating a national Re-Hire Indigenous Students List to facilitate bridging students into the CRA as permanent employees and hiring 94 Indigenous students from April 2018 to March 2019
  • developing a National Indigenous Community page, which currently has 226 members, on GCconnex, a professional networking and collaborative workspace
  • continuing the implementation of the Indigenous Mentoring Initiative, matching 63 pairs across the country as of March 2019
  • increasing the recruitment of Indigenous peoples in professional positions to address current and future underrepresentation, surpassing our target of reducing the gap in the professional group by 50%
• conducted outreach and increased awareness of the CRA as an employer of choice through participation in experimental learning activities with various post-secondary institutions, like our successful CRA Recruitment Day, at Lakehead University, Thunder Bay, where we piloted on-the-spot letters of offer to address recruitment gaps in information technology and audit
• continued supporting CRA's 2018 Charitable Campaign with the help of employees across Canada who volunteered their time and efforts, changing the lives of 15,168 Canadians
• expanded our online presence and developed enhanced content for our social media platforms to showcase our workplace culture, sharing our status as a Top 100 Employer and promoting the CRA as an inclusive and diverse workplace

Information technology

Information technology (IT) is one of the cornerstones of the CRA's operations, allowing us to provide sustainable and reliable services to Canadians and deliver our core responsibilities of tax and benefits. It plays an important role in meeting Canadians' expectations for a seamless service experience when dealing with the CRA. While evolving our systems to be more service-oriented, in 2018–19 we:

• continued to modernize our IT operational environment by completing an annual assessment of our legacy IT systems, and completed an annual multi-year investment plan to support CRA and Government-wide strategies to renew aging software applications, protecting their integrity
• increased our use of Agile and Lean methodologies to improve IT agility and internal practices for developing software and achieve faster program and service delivery
• continued to expand our digital service offerings to Canadians to make it easier and more convenient for individuals and businesses to interact with the Agency
• protected CRA data, information assets and IT infrastructure from increasingly sophisticated cybersecurity threats, unauthorized access, alteration, and loss
• established a self-service business intelligence environment, meeting the needs of CRA researchers and analysts and supporting more complex activities in research, analytics and data mining
• evolved our governance and partnership with Shared Services Canada by streamlining processes and collaborating to ensure IT infrastructure services are available and reliable
• collaborated with other government departments, under the leadership of the Treasury Board of Canada Secretariat, to support a whole of Government approach in setting the strategic direction for the evolution of IT services

Integrity and security

During the 2018–19 year, we continued supporting and promoting integrity and security through our continuous investment in our information technology infrastructure. We developed and promoted awareness tools to ensure employees and managers understand their responsibilities when it comes to protecting the integrity of CRA programs, data, and systems. We also continued to strengthen the public’s trust by educating them about new scams and increasing transparency through our commitment to report on our mandate. During 2018–19, we:

• continued to safeguard client information by monitoring employee access and actions on CRA systems while ensuring employees have the accesses they need to serve Canadians
• continued carefully disposing of surplus assets, like office equipment, while ensuring the respect of government goals for sustainable stewardship of assets

• partnered with the media, community groups, and police forces for wider distribution of warnings about new scams targeting Canadians:
  • used social media to raise awareness of email, phone and text scams using static messages and four new videos, targeting vulnerable populations and the population at large
  • distributed a comprehensive kit for members of Parliament with the view that they can use our communications material in collaboration with their local community associations to help raise awareness and protect citizens from falling victim to tax scams
  • distributed a pragmatic document to media that explains what clients can expect when the CRA calls clients to help them manage their tax affairs and laying out what they can do if they are unsure if the call they received is a scam or if they fear they have been scammed
  • collaborated with partners, including the Royal Canadian Mounted Police, the Competition Bureau, the Canadian Antifraud Centre and the Retail Council of Canada to promote awareness of frauds and scams across Canada

Access to information and privacy

Parliamentarians, journalists and the general public want access to CRA information that is transparent, complete and meaningful. Working toward the CRA's objective of ensuring that the information it releases to the public respects our clients' right to privacy, in 2018–19, we:

• hired a consulting firm in March 2019 to assist us in implementing recommendations to reform the CRA privacy management program, with implementation of recommendations expected in 2019–20
• developed a workload management plan to help ensure that all access to information and privacy requests are treated within the targeted timeframe

Analysis of trends in spending and human resources

Actual expenditures

Analysis of budgetary performance summary

Actual spending for fiscal years 2016–17 to 2018–19 includes technical adjustments such as the CRA's carry-forward from the previous year and funding for severance payments, parental benefits, and vacation credits. In 2017–18, a significant portion of the increase in spending is associated with the cash out of severance benefits upon resignation or retirement for employees represented by the Public Service Alliance of Canada, Union of Taxation Employees (PSAC-UTE). The 2016–17 and 2017–18 fiscal years also reflect higher spending as a result of retroactive payments associated with collective bargaining increases for employees represented by the PSAC-UTE and the Professional Institute of the Public Service of Canada-Audit Financial and Scientific (PIPSC-AFS) group, including amounts set aside in anticipation of wage settlements for the period under the operating budget freeze.

The CRA's 2018–19 total authorities available for use increased by $1.106 billion, or 26.3% over the planned spending identified in the 2018–19 Departmental Plan. Of this amount $663.8 million is related to the statutory Climate Action Incentive payment deemed to have been paid as a rebate in respect of fuel charges levied under Part I of the Greenhouse Gas Pollution Pricing Act (included in both 2018–19 total authorities available for use and actual spending). Other items contributing to the increase include the carry-forward from 2017–18, funding for severance payments, parental benefits, and vacation credits, funding to implement and administer measures announced in the 2018 federal budget and the federal fuel charge, and collective bargaining adjustments (for more information, please see "Authorities approved after Main Estimates" in the supplementary information tables). The CRA's actual 2018–19 spending was $5.121 billion resulting in $189.7 million remaining unexpended at year-end. The majority of this funding, $179.4 million, can be carried forward by the CRA to 2019–20 under its statutory two-year spending authority. This amount was largely planned and forms part of the CRA's strategy to address unfunded operating pressures in 2019–20 as well as manage changes in the funding profile of major investment projects.

Over the planning period, the CRA's authorities show a slight reduction (from $4.442 billion in 2019–20 to $4.385 billion in 2020–21) primarily as a result of planned decreases in funding received to administer various measures announced in the federal budgets as well as the federal fuel charge and the upgrade of the individual income tax processing system. Further reductions are associated with the reallocation of departmental resources as announced in the 2018 Federal Budget to modernize and enhance the Government's digital services.

Anticipated fluctuations in future year funding are proactively monitored and reflected in the planning process. Given that more than three-quarters of the CRA's spending is associated with personnel costs, such changes could substantially impact planning and related staffing process for upcoming years. To be agile, Agency management continually reviews how CRA resources are allocated to ensure that the programs being supported remain relevant and that these programs are being delivered in the most efficient manner possible. Where necessary, funds may be reallocated from areas generating efficiencies or where the public policy priority may have diminished to higher priority work.

Analysis of human resources summary

The increase in FTEs in 2018–19 is largely attributable to new funding received to implement and administer measures announced in Budget 2018 as well as growth in funding for measures announced in Budget 2016 and Budget 2017.

Over the planning period, the reduction in FTEs (from 41,796 in 2019–20 to 41,195 in 2020–21) is primarily the result of planned decreases in funding received for various measures announced in the federal budgets as well as reductions in planned project investments. A portion of the decrease in internal services FTEs from 2018–19 to 2019–20 is due to the attribution of direct internal service costs to the programs (primarily within the tax core responsibility).

Financial statements highlights

Agency activities

The CRA's 2018–19 net cost of operations before government funding and transfers amounted to $4,580.0 million, an increase of $183.5 million from the $4,396.5 million net cost of operations before government funding and transfers in 2017–18.

Personnel expenses (salaries, other allowances and benefits) represent 74% of total expenses and are the CRA's primary costs. The remaining 26% of expenses are comprised of other costs such as information technology (IT) and accommodation expenses.

Personnel costs have increased by $132.5 million in 2018–19, including salary expenses ($101.9 million) and other allowances and benefits ($30.6 million). The increase is mainly explained by an increase in the number of employees and higher rates of pay reflecting collective agreements ratified in fiscal year 2018.

Non-personnel expenses have increased by $67.5 million in 2018–19. This net variance mainly results from an increase in IT services provided by Shared Services Canada (SSC) ($73.0 million) mostly due to the implementation of a costing methodology by SSC to refine its assessment of the cost of services provided without charge to other government departments (OGD), as well as an increase in computer purchases resulting from the End user Renewal Program ($20.2 million). This increase was offset in part by a decrease in accommodation costs as a result of a reduction in the number of fit-up projects ($10.5 million) and a decrease in direct occupancy costs due to the net reduction of space used, as well as an incentive to re-locate to locations with lower rent cost ($15.5 million).

Liabilities have decreased by $99.5 million in 2018–19. This was mainly attributable to a reversal of salary accruals resulting from the ratification of the collective agreements for the Public Service Alliance of Canada ($51.9 million) and the Professional Institute of the Public Service of Canada ($125.9 million) in fiscal year 2018. This decrease was offset in part by an increase in the current year provision for salary accruals to reflect expired collective agreements ($77.4 million).

The decrease of $138.7 million in financial assets reflects a decrease in the Due from the Consolidated Revenue Fund (CRF) as the prior year amount included accrued salaries resulting from the ratification of collective agreements in 2017–18 which have been settled in 2018–19. The Due from the CRF account  represents the net amount of cash that the CRA is entitled to draw without using further appropriations to discharge its liabilities.

Administered activities

The CRA administers revenues for the Government of Canada, provincial and territorial governments and First Nations as well as pension contributions and other revenues for the Canada Pension Plan. The total administered revenues amounted to $457,219 million in 2018–19, an increase of $26,888 million or 6.2% from 2017–18. This increase is mainly due to sustained economic growth.

The CRA administers expenses for the Government of Canada, provincial and territorial governments as well as the doubtful accounts expense for the Canada Pension Plan. The CRA also administers recoveries for the Government of Canada relating to the Old Age Security and employment insurance benefits. The total net administered expenses and recoveries amounted to $37,388 million in 2018–19, an increase of $2,292 million or 6.5% from 2017–18. The increase reflects the implementation of the Climate Action Incentive payments on January 1, 2019, and the indexation of Canada Child Benefit basic entitlement.

Total administered assets amounted to $131,971 million as at March 31, 2019, an increase of $3,496 million or 2.7% from 2017–18. The increase is in line with the growth in revenues due to  sustained economic growth, offset in part by lower instalments and payments on filing from corporations at year-end.

Administered liabilities amounted to $65,988 million as at March 31, 2019, an increase of $3,384 million or 5.4% from 2017–18. The increase reflects higher individual and GST/HST refund claims at year-end, as well as higher amounts payable to corporations.

Supplementary information

Organizational contact information

Reporting framework

The CRA’s Departmental Results Framework and Program Inventory of record for 2018–19 are shown below.

Supplementary information tables

The following supplementary information tables are available on the CRA's website:

• CRA Sustainable Development Strategy
• Definitions
• Details on transfer payment programs of $5 million or more
• Endnotes
• Gender-based analysis plus
• Response to parliamentary committees and external audits

Federal tax expenditures

The tax system can be used to achieve public policy objectives through the application of special measures such as low tax rates, exemptions, deductions, deferrals and credits. The Department of Finance Canada publishes cost estimates and projections for these measures each year in the Report on Federal Tax Expenditures. This report also provides detailed background information on tax expenditures, including descriptions, objectives, historical information and references to related federal spending programs. The tax measures presented in this report are the responsibility of the Minister of Finance.

Public service commission and assessment of recourse reports

The Canada Revenue Agency Act requires the CRA to include in its annual reporting a copy of any report produced under subsection 56(1) or a summary statement of any assessment produced under section 59.

The report and assessment are produced on an as needed basis. During 2018–19, the Public Service Commission did not prepare, or have prepared on its behalf, a report to the CRA pursuant to subsection 56(1) of the Canada Revenue Agency Act on the consistency of the Agency's staffing program with the principles set out in the summary of its corporate business plan. For the same period, the CRA did not prepare pursuant to section 59 of the Canada Revenue Agency Act an assessment of the recourse the Agency provides or administers in its management of human resources.

Links

Service standards

Financial statements

Expenditures by vote: Public Accounts of Canada 2018–19

Government of Canada spending and activities: GC InfoBase

Supporting information on the Program Inventory: GC InfoBase

Agency governance and the Board of Management

Board priorities and accomplishments for 2018–19

Top row: David Reid, Stanley Thompson, Gerard Fitzpatrick, Dawn Dalley
Middle row: Susan Hayes, Susan Green, Joyce Sumara, France-Élaine Duranceau, Paul Summerville
Bottom row: Mireille Saulnier, Bob Hamilton, Suzanne Gouin, Kathy Bouey, Francine Martel-Vaillancourt, Mary Ference

The Board provided oversight in all areas of its statutory responsibilities and accomplished its objectives as outlined in the CRA's Corporate Business Plan (CBP) 2018–2019 to 2020–2021.

Strategic direction

The Board focused on its strategic priorities of: service to Canadians, people resources, integrity and security, innovation and resource optimization for 2018–19. Enhancing service to Canadians remained the core of all strategic priorities of the Board.

During this fiscal year, new key performance indicators were used to produce a quarterly performance dashboard to support the Board in providing oversight. In addition, the Board regularly reviewed the Status Report on Strategic Deliverables to oversee the Agency's progress on the CBP commitments. These reporting tools have allowed the Board to provide strategic advice and direction to the Agency to ensure that it is well positioned to achieve its commitments as set out in the CBP.

Service to canadians

Enhancing service to Canadians and ensuring that they are treated like valued clients remained a Board priority during this fiscal year. The Agency's Chief Service Officer established a Service Secretariat, which collaboratively developed a service policy framework with a new CRA vision: Trusted, fair and helpful by putting people first. This vision will guide the Agency’s journey forward and ensure it remains a World-Class Tax and Benefit Administration.

In support of the Agency’s significant service transformation journey, the Board established a Service Transformation Subcommittee in September 2018. The subcommittee received quarterly updates on service transformation initiatives, including employee engagement and communications, and provided strategic advice and support to the Chief Service Officer in the development of the Service Policy Framework. The subcommittee also received a service related annual update from the Office of Taxpayers' Ombudsman.

The Board also oversaw the Agency's call centre migration to the new Hosted Contact Centre Service platform, which was completed by the end of 2018 for the Agency's benefits, individual, and business enquiries phone lines. The Service Transformation Subcommittee continues to receive regular updates on call centre improvements and performance.

People resources

In the area of people resources, the Board reviewed and approved the annual Agency Workforce Plan (AWP) 2018–2019 to 2020–2021, which outlines continued focus on three themes; Agency's leaders, its people and its work environment. The AWP will support the Agency in building a skilled workforce to meet its current and future business deliverables.

The Board also:

• received quarterly updates on compensation at the Agency, supporting its employees on compensation related issues that stem from the Phoenix Payroll System; this includes steps undertaken to mitigate financial hardship while efforts are underway to stabilize the pay system
• received regular updates on the Agency's human resources initiatives, such as the staffing redesign initiative, the introduction of character leadership in its executive recruitment and development and the Agency's preparedness for the future of work
• continued to encourage the Agency's recruitment and outreach activities with educational institutions across the country
• focused on ensuring the Agency had robust succession plans and processes in place for its senior leaders and for key positions

Integrity and security

The Board continued to ensure the Agency had appropriate measures in place to safeguard its clients' personal information by investing and modernizing its information technology (IT) systems.

The Board also:

• approved the Agency's annual IT strategy, which sets out the Agency's and Government of Canada’s IT priorities
• received quarterly updates on cyber-security and monitored related risks and mitigation plans through the development of a cyber-security dashboard
• reviewed the integrity framework and plans to enhance integrity at the Agency; the Framework supports the Agency to foster a culture of integrity, while also preventing, monitoring, detecting, and managing breaches of integrity
• supported the Agency's use of social, broadcast, and print media to inform Canadians of tax scams and to promote awareness of tax fraud and its consequences
• received annual update from Agency’s Chief Privacy Officer on the Access to Information and Privacy program, and its efforts to ensure sound privacy management at the Agency
• monitored the status of the Agency's corporate policy suite to ensure that they remain current, relevant and employee-centric and that the employees better understand the Code of Integrity and Professional Conduct and CRA's Corporate Policy Instruments

Innovation

The Board continued to encourage and support the Agency's efforts to explore and implement innovative approaches to doing business, and regularly reviewed the Agency’s new emerging technology radar which forms part of the Board’s quarterly dashboard.

The Board also:

• invited external speakers from the private sector and other tax agencies to its June 2018 planning meeting to discuss various innovative methods being used in their organizations to enhance client service and experience
• received updates from the Agency's Innovation Lab on the continued work with other government departments including academic institutions in the fields of Artificial Intelligence and Data Analytics to improve service and compliance

Recourse optimization

As part of its resource (e.g., infrastructure, information technology, financial, etc.) oversight responsibility, the Board:

• monitored the Agency's utilization of funds received in Budgets 2016 and 2017 to address non-compliance
• received quarterly updates on the state of the Agency’s budget, and reviewed its quarterly financial statements
• monitored and received quarterly financial and performance audit updates from the Office of the Auditor General
• reviewed the internal audit reports and action plans to address any recommendations from internal audits; the Board also reviewed and approved the Agency's annual risk based audit and evaluation plan
• reviewed the Agency's quarterly financial reports and approved the 2018–19 financial statements for Administered Activities and Agency Activities
• supported the Agency's completion of its comprehensive review and its recommendations to achieve its service transformation objectives; the Board was pleased with the Agency's internal resource alignment process to ensure that its resources continue to be properly aligned with the priorities and that it can deliver on its mandate
• received quarterly updates from the Agency on Shared Services Canada (SSC) initiatives, discussed the Agency's client satisfaction rating for SSC services, and met with the SSC President to discuss the Agency's priorities to provide support for this productive and critical relationship; SSC is an important stakeholder in the Agency's operations as the Agency is dependent on SSC for delivering on transformation projects and for providing major IT services
• reviewed ongoing work on major IT projects over $20 million, through its quarterly major project investment dashboard report
• maintained its oversight of the Agency's contracting and procurement activities through the annual report
• received an update on the Agency's 2017–18 results on the Sustainable Development Strategy

Conclusion

The Board accomplished its strategic objectives for 2018–19 and remains committed to:

• fulfilling its oversight responsibilities, in its fiduciary role
• providing strategic advice and guidance to the Agency
• exploring innovative methods to streamline its governance and make its oversight role more effective and efficient

The Board thanks Commissioner of Revenue, Mr. Bob Hamilton for his leadership and is grateful for the excellent cooperation and support received from CRA senior management and employees in achieving its fiduciary obligations.

Board of Management Attendance Record for 2018–19

The Board of Management is supported by four committees and one subcommittee. They undertake much of the detailed review of items brought before the Board for its consideration. The following table shows the membership of each committee as well as directors’ committee attendance over the 2018–19 fiscal year.