Canada Revenue Agency Financial Statements – Agency Activities

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

Statement of Financial Position – Agency Activities image description

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

Under the liabilities section,

  • Accrued salaries for 2020 are 678,862 and for 2019 are 390,081.
  • Accounts payable and accrued liabilities (note 4) for 2020 are 77,104 and for 2019 are 129,153.
  • Vacation pay and compensatory leave for 2020 are 245,174 and for 2019 are 208,056.
  • Employee severance benefits (note 5e) for 2020 are 172,407 and for 2019 are 187,156.
  • Employee sick leave benefits (note 5e) for 2020 are 280,284 and for 2019 are 269,694.
  • Total liabilities for 2020 are 1,453,831 and for 2019 are 1,184,140.

Under the financial assets section,

  • Due from the Consolidated Revenue Fund for 2020 is 306,320 and for 2019 is 362,149.
  • Accounts receivable and advances (note 6) for 2020 are 39,879 and for 2019 are 22,595.
  • Total financial assets for 2020 are 346,199 and for 2019 are 384,744.

Total Agency net debt for 2020 is 1,107,632 and for 2019 is 799,396.

Under the non-financial assets section,

  • Prepaid expenses for 2020 are 20,074 and for 2019 are 15,643.
  • Tangible capital assets (note 7) for 2020 are 420,409 and for 2019 are 418,056.
  • Total non-financial assets for 2020 are 440,483 and for 2019 are 433,699.

Agency net financial position for 2020 is 667,149 for 2019 is 365,697.

Contingent liabilities (note 11)
The accompanying notes form an integral part of these financial statements.

Approved by:

Original signed

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

October 2, 2020

Original signed

Suzanne Gouin, MBA, ICD.D
Chair, Board of Management

October 2, 2020

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

Statement of Operations and Agency Net Financial Position – Agency Activities image description

The Canada Revenue Agency Statement of Operations and Agency Net Financial Position – Agency Activities for the year ended March 31, separated into 3 categories: expenses, non-tax revenues, and Government funding and transfers (in thousands of dollars)

Under the expenses section (note 8a)

  • Tax: the 2020 planned result is 3,892,618, the 2020 actual result is 4,109,654, and the 2019 actual result is 3,773,570.
  • Internal services: the 2020 planned result is 1,239,236, the 2020 actual result is 1,259,057, and the 2019 actual result is 1,178,535.
  • Benefits: the 2020 planned result is 180,313, the 2020 actual result is 163,746, and the 2019 actual result is 159,707.
  • Taxpayers' Ombudsman: the 2020 planned result is 3,885, the 2020 actual result is 4,283, and the 2019 actual result is 4,024.

Total expenses: the 2020 planned result is 5,316,052, the 2020 actual result is 5,536,740, and the 2019 actual result is 5,115,836.

Under the non-tax revenues section (note 8b)

  • Tax: the 2020 planned result is 430,340, the 2020 actual result is 447,838, and the 2019 actual result is 412,396.
  • Internal services: the 2020 planned result is 165,219, the 2020 actual result is 186,363, and the 2019 actual result is 171,248.
  • Benefits: the 2020 planned result is 23,901, the 2020 actual result is 23,242, and the 2019 actual result is 27,700.
  • Revenues earned on behalf of Government: the 2020 planned result is (76,709), the 2020 actual result is (80,019), and the 2019 actual result is (75,555).

Total non-tax revenues: the 2020 planned result is 542,751, the 2020 actual result is 577,424, and the 2019 actual result is 535,789.

Net cost of operations before government funding and transfers: the 2020 planned result is 4,773,301, the 2020 actual result is 4,959,316, and the 2019 actual result is 4,580,047.

Under the Government funding and transfers section

  • Net cash provided by the Government of Canada: the 2020 planned result is 4,060,746, the 2020 actual result is 4,068,486, and the 2019 actual result is 4,049,305.
  • Services provided without charge from other government departments and agencies (note 9): the 2020 planned result is 564,195, the 2020 actual result is 645,179, and the 2019 actual result is 625,096.
  • Change in due from the Consolidated Revenue Fund: the 2020 actual result is (55,829), and the 2019 actual result is (125,638).
  • Transfer of transition payments for implementing salary payments in arrears: the 2020 actual result is (11), and the 2019 actual result is (17).
  • Net transfers of tangible capital assets and salary overpayments from/to other government departments: the 2020 actual result is 39, and the 2019 actual result is (1).

Total government funding and transfers: the 2020 planned result is 4,624,941, the 2020 actual result is 4,657,864, and the 2019 actual result is 4,548,745.

Net cost of operations after government funding and transfers: the 2020 planned result is 148,360, the 2020 actual result is 301,452, and the 2019 actual result is 31,302.

Agency net financial position – Beginning of year: the 2020 planned result is 365,697, the 2020 actual result is 365,697, and the 2019 actual result is 334,395.

Agency net financial position – End of year: the 2020 planned result is 514,057, the 2020 actual result is 667,149, and the 2019 actual result is 365,697.

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

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

Statement of Change in Agency Net Debt – Agency Activities image description

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

Net cost of operations after government funding and transfers: the 2020 planned result is 148,360, the 2020 actual result is 301,452 and the 2019 actual result is 31,302.

Under Change in tangible capital assets

  • Acquisition of tangible capital assets (note 7): the 2020 planned result is 38,545, the 2020 actual result is 63,964, and the 2019 actual result is 71,606.
  • Amortization of tangible capital assets (note 7): the 2020 planned result is (84,372), the 2020 actual result is (60,048), and the 2019 actual result is (61,964).
  • Proceeds from disposal of tangible capital assets: the 2020 actual result is (63), and the 2019 actual result is (80).
  • Net loss on disposal/write-off of tangible capital assets: the 2020 planned result is (606), the 2020 actual result is (1,500), and the 2019 actual result is (608).
  • Net transfers of tangible capital assets to other government departments: the 2020 actual result is nil, and the 2019 actual result is (95).

Total change in tangible capital assets: the 2020 planned result is (46,433), the 2020 actual result is 2,353, and the 2019 actual result is 8,859.

Change in prepaid expenses: the 2020 actual result is 4,431 and the 2019 actual result is (1,006).

Net increase in agency net debt: the 2020 planned result is 101,927, the 2020 actual result is 308,236, and the 2019 actual result is 39,155.

Agency net debt – Beginning of year: the 2020 planned result is 799,396, the 2020 actual result is 799,396, and the 2019 actual result is 760,241.

Agency net debt – End of year: the 2020 planned result is 901,323, the 2020 actual result is 1,107,632, and the 2019 actual result is 799,396.

The accompanying notes form an integral part of these financial statements

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

Statement of Cash Flows – Agency Activities image description

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

Under the operating activities section

  • Net cost of operations before government funding and transfers: for 2020 the amount is 4,959,316 and for 2019 the amount is 4,580,047.
  • Items not affecting cash
    • Amortization of tangible capital assets (note 7): for 2020 the amount is (60,048) and for 2019 the amount is (61,964).
    • Net loss on disposal/write-off of tangible capital assets: for 2020 the amount is (1,500) and for 2019 the amount is (608).
    • Services provided without charge from other government departments and agencies (note 9): for 2020 the amount is (645,179) and for 2019 the amount is (625,096).
    • Transition payments for implementing salary payments in arrears: for 2020 the amount is 11 and for 2019 the amount is 17.
    • Transfer of salary overpayments from other government departments: for 2020 the amount is (39) and for 2020 the amount is (94).
    • Change in accounts receivable and advances: for 2020 the amount is 17,284 and for 2019 the amount is (13,036).
    • Change in prepaid expenses: for 2020 the amount is 4,431 and for 2019 the amount is (1,006).
    • Change in accrued salaries: for 2020 the amount is (288,781) and for 2019 the amount is 89,013.
    • Change in accounts payable and accrued liabilities: for 2020 the amount is 52,049 and for 2019 the amount is (13,719).
    • Change in vacation pay and compensatory leave: for 2020 the amount is (37,118) and for 2019 the amount is 3,869.
    • Change in employee severance benefits: for 2020 the amount is 14,749 and for 2019 the amount is 29,534.
    • Change in employee sick leave benefits: for 2020 the amount is (10,590) and for 2019 the amount is (9,178).
  • Cash used in operating activities: for 2020 the amount is 4,004,585 and for 2019 the amount is 3,977,779.

Under the Capital investing activities section

  • Acquisition of tangible capital assets (note 7): for 2020 the amount is 63,964 and for 2019 the amount is 71,606.
  • Proceeds from disposal of tangible capital assets: for 2020 the amount is (63) and for 2019 the amount is (80).

Cash used in capital investing activities: for 2020 the amount is 63,901, and for 2019 the amount is 71,526.

Net cash provided by the Government of Canada: for 2020 the amount is 4,068,486 and for 2019 the amount is 4,049,305.

The accompanying notes form an integral part of these financial statements

Canada Revenue Agency
Notes to the Financial Statements – Agency Activities

1.  Authority and objectives

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

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

  1. supporting the administration and enforcement of program legislation;
  2. implementing agreements between the Government of Canada or the CRA and the government of a province, territory or other public body performing a function of government in Canada to carry out an activity or administer a tax or program;
  3. implementing agreements or arrangements between the CRA and departments or agencies of the Government of Canada to carry out an activity or administer a program; and
  4. implementing agreements between the Government of Canada and First Nations governments to administer a tax.

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

In delivering its mandate, the CRA operates under the following core responsibilities:

  1. Tax: to ensure that Canada’s self-assessment tax system is sustained by providing taxpayers with the support and information they need to understand and fulfil 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;
  2. Internal services: Internal services are those groups of related activities and resources that the Federal Government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal services refer to the activities and resources of ten distinct services that support program delivery in the organization, regardless of the Internal Services delivery model in a department. These services are: Acquisition Management, Communications, Financial Management, Human Resources Management, Information Management, Information Technology, Legal Services, Materiel Management, Management and Oversight and Real Property Management;
  3. Benefits: to ensure that Canadians obtain the support and information they need to know what benefits they may be eligible to receive, that they receive their benefit payments in a timely manner, and have avenues of redress when they disagree with a decision on their benefit eligibility;
  4. Taxpayers’ Ombudsman: Canadians have access to trusted and independent review of service complaints about the CRA.

2. Summary of significant accounting policies

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

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

(a) Parliamentary appropriations

The CRA is financed by the Government of Canada through Parliamentary appropriations. Financial reporting of authorities provided to the CRA does not parallel financial reporting according to Canadian public sector accounting standards, as they are based in large part on cash flow requirements. Consequently, items recognized in the Statement of Financial Position and the Statement of Operations and Agency Net Financial Position may be different from those provided through appropriations from Parliament. Note 3(b) provides a high-level reconciliation between the two bases of reporting. The Future-oriented Statement of Operations - Agency Activities and its accompanying notes included in the 2019-2020 Departmental Plan are the source of information for the planned results in the financial statements.

(b) Net cash provided by the Government of Canada

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

(c) Expense recognition

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

(d) Revenue recognition

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

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

(e)   Vacation pay and compensatory leave

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

(f) Employee future benefits

  1. Pension benefits
    All eligible CRA employees participate in the Public Service Pension Plan administered by the Government of Canada. The CRA’s contributions reflect the full cost as employer. These amounts are currently based on a multiple of an employee’s required contributions and may change over time depending on the experience of the plan. The CRA’s contributions are expensed during the year in which the services are rendered and represent the total pension obligation of the CRA. Current legislation does not require the CRA to make contributions with respect to any actuarial deficiencies of the Public Service Pension Plan.
  2. Health and dental benefits
    The Government of Canada sponsors employee benefit plans (health and dental) in which the CRA participates. Employees are entitled to health and dental benefits, as provided for under labour contracts and conditions of employment. The CRA’s contributions to the plans, which are provided without charge by the Treasury Board Secretariat, are recorded as expenses at their carrying value. They represent the CRA’s total obligation to the plans. Current legislation does not require the CRA to make contributions for any future unfunded liabilities of the plans.
  3. Severance benefits
    The accumulation of severance benefits for voluntary departures ceased for all applicable employee groups. The remaining obligation for employees who did not withdraw benefits represents an obligation of the CRA that entails settlement by future payments and is calculated using information from an actuarial valuation based on the projected benefit method prorated on services. Changes in actuarial assumptions and any variance between the expected and the actual experience of the severance benefits plan give rise to actuarial gains or losses. These gains or losses are not recognized immediately but amortized on a straight-line basis over the expected average remaining service life of the employees starting in the fiscal year following the one in which they arose.
  4. Sick leave benefits
    Employees are eligible to accumulate sick leave benefits until retirement or termination according to their terms of employment. Sick leave benefits are earned based on employee services rendered and are paid upon an illness or injury related absence. These are accumulating non-vesting benefits that can be carried forward to future years, but are not eligible for payment on retirement or termination, nor can these be used for any other purpose. A liability is recorded for unused sick leave credits expected to be used in future years in excess of future allotments, based on an actuarial valuation using an accrued benefit method. Changes in actuarial assumptions and any variance between the expected and the actual experience of the sick leave benefits plan give rise to actuarial gains or losses. These gains or losses are not recognized immediately but amortized on a straight-line basis over the expected average remaining service life of the employees starting in the fiscal year following the one in which they arose.

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

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

(h)  Accounts receivable and advances

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

(i)   Tangible capital assets

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

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

Asset class Useful life
Machinery, equipment, and furniture 10 years
In-house developed software 5-10 years
Motor vehicles 5 years
Information technology equipment 5 years
Purchased software 3 years

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

(j) Contingent liabilities

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

(k) Foreign currency translation

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

(l) Financial instruments

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

Financial assets and financial liabilities Measurement
Accounts receivable and advances Amortized cost
Accrued salaries Cost
Accounts payable and accrued liabilities Cost
Vacation pay and compensatory leave Cost

(m) Related party transactions

Inter-entity transactions are transactions between commonly controlled entities. Inter-entity transactions, other than restructuring transactions, are recorded on a gross basis and are measured at the carrying amount, except for the following:

  1. Services provided on a recovery basis are recognized as revenues and expenses on a gross basis and measured at the exchange amount.
  2. Certain services received on a without charge basis, including inter-entity transfers of tangible capital assets for nominal or no consideration, are recorded at the carrying amount.

Transactions with Crown corporations are entered into using similar terms and conditions to those adopted if the entities were dealing at arm’s length and are recorded at the exchange amount.

(n) Measurement uncertainty

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

3.  Parliamentary appropriations

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

a) Reconciliation of Parliamentary appropriations provided and used:

Reconciliation of Parliamentary appropriations provided and used image description

Reconciliation of Parliamentary appropriations provided and used (in thousands of dollars)

Parliamentary appropriations — provided:

  • Vote 1 – Operating expenditures, contributions and recoverable expenses on behalf of the Canada Pension Plan and the Employment Insurance Act: the amount for 2020 is 3,785,608 and the amount for 2019 is 3,582,433.
  • Vote 5 – Capital expenditures: the amount for 2020 is 62,302 and the amount for 2019 is 84,964.
  • Vote 10 – Access to Charitable Tax Incentives for Not-for-Profit Journalism (footnote 1): the amount for 2020 is 196 and the amount for 2019 is nil.
  • Vote 15 – Ensuring Proper Payments for Public Servants (footnote 1): the amount for 2020 is 2,857 and the amount for 2019 is nil.
  • Vote 20 – Improving Access to the Canada Workers Benefit Throughout the Year (footnote 1): the amount for 2020 is 1,997 and the amount for 2019 is nil.
  • Vote 25 – Improving Client Services at the Canada Revenue Agency (footnote 1): the amount for 2020 is 2,072 and the amount for 2019 is nil.
  • Vote 30 – Improving Tax Compliance (footnote 1): the amount for 2020 is 6,868 and the amount for 2019 is nil.
  • Vote 35 – Taking Action to Enhance Tax Compliance in the Real Estate Sector (footnote 1): the amount for 2020 is 2,301 and the amount for 2019 is nil.
  • Vote 40 – Tax Credit for Digital News Subscriptions (footnote 1): the amount for 2020 is 18 and the amount for 2019 is nil.
  • Spending of revenues received through the conduct of operations pursuant to section 60 of the Canada Revenue Agency Act: the amount for 2020 is 189,819 and the amount for 2019 is 182,105.
  • Spending of proceeds from disposal of surplus Crown assets: the amount for 2020 is 95 and the amount for 2019 is 120.
  • Statutory expenditures:
    • Contributions to employee benefit plans: the amount for 2020 is 462,466 and the amount for 2019 is 453,145.
    • Children's special allowance payments (footnote 2): the amount for 2020 is 351,623 and the amount for 2019 is 338,745.
    • Climate action incentive payments (footnote 2): the amount for 2020 is 2,629,934 and the amount for 2019 is 663,759.
    • Distribution of fuel and excess emission charges (footnote 2): the amount for 2020 is 5,610 and the amount for 2019 is nil.
    • Other: the amount for 2020 is 1,705 and the amount for 2019 is 5,529.
    • Total for 2020 is 7,505,471 and for 2019 is 5,310,800.

Less:

  • Appropriations available for future year (footnote 3):  
  • Vote 1: the amount for 2020 is (277,663) and the amount for 2019 is (153,094).
  • Vote 5: the amount for 2020 is (9,779) and the amount for 2019 is (26,281).
  • Appropriations lapsed:  
  • Vote 1: the amount for 2020 is (3,509) and the amount for 2019 is (10,312).
  • Budget implementation votes (footnote 1): the amount for 2020 is (16,309) and the amount for 2019 is nil.
  • Expenditures related to administered activities (footnote 2): the amount for 2020 is (2,987,172) and the amount for 2020 is (1,002,511).
  • Total for 2020 is (3,294,432) and for 2019 is (1,192,198).

Total Parliamentary appropriations used: the amount for 2020 is 4,211,039 and the amount for 2019 is 4,118,602.

Followed by:

Footnotes

  1. The use of the Budget implementation Votes was part of a two year pilot project to better align the Main Estimates with the Federal Budget. In 2020, the Budget Implementation Votes were associated with each individual department, while in 2019 they were centralized into one large Budget Implementation Vote under the Treasury Board Secretariat.
  2. In accordance with the division of activities for financial reporting purposes outlined in note 2, the payments are reported as federal administered expenses on the Statement of Administered Expenses and Recoveries of the CRA’s Financial Statements - Administered Activities.
  3. Pursuant to section 60(1) of the Canada Revenue Agency Act, the CRA has up to two fiscal years to utilize parliamentary appropriations once approved.

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

Reconciliation of net cost of operations image description

Reconciliation of net cost of operations before government funding and transfers to current year Parliamentary appropriations used (in thousands of dollars)

Net cost of operations before government funding and transfers: for 2020 the amount is 4,959,316 and for 2019 the amount is 4,580,047.

Expenses not requiring use of current year appropriations:

  • Amortization of tangible capital assets (note 7): for 2020 the amount is (60,048) and for 2019 the amount is (61,964).
  • Adjustment to prior years' accruals: for 2020 the amount is 4,224 and for 2019 the amount is 3,504.
  • Loss on disposal/write-off of tangible capital assets: for 2020 the amount is (1,557) and for 2019 the amount is (686).
  • Services provided without charge from other government departments and agencies (note 9): for 2020 the amount is (645,179) and for 2019 the amount is (625,096).
  • Other: for 2020 the amount is 654 and for 2019 the amount is 447.
  • The sub-total for expenses not requiring use of current year appropriations: for 2020 the amount is (701,906) and for 2019 the amount is (683,795).

Changes to assets affecting appropriations:

  • Tangible capital assets acquisitions (note 7): for 2020 the amount is 63,964 and for 2019 the amount is 71,606.
  • Less: Variation in prior years expenses capitalization: for 2020 the amount is nil and for 2019 the amount is 332.
  • Variation in prepaid expenses: for 2020 the amount is 4,431 and for 2019 the amount is (1,006).
  • Variation in salary advances and overpayments: for 2020 the amount is 4,139 and or 2019 the amount is 12,282.
  • Transition payments for implementing salary payments in arrears: for 2020 the amount is 11 and for 2019 the amount is 17.
  • The sub-total for changes to assets affecting appropriations: for 2020 the amount is 72,545 and for 2019 the amount is 83,231.

Changes in future funding requirements:

  • Salary, vacation pay and compensatory leave: for 2020 the amount is (311,005) and for 2019 the amount is (60,891).
  • Employee severance benefits: for 2020 the amount is 14,749 and for 2019 the amount is 29,534.
  • Employee sick leave benefits: for 2020 the amount is (10,590) and for 2019 the amount is (9,178).
  • The sub-total for changes in future funding requirements: for 2020 the amount is (306,846) and for 2019 the amount is (40,535).

Non-tax revenues available for spending (note 8b): for 2020 the amount is 187,930 and for 2019 the amount is 179,654.

Total Parliamentary appropriations used: for 2020 the amount is 4,211,039 and for 2019 the amount is 4,118,602.

4. Accounts payable and accrued liabilities

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

Accounts payable and accrued liabilities image description

Accounts payable and accrued liabilities (in thousands of dollars)

  • Accounts payable and accrued liabilities – External: the amount for 2020 is 44,101 and the amount for 2019 is 78,011.
  • Accounts payable and accrued liabilities – Other government departments and agencies: the amount for 2020 is 33,003 and the amount for 2019 is 51,142.
  • The total amount for accounts payable and accrued liabilities for 2020 is 77,104 and for 2019 is 129,153.

5. Employee future benefits

a) Pension benefits

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

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

Each group has a distinct contribution rate. The current year expense for the CRA’s contributions for Group 1 members represents approximately 1.01 times (1.01 times in 2018-2019) the contributions of employees and, for Group 2 members, approximately 1.00 time (1.00 time in 2018-2019) the contributions of employees.

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

Pension benefits image description

Pension benefits (in thousands of dollars)

  • CRA's contributions: for 2020 are 320,396 and for 2019 are 316,023.
  • Employees' contributions: for 2020 are 318,117 and for 2019 are 313,578.

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

b) Health and dental benefits

The CRA contributes for all eligible employees to the Public Service Health Care Plan and Public Service Dental Care Plan, which are sponsored by the Government of Canada. The CRA’s responsibility with regard to these plans is limited to its contributions (refer to note 9). 

c) Severance benefits

In 2016-2017, following collective agreement negotiations, the accumulation of severance benefits for voluntary departures ceased for the last employee group eligible to accumulate severance benefits. Employees subject to these changes were given the option to be paid the full or partial value of benefits earned to date or collect the full or remaining value of benefits upon departure from the public service. Severance benefits provided to CRA’s entitled employees are based on an employee’s eligibility, years of service and salary at termination of employment. By March 31, 2020, substantially all settlements for immediate cash out were completed. The remaining obligation relates mostly to the benefits for the employees who had opted to be paid upon termination. Severance benefits are unfunded and, consequently, will be paid from future appropriations.

d) Sick leave benefits

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

e) Valuation of future benefits

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

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

Valuation of future benefits image description

Valuation of future benefits (in thousands of dollars)

Accrued employee benefits obligations, beginning of year

  • Severance benefits for 2020: 184,252, for 2019: 210,905
  • Sick leave benefits for 2020: 248,420, for 2019: 239,930

Benefits earned

  • Severance benefits for 2020: 4,888, for 2019: 4,514
  • Sick leave benefits for 2020: 47,837, for 2019: 44,885

Interest on average accrued benefit obligations (note 8a)

  • Severance benefits for 2020: 3,037, for 2019: 4,102
  • Sick leave benefits for 2020: 4,344, for 2019: 5,076

Benefits paid

  • Severance benefits for 2020: (22,307), for 2019: (37,478)
  • Sick leave benefits for 2020: (39,600), for 2019: (38,978)

Actuarial (gain)/loss

  • Severance benefits for 2020: 13,702, for 2019: 2,209
  • Sick leave benefits for 2020: 16,367, for 2019: (2,493)

Accrued employee benefits obligations, end of year

  • Severance benefits for 2020: 183,572, for 2019: 184,252
  • Sick leave benefits for 2020: 277,368, for 2019: 248,420

Plus: Unamortized net actuarial gain/(loss)

  • Severance benefits for 2020: (11,165), for 2019: 2,904
  • Sick leave benefits for 2020: 2,916, for 2019: 21,274

Employee benefits liability

  • Severance benefits for 2020: 172,407, for 2019: 187,156
  • Sick leave benefits for 2020: 280,284, for 2019: 269,964

Benefit expenses (footnote 1)

Benefits earned

  • Severance benefits for 2020: 4,888, for 2019: 4,514
  • Sick leave benefits for 2020: 47,837, for 2019: 44,885

Actuarial gain recognized following plan settlement

  • Severance benefits for 2020: (6), for 2019: (115)
  • Sick leave benefits for 2020: nil, for 2019: nil

Amortization on net actuarial gain recognized during the year

  • Severance benefits for 2020: (361), for 2019: (558)
  • Sick leave benefits for 2020: (1,991), for 2019: (1,805)

Total benefit expenses

  • Severance benefits for 2020: 4,521, for 2019: 3,841
  • Sick leave benefits for 2020: 45,846, for 2019: 43,080

Footnote

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

f) Actuarial assumptions

Actuarial assumptions are used to determine the severance and sick leave accrued benefit obligations and includes estimates of the discount rate and yearly salary growth. These assumptions are reviewed at March 31 of each year and are based on management’s best estimate. The actuarial valuation as at March 31, 2020 used discount rates of 0.96% for severance benefit obligation and 0.93% for sick leave benefit obligation (1.73% and 1.72% respectively as at March 31, 2019) and a salary growth of 1.5% - 2.7% for both obligations (2.0% - 2.6% as at March 31, 2019). The expected average remaining service life is 12.1 years for severance benefits and 13.73 years for sick leave benefits as at March 31, 2020 (11.8 years and 13.43 years respectively as at March 31, 2019).

g) Sensitivity Analysis

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

Sensitivity Analysis image description

Sensitivity analysis (in thousands of dollars)

Possible impact on the accrued employee benefits obligations due to:

Increase of 1% in discount rate

  • Severance benefits for 2020: (12,380), for 2019: (11,663)
  • Sick leave benefits for 2020: (17,658), for 2019: (14,890)

Decrease of 1% in discount rate

  • Severance benefits for 2020: 14,281, for 2019: 13,347
  • Sick leave benefits for 2020: 20,191, for 2019: 16,905

Increase of 1% in salary growth

  • Severance benefits for 2020: 13,941, for 2019: 13,133
  • Sick leave benefits for 2020: 19,679, for 2019: 16,608

Decrease of 1% in salary growth

  • Severance benefits for 2020: (12,348), for 2019: (11,711)
  • Sick leave benefits for 2020: (17,580), for 2019: (14,926)

6. Accounts receivable and advances

Accounts receivable and advances image description

Accounts receivable and advances (in thousands of dollars)

  • Accounts receivable – Other government departments and agencies: for 2020 are 24,983 and for 2019 are 6,711
  • Salary overpayments: for 2020 are 11,665 and for 2019 are 11,972
  • Advances to employees: for 2020 are 2,248 and for 2019 are 3,742
  • Accounts receivable – External: for 2020 are 2,118 and for 2019 are 2,002
  • The subtotal for 2020 is 41,014 and for 2019 is 24,427
  • Less: Allowance for doubtful accounts: for 2020 is (1,135) and for 2019 is (1,832)

Total accounts receivable and advances: for 2020 is 39,879 and for 2019 is 22,595

7. Tangible capital assets

Tangible capital assets image description

Tangible capital assets, by tangible capital asset class (in thousands of dollars)

Cost

  • Machinery, equipment and furniture: the opening balance is 7,100, the acquisitions 313, the disposals (495), the transfers to other government departments nil, and the closing balance 6,918
  • Software (purchased and in-house developed and/or in development): the opening balance is 1,208,181, the acquisitions 63,088, the disposals (1,706), the transfers to other government departments nil, and the closing balance 1,269,563
  • Motor vehicles: the opening balance is 1,761, the acquisitions 105, the disposals (145), the transfers to other government departments nil, and the closing balance 1,721
  • Information technology equipment: the opening balance is 10,263, the acquisitions 458, the disposals (255), the transfers to other government departments nil, and the closing balance 10,466
  • Total cost: the opening balance is 1,227,305, the acquisitions 63,964, the disposals (2,601), the transfers to other government departments nil, and the closing balance 1,288,668

Accumulated amortization

  • Machinery, equipment and furniture: the opening balance is 4,390, the amortization expense 451, the disposals (420), the transfers to other government departments nil, and the closing balance 4,421
  • Software (purchased and in-house developed and/or in development): the opening balance is 796,075, the amortization expense 58,498, the disposals (221), the transfers to other government departments nil, and the closing balance 854,352
  • Motor vehicles: the opening balance is 1,268, the amortization expense 146, the disposals (142), the transfers to other government departments nil, and the closing balance 1,272
  • Information technology equipment: the opening balance is 7,517, the amortization expense 953, the disposals (256), the transfers to other government departments nil, and the closing balance 8,214
  • Total accumulated amortization: the opening balance is 809,250, the amortization expense 60,048, the disposals (1,039), the transfers to other government departments nil, and the closing balance 868,259

Net book value

  • Machinery, equipment and furniture: 2020 is 2,497 and 2019 is 2,710
  • Software (purchased and in-house developed and/or in development): 2020 is 415,211 and 2019 is 412,107
  • Motor vehicles: 2020 is 449 and 2019 is 493
  • Information technology equipment: 2020 is 2,252 and 2019 is 2,747
  • Total net book value: 2020 is 420,409 and 2019 is 418,056

The cost of software in development, which is not amortized, is $129.4 million as at March 31, 2020 ($144.1 million as at March 31, 2019). 

8.  Segmented information

Presentation by segment is based on the CRA’s core responsibilities as described in note 1 of these financial statements. The presentation by segment is based on the same accounting policies as described in the Summary of significant accounting policies in note 2.

a) The following table presents the expenses incurred for the main core responsibilities, by major object of expense.

Segmented information – expenses image description

Segmented information – expenses (in thousands of dollars)

Personnel:

  • Salaries: Tax 2,448,276, Internal services 496,830, Benefits 85,164, Taxpayers' Ombudsman 2,505, total for 2020 3,032,775, and total for 2019 2,772,185
  • Other allowances and benefits (including employee benefits described in note 5): Tax 954,574, Internal services 198,101, Benefits 31,019, Taxpayers' Ombudsman 967, total for 2020 1,184,661, and total for 2019 1,012,084
  • Total for personnel: Tax 3,402,850, Internal services 694,931, Benefits 116,183, Taxpayers' Ombudsman 3,472, total for 2020 4,217,436, and total for 2019 3,784,269
  • Professional and business services: Tax 146,022, Internal services 415,684, Benefits 5,643, Taxpayers' Ombudsman 365, total for 2020 567,714, and total for 2019 562,850
  • Accommodation: Tax 225,544, Internal services 62,167, Benefits 9,502, Taxpayers' Ombudsman 201, total for 2020 297,414, and total for 2019 290,453
  • Federal sales tax administration costs by the Province of Québec: Tax 141,828, Internal services nil, Benefits nil, Taxpayers' Ombudsman nil, total for 2020 141,828, and total for 2019 141,794
  • Transportation and communications: Tax 83,782, Internal services 18,954, Benefits 16,216, Taxpayers' Ombudsman 65, total for 2020 119,017, and total for 2019 118,539
  • Amortization of tangible capital assets (note 7): Tax 48,402, Internal services 8,242, Benefits 3,402, Taxpayers' Ombudsman 2, total for 2020 60,048, and total for 2019 61,964
  • Equipment purchases: Tax 6,993, Internal services 33,231, Benefits 248, Taxpayers' Ombudsman 21, total for 2020 40,493, and total for 2019 47,257
  • Other services and expenses: Tax 17,164, Internal services 4,016, Benefits 10,497, Taxpayers' Ombudsman 59, total for 2020 31,736, and total for 2019 39,212
  • Materials and supplies: Tax 13,456, Internal services 2,673, Benefits 1,396, Taxpayers' Ombudsman 16, total for 2020 17,541, and total for 2019 18,509
  • Advertising, information and printing services: Tax 11,331, Internal services 5,657, Benefits 14, Taxpayers' Ombudsman 42, total for 2020 17,044, and total for 2019 23,394
  • Equipment rentals: Tax 5,434, Internal services 10,705, Benefits 374, Taxpayers' Ombudsman 34, total for 2020 16,547, and total for 2019 15,741
  • Interest on average accrued benefit obligations (note 5): Tax 5,950, Internal services 1,225, Benefits 200, Taxpayers' Ombudsman 6, total for 2020 7,381, and total for 2019 9,178
  • Loss on disposal/write-off of tangible capital assets: Tax 95, Internal services 1,451, Benefits 11, Taxpayers' Ombudsman nil, total for 2020 1,557, and total for 2019 686
  • Repair and maintenance: Tax 803, Internal services 121, Benefits 60, Taxpayers' Ombudsman nil, total for 2020 984, and total for 2019 1,990
  • Total expenses: Tax 4,109,654, Internal services 1,259,057, Benefits 163,746, Taxpayers' Ombudsman 4,283, total for 2020 5,536,740, and total for 2019 5,115,836

b) The following table presents the non-tax revenues generated for the main core responsibilities, by major type of non-tax revenues. 

Segmented information – non-tax revenues image description

Segmented information – non-tax revenues (in thousands of dollars)

Non-tax revenues credited to Vote 1

  • Fees for administering the Employment Insurance Act: Tax 152,742, Internal services 31,629, Benefits 713, total for 2020 185,084 and total for 2019 183,435,
  • Fees for administering the Canada Pension Plan: Tax 151,315, Internal services 53,095, Benefits nil, total for 2020 204,410 and total for 2019 172,700
  • Total for non-tax revenues credited to Vote 1: Tax 304,057, Internal services 84,724, Benefits 713, total for 2020 389,494 and total for 2019 356,135

Non-tax revenues available for spending

  • Administration fees - provinces and territories: Tax 59,326, Internal services 43,176, Benefits 17,814, total for 2020 120,316 and total for 2019 128,105
  • Services fees: Tax 21,099, Internal services 42,803, Benefits 1,721, total for 2020 65,623 and total for 2019 49,033
  • Miscellaneous respendable revenues: Tax 1,724, Internal services 258, Benefits 9, total for 2020 1,991 and total for 2019 2,516
  • Total non-tax revenues available for spending: Tax 82,149, Internal services 86,237, Benefits 19,544, total for 2020 187,930 and total for 2019 179,654.

Non-tax revenues not available for spending

  • Recovery of employee benefit costs relating to non-tax revenues credited to Vote 1 and revenues available for spending: Tax 60,883, Internal services 15,286, Benefits 2,985, total for 2020 79,154 and total for 2019 74,154
  • Miscellaneous non-tax revenues: Tax 749, Internal services 116, Benefits nil, total for 2020 865 and total for 2019 1,401
  • Total non-tax revenues not available for spending: Tax 61,632, Internal services 15,402, Benefits 2,985, total for 2020 80,019 and total for 2019 75,555
  • Total non-tax revenues before revenues earned on behalf of Government: Tax 447,838, Internal services 186,363, Benefits 23,242, total for 2020 657,443 and total for 2019 611,344.

Revenues earned on behalf of Government: Tax (61,632), Internal services (15,402), Benefits (2,985), total for 2020 (80,019) and total for 2019 (75,555)

Total non-tax revenues: Tax 386,206, Internal services 170,961, Benefits 20,257, total for 2020 577,424 and total for 2019 535,789

9. Related party transactions

The CRA is related as a result of common ownership to all Government of Canada departments, agencies and Crown corporations. Related parties also include individuals who are members of the CRA key management personnel or close family members of those individuals, and entities fully or jointly controlled by any of them.

The CRA enters into transactions with these entities in the normal course of business and on normal trade terms.

The following material transactions have occurred at a value different from that which would have been arrived at if the parties were unrelated:

a) Common services provided without charge by other government departments and agencies

During the year, the CRA received services without charge from other government departments and agencies, related to information technology, the employer’s contribution to the health and dental insurance plans and workers’ compensation coverage, legal services and audit services. These services provided without charge have been recorded at the carrying value in the CRA’s Statement of Operations and Net Financial Position as follows:

Related party transactions image description

Related party transactions (in thousands of dollars)   

  • Information technology services - Shared Services Canada: for 2020, the amount is 314,606 and for 2019, the amount is 317,719
  • Employer's contribution to the health and dental insurance plans – Treasury Board Secretariat: for 2020, the amount is 295,043 and for 2019, the amount is 262,372
  • Legal services – Justice Canada: for 2020, the amount is 31,852 and for 2019, the amount is 28,861
  • Payroll services – Public Services and Procurement Canada: for 2020, the amount is nil and for 2019, the amount is 12,700
  • Audit services – Office of the Auditor General of Canada: for 2020, the amount is 2,680 and for 2019, the amount is 2,363
  • Workers' compensation benefits – Employment and Social Development Canada: for 2020, the amount is 998 and for 2019, the amount is 1,081
  • Total: for 2020, the amount is 645,179 and for 2019, the amount is 625,096

The Government has centralized some of its administrative activities for efficiency, cost-effectiveness purposes and economic delivery of programs to the public. As a result, the Government uses central agencies and common service organizations so that one department performs services for all other departments and agencies without charge. The costs of these services, such as the payroll and cheque issuance services provided by Public Services and Procurement Canada, are not included in the CRA’s Statement of Operations and Net Financial Position. The estimated cost of these payroll services was previously available and included at the carrying value in CRA’s Statement of Operations and Net Financial Position ($12.7 million in 2018-2019).

b) Other transactions with other government departments and agencies

In addition, the CRA recorded the following expenses and revenues at the exchange amount for services provided from or to other government departments and agencies:

Expenses and revenues at the exchange amount for services provided from or to OGD and agencies image description

Expenses and revenues at the exchange amount for services provided from or to other government departments and agencies (in thousands of dollars)   

  • Expenses – Other government departments and agencies: for 2020, the amount is 930,151 and for 2019, the amount is 909,448
  • Revenues – Other government departments and agencies: for 2020, the amount is (456,568) and for 2019, the amount is (406,051)

Expenses for services provided by other government departments and agencies are mainly comprised of: $462 million as at March 31, 2020 for employer contributions to employee benefit plans charged by Treasury Board Secretariat and $298 million for accommodation costs charged by Public Services and Procurement Canada ($453 million and $290 million respectively as at March 31, 2019). 

Revenues for services provided to other government departments and agencies primarily relate to cost recoveries totaling $389 million as at March 31, 2020 for the administration and enforcement of the Canada Pension Plan and the Employment Insurance program on behalf of Employment and Social Development Canada ($356 million as at March 31, 2019).

10. Board of Management

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

Board of Management image description

Board of Management (in thousands of dollars)

Board of Management

  • Compensation: the amount for 2020 is 367 and the amount for 2019 is 393
  • Travel: the amount for 2020 is 117 and the amount for 2019 is 118
  • Professional services and other expenses: the amount for 2020 is 130 and the amount for 2019 is 116
  • Total for the Board of Management: the amount for 2020 is 614 and the amount for 2019 is 627

Other related costs

  • Board Secretariat support: the amount for 2020 is 639 and the amount for 2019 is 640.

Total: the amount for 2020 is 1,253 and the amount for 2019 is 1,267

11.  Contingent liabilities

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

All other cases, excluding those assessed as unlikely to be lost, are considered contingent liabilities and the related amounts are disclosed whenever the amount of the contingency can be reasonably estimated. As at March 31, 2020, these contingent liabilities have been estimated at $61.4 million ($66.6 million as at March 31, 2019) which is based on management’s best estimate determined on a case by case basis.

12. Financial risk management

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

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

The credit risk is the risk that another party owing money to the CRA would fail to discharge its obligation creating a financial loss for the CRA. The maximum exposure of the CRA to the credit risk amounted to $39.9 million as at March 31, 2020 ($22.6 million as at March 31, 2019), which is equal to the carrying value of its accounts receivable and advances. As the vast majority of the CRA’s accounts receivable and advances are either with other government departments or employees, the credit risk is low.

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

The market risk is defined as the risk that future cash flows of a financial instrument would fluctuate because of changes in currency rates, interest rates and/or other rates. The CRA’s exposure to market risk is limited to fluctuations in the currency rates and the impact of such variations on CRA’s cash flows is negligible as its financial transactions in foreign currency are immaterial. The CRA’s exposure to these risks and the policies and processes to manage and measure them did not change significantly from the prior year.

13. Comparative figures

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

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