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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 three categories: liabilities, financial assets, and non-financial assets (in thousands of dollars).

Under the liabilities section

  • Accrued salaries for 2021 are 249,029 and for 2020 are 678,862.
  • Accounts payable and accrued liabilities (note 4) for 2021 are 240,990 and for 2020 are 77,104.
  • Vacation pay and compensatory leave for 2021 are 325,741 and for 2020 are 245,174.
  • Employee severance benefits (note 5e) for 2021 are 164,079 and for 2020 are 172,407.
  • Employee sick leave benefits (note 5e) for 2021 are 293,954 and for 2020 are 280,284.
  • Total liabilities for 2021 are 1,273,793 and for 2020 are 1,453,831.

Under the financial assets section

  • Due from the Consolidated Revenue Fund for 2021 is 389,609 and for 2020 is 306,320.
  • Accounts receivable and advances (note 6) for 2021 are 44,264 and for 2020 are 39,879.
  • Total financial assets for 2021 are 433,873 and for 2020 are 346,199.

Total Agency net debt for 2021 is 839,920 and for 2020 is 1,107,632.

Under the non-financial assets section

  • Prepaid expenses for 2021 are 30,257 and for 2020 are 20,074.
  • Tangible capital assets (note 7) for 2021 are 452,944 and for 2020 are 420,409.
  • Total non-financial assets for 2021 are 483,201 and for 2020 are 440,483.

Agency net financial position for 2021 is 356,719 for 2020 is 667,149.

Contingent liabilities and contingent assets (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

September 1, 2021

Original signed

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

September 1, 2021

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 three categories: expenses, non-tax revenues, and Government funding and transfers (in thousands of dollars).

Under the expenses section (note 8a)

  • Tax: the 2021 planned result is 4,162,582, the 2021 actual result is 4,338,992, and the 2020 actual result is 4,109,654.
  • Internal services: the 2021 planned result is 1,282,505, the 2021 actual result is1,340,028, and the 2020 actual result is 1,259,057.
  • Benefits: the 2021 planned result is 183,827, the 2021 actual result is 197,588, and the 2020 actual result is 163,746.
  • Taxpayers' Ombudsperson: the 2021 planned result is 4,378, the 2021 actual result is 4,674, and the 2020 actual result is 4,283.

Total expenses: the 2021 planned result is 5,633,292, the 2021 actual result is5,881,282, and the 2020 actual result is 5,536,740.

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

  • Tax: the 2021 planned result is 456,909, the 2021 actual result is 604,791, and the 2020 actual result is 429,198.
  • Internal services: the 2021 planned result is 185,511, the 2021 actual result is 324,070, and the 2020 actual result is 205,719.
  • Benefits: the 2021 planned result is 20,823, the 2021 actual result is 24,502, and the 2020 actual result is 22,526.
  • Revenues earned on behalf of Government: the 2021 planned result is (98,385), the 2021 actual result is (131,513), and the 2020 actual result is (80,019).

Total non-tax revenues: the 2021 planned result is 564,858, the 2021 actual result is 821,850, and the 2020 actual result is 577,424.

Net cost of operations before government funding and transfers: the 2021 planned result is 5,068,434, the 2021 actual result is5,059,432, and the 2020 actual result is 4,959,316.

Under the Government funding and transfers section

  • Net cash provided by the Government of Canada: the 2021 planned result is 4,265,832, the 2021 actual result is 4,595,232, and the 2020 actual result is 4,068,486.
  • Services provided without charge from other government departments and agencies (note 9): the 2021 planned result is 614,456, the 2021 actual result is 691,123, and the 2020 actual result is 645,179.
  • Change in due from the Consolidated Revenue Fund: the 2021 actual result is 83,289, and the 2020 actual result is (55,829).
  • Transfer of transition payments for implementing salary payments in arrears: the 2021 actual result is nil, and the 2020 actual result is (11).
  • Net transfers of salary overpayments from other government departments: the 2021 actual result is 218, and the 2020 actual result is 39.

Total government funding and transfers: the 2021 planned result is 4,880,288, the 2021 actual result is 5,369,862, and the 2020 actual result is 4,657,864.

Net cost (surplus) of operations after government funding and transfers: the 2021 planned result is 188,146, the 2021 actual result is (310,430), and the 2020 actual result is 301,452.

Agency net financial position – Beginning of year: the 2021 planned result is 667,149, the 2021 actual result is 667,149, and the 2020 actual result is 365,697.

Agency net financial position – End of year: the 2021 planned result is 855,295, the 2021 actual result is 356,719, and the 2020 actual result is 667,149.

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 (surplus) of operations after government funding and transfers: the 2021 planned result is 188,146, the 2021 actual result is (310,430) and the 2020 actual result is 301,452.

Under Change in tangible capital assets section

  • Acquisition of tangible capital assets (note 7): the 2021 planned result is 55,804, the 2021 actual result is 88,679, and the 2020 actual result is 63,964.
  • Amortization of tangible capital assets (note 7): the 2021 planned result is (68,101), the 2021 actual result is (55,464), and the 2020 actual result is (60,048).
  • Proceeds from disposal of tangible capital assets: the 2021 actual result is (56), and the 2020 actual result is (63).
  • Net loss on disposal/write-off of tangible capital assets: the 2021 planned result is (1,212), the 2021 actual result is (624), and the 2020 actual result is (1,500).

Total change in tangible capital assets: the 2021 planned result is (13,509), the 2021 actual result is 32,535, and the 2020 actual result is 2,353.

Change in prepaid expenses: the 2021 actual result is 10,183 and the 2020 actual result is 4,431.

Net increase (decrease) in agency net debt: the 2021 planned result is 174,637, the 2021 actual result is (267,712), and the 2020 actual result is 308,236.

Agency net debt – Beginning of year: the 2021 planned result is 1,107,632, the 2021 actual result is 1,107,632, and the 2020 actual result is 799,396.

Agency net debt – End of year: the 2021 planned result is 1,282,269, the 2021 actual result is 839,920, and the 2020 actual result is 1,107,632.

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 two 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 2021 the amount is 5,059,432 and for 2020 the amount is 4,959,316.
  • Items not affecting cash
    • Amortization of tangible capital assets (note 7): for 2021 the amount is (55,464) and for 2020 the amount is (60,048).
    • Net loss on disposal/write-off of tangible capital assets: for 2021 the amount is (624) and for 2020 the amount is (1,500).
    • Services provided without charge from other government departments and agencies (note 9): for 2021 the amount is (691,123) and for 2020 the amount is (645,179).
    • Transition payments for implementing salary payments in arrears: for 2021 the amount is nil and for 2020 the amount is 11.
    • Transfer of salary overpayments from other government departments: for 2021 the amount is (218) and for 2021 the amount is (39).
    • Change in accounts receivable and advances: for 2021 the amount is 4,385 and for 2020 the amount is 17,284.
    • Change in prepaid expenses: for 2021 the amount is 10,183 and for 2020 the amount is 4,431.
    • Change in accrued salaries: for 2021 the amount is 429,833 and for 2020 the amount is (288,781).
    • Change in accounts payable and accrued liabilities: for 2021 the amount is (163,886) and for 2020 the amount is 52,049.
    • Change in vacation pay and compensatory leave: for 2021 the amount is (80,567) and for 2020 the amount is (37,118).
    • Change in employee severance benefits: for 2021 the amount is 8,328 and for 2020 the amount is 14,749.
    • Change in employee sick leave benefits: for 2021 the amount is (13,670) and for 2020 the amount is (10,590).
  • Cash used in operating activities: for 2021 the amount is 4,506,609 and for 2020 the amount is 4,004,585.

Under the Capital investing activities section

  • Acquisition of tangible capital assets (note 7): for 2021 the amount is 88,679 and for 2020 the amount is 63,964.
  • Proceeds from disposal of tangible capital assets: for 2021 the amount is (56) and for 2020 the amount is (63).

Cash used in capital investing activities: for 2021 the amount is 88,623, and for 2020 the amount is 63,901.

Net cash provided by the Government of Canada: for 2021 the amount is 4,595,232 and for 2020 the amount is 4,068,486.

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 of the 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, the Public Health Events of National Concern Payments Act, the Canada Emergency Response Benefit Act, the Canada Emergency Student Benefit Act, the Canada Recovery Benefits 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’ Ombudsperson: 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 2020-2021 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 and contingent assets

Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, a provision is accrued and an expense recorded to other expenses. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.

Contingent assets are possible assets which may become actual assets when one or more future events occur or fail to occur. If the future event is likely to occur or fail to occur, the contingent asset 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 for departmental financial statement purposes 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 2021 is 4,379,582 and the amount for 2020 is 3,785,608.
  • Vote 5 – Capital expenditures: the amount for 2021 is 89,114 and the amount for 2020 is 62,302.
  • Vote 10 – Access to Charitable Tax Incentives for Not-for-Profit Journalism (footnote 1): the amount for 2021 is nil and the amount for 2020 is 196.
  • Vote 15 – Ensuring Proper Payments for Public Servants (footnote 1): the amount for 2021 is nil and the amount for 2020 is 2,857.
  • Vote 20 – Improving Access to the Canada Workers Benefit Throughout the Year (footnote 1): the amount for 2021 is nil and the amount for 2020 is 1,997.
  • Vote 25 – Improving Client Services at the Canada Revenue Agency (footnote 1): the amount for 2021 is nil and the amount for 2020 is 2,072.
  • Vote 30 – Improving Tax Compliance (footnote 1): the amount for 2021 is nil and the amount for 2020 is 6,868.
  • Vote 35 – Taking Action to Enhance Tax Compliance in the Real Estate Sector (footnote 1): the amount for 2021 is nil and the amount for 2020 is 2,301.
  • Vote 40 – Tax Credit for Digital News Subscriptions (footnote 1): the amount for 2021 is nil and the amount for 2020 is 18.
  • Spending of revenues received through the conduct of operations pursuant to section 60 of the Canada Revenue Agency Act: the amount for 2021 is 348,161 and the amount for 2020 is 189,819.
  • Spending of proceeds from disposal of surplus Crown assets: the amount for 2021 is 93 and the amount for 2020 is 95.
  • Statutory expenditures:
    • Contributions to employee benefit plans: the amount for 2021 is 585,801 and the amount for 2020 is 462,466.
    • Public Health Event of National Concern and Income Support – payments to ensure access to CRA call centres: the amount for 2021 is 82,819 and the amount for 2020 is nil.
    • Public Health Event of National Concern and Income Support – payments to support COVID-19 economic measures: the amount for 2021 is 34,323 and the amount for 2020 is nil.
    • Children's special allowance payments (footnote 2): the amount for 2021 is 381,822 and the amount for 2020 is 351,623.
    • Climate action incentive payments (footnote 2): the amount for 2021 is 4,546,974 and the amount for 2020 is 2,629,934.
    • Distribution of fuel and excess emission charges (footnote 2): the amount for 2021 is 18,451 and the amount for 2020 is 5,610.
    • Other: the amount for 2021 is 4,482 and the amount for 2020 is 1,705.
    • Total parliamentary appropriations provided for 2021 is 10,471,622 and for 2020 is 7,505,471

Less:

  • Appropriations available for future year (footnote 3):
    • Vote 1: the amount for 2021 is (474,968) and the amount for 2020 is (277,663).
    • Vote 5: the amount for 2021 is (12,650) and the amount for 2020 is (9,779).
  • Appropriations lapsed:
    • Vote 1: the amount for 2021 is (8) and the amount for 2020 is (3,509).
    • Budget implementation votes (footnote 1): the amount for 2021 is nil and the amount for 2020 is (16,309).
  • Expenditures related to administered activities (footnote 2): the amount for 2021 is (4,947,263) and the amount for 2021 is (2,987,172).
  • Sub-total for 2021 is (5,434,889) and for 2020 is (3,294,432).

Total Parliamentary appropriations used: the amount for 2021 is 5,036,733 and the amount for 2020 is 4,211,039.

Footnotes

  1. The use of the Budget implementation Vote was part of a two year pilot project in 2019 and 2020 to better align the Main Estimates with the Federal Budget. In 2020, the Budget Implementation Votes were associated with each individual department.
  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 2021 the amount is 5,059,432 and for 2020 the amount is 4,959,316.

Expenses not requiring use of current year appropriations:

  • Amortization of tangible capital assets (note 7): for 2021 the amount is (55,464) and for 2020 the amount is (60,048).
  • Adjustment to prior years' accruals: for 2021 the amount is 4,158 and for 2020 the amount is 4,224.
  • Loss on disposal/write-off of tangible capital assets: for 2021 the amount is (680) and for 2020 the amount is (1,557).
  • Services provided without charge from other government departments and agencies (note 9): for 2021 the amount is (691,123) and for 2020 the amount is (645,179).
  • Other: for 2021 the amount is 2,586 and for 2020 the amount is 654.
  • The sub-total for expenses not requiring use of current year appropriations is (740,523) for 2021 and (701,906) for 2020.

Changes to assets affecting appropriations:

  • Tangible capital assets acquisitions (note 7): for 2021 the amount is 88,679 and for 2020 the amount is 63,964.
  • Variation in prepaid expenses: for 2021 the amount is 10,183 and for 2020 the amount is 4,431.
  • Variation in salary advances and overpayments: for 2021 the amount is 3,734 and or 2020 the amount is 4,139.
  • Transition payments for implementing salary payments in arrears: for 2021 the amount is nil and for 2020 the amount is 11.
  • The sub-total for changes to assets affecting appropriations is 102,596 for 2021 and 72,545 for 2020.

Changes in future funding requirements:

  • Salary, vacation pay and compensatory leave: for 2021 the amount is 272,909 and for 2020 the amount is (311,005).
  • Employee severance benefits: for 2021 the amount is 8,328 and for 2020 the amount is 14,749.
  • Employee sick leave benefits: for 2021 the amount is (13,670) and for 2020 the amount is (10,590).
  • The sub-total for changes in future funding requirements is 267,567 for 2021 and (306,846) for 2020.

Non-tax revenues available for spending (note 8b): for 2021 the amount is 347,661 and for 2020 the amount is 187,930.

Total Parliamentary appropriations used: for 2021 the amount is 5,036,733 and for 2020 the amount is 4,211,039.

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 2021 is 78,076 and the amount for 2020 is 44,101.
  • Accounts payable and accrued liabilities – Other government departments and agencies: the amount for 2021 is 162,914 and the amount for 2020 is 33,003.
  • Total accounts payable and accrued liabilities for 2021 is 240,990 and for 2020 is 77,104.

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 2019-2020) the contributions of employees and, for Group 2 members, approximately 1.00 time (1.00 time in 2019-2020) the contributions of employees.

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

Pension benefits image description

The contributions to the Plan for the year (in thousands of dollars).

  • CRA's contributions: for 2021 are 406,275 and for 2020 are 320,396.
  • Employees' contributions: for 2021 are 403,657 and for 2020 are 318,117.

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, 2021, 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

Changes from the prior year in the actuarial value of the 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 (in thousands of dollars) presented separately for severance benefits and sick leave benefits.

Severance benefits

  • Accrued employee benefits obligation, beginning of year: for 2021 is 183,572 and for 2020 is 184,252.
  • Benefits earned: for 2021 is 5,851 and for 2020 is 4,888.
  • Interest on average accrued benefit obligations (note 8a): for 2021 is 1,710 and for 2020 is 3,037.
  • Benefits paid : for 2021 is (16,673) and for 2020 is (22,307).
  • Actuarial (gain)/loss: for 2021 is (7,255) and for 2020 is 13,702.
  • Accrued employee benefits obligation, end of year: for 2021 is 167,205 and for 2020 is 183,572.
  • Plus: Unamortized net actuarial gain/(loss): for 2021 is (3,126) and for 2020 is (11,165).
  • Employee benefits liability – Severance benefits: for 2021 is 164,079 and for 2020 and 172,407.
  • Benefit expenses (footnote 1)
  • Benefits earned: for 2021 is 5,851 and for 2020 is 4,888.
  • Actuarial (gain)/loss recognized following plan settlement: for 2021 is 2 and for 2020 is (6).
  • Amortization on net actuarial (gain)/loss recognized during the year: for 2021 is 781 and for 2020 is (361).
  • Total benefit expenses – Severance benefits: for 2021 is 6,634 and for 2020 is 4,521.

Sick leave benefits

  • Accrued employee benefits obligation, beginning of year: for 2021 is 277,368 and for 2020 is 248,420.
  • Benefits earned: for 2021 is 53,673 and for 2020 is 47,837.
  • Interest on average accrued benefit obligations (note 8a): for 2021 is 2,635 and for 2020 is 4,344.
  • Benefits paid: for 2021 is (41,839) and for 2020 is (39,600).
  • Actuarial (gain)/loss: for 2021 is (62,771) and for 2020 is 16,367.
  • Accrued employee benefits obligation, end of year: for 2021 is 229,066 and for 2020 is 277,368.
  • Plus: Unamortized net actuarial gain/(loss): for 2021 is 64,888 and for 2020 is 2,916.
  • Employee benefits liability – Sick leave benefits: for 2021 is 293,954 and for 2020 is 280,284.
  • Benefit expenses (footnote 1)
  • Benefits earned : for 2021 is 53,673 and for 2020 is 47,837.
  • Actuarial (gain)/loss recognized following plan settlement : for 2021 is nil and for 2020 is nil.
  • Amortization on net actuarial (gain)/loss recognized during the year : for 2021 is (799) and for 2020 is (1,991).
  • Total benefit expenses – Sick leave benefits: for 2021 is 52,874 and for 2020 is 45,846.

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, 2021 used discount rates of 1.56% for severance benefit obligation and 1.50% for sick leave benefit obligation (0.96% and 0.93% respectively as at March 31, 2020) and a salary growth of 1.5% - 2.7% for both obligations (1.5% - 2.7% as at March 31, 2020). The expected average remaining service life is 13 years for severance benefits and 13.98 years for sick leave benefits as at March 31, 2021 (12.1 years and 13.73 years respectively as at March 31, 2020).

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) presented separately for severance benefits and sick leave benefits.

Severance benefits

  • Possible impact on the accrued employee benefits obligation due to:
  • Increase of 1% in discount rate: for 2021 is (11,263) and for 2020 is (12,380).
  • Decrease of 1% in discount rate: for 2021 is 13,037 and for 2020 is 14,281.
  • Increase of 1% in salary growth: for 2021 is 12,821 and for 2020 is 13,941.
  • Decrease of 1% in salary growth: for 2021 is (11,307) and for 2020 is (12,348).

Sick leave benefits

  • Possible impact on the accrued employee benefits obligation due to:
  • Increase of 1% in discount rate: for 2021 is (13,946) and for 2020 is (17,658).
  • Decrease of 1% in discount rate: for 2021 is 15,901 and for 2020 is 20,191.
  • Increase of 1% in salary growth: for 2021 is 15,612 and for 2020 is 19,679.
  • Decrease of 1% in salary growth: for 2021 is (13,975) and for 2020 is (17,580).

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 2021 are 31,828 and for 2020 are 24,983.
  • Salary overpayments: for 2021 are 9,729 and for 2020 are 11,665.
  • Advances to employees: for 2021 are 1,297 and for 2020 are 2,248.
  • Accounts receivable – External: for 2021 are 2,376 and for 2020 are 2,118.
  • The subtotal for 2021 is 45,230 and for 2020 is 41,014.
  • Less: Allowance for doubtful accounts: for 2021 is (966) and for 2020 is (1,135).

Total accounts receivable and advances: for 2021 is 44,264 and for 2020 is 39,879.

7. Tangible capital assets

Tangible capital assets image description

The cost of software in development, which is not amortized, is $74.4 million as at March 31, 2021 ($129.4 million as at March 31, 2020).

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

Cost

  • Machinery, equipment and furniture: the opening balance is 6,918, the acquisitions 557, the disposals (597), the transfers to other government departments nil, and the closing balance 6,878.
  • Software (purchased and in-house developed and/or in development): the opening balance is 1,269,563, the acquisitions 86,327, the disposals (6,111), the transfers to other government departments nil, and the closing balance 1,349,779.
  • Motor vehicles: the opening balance is 1,721, the acquisitions 291, the disposals (157), the transfers to other government departments nil, and the closing balance 1,855.
  • Information technology equipment: the opening balance is 10,466, the acquisitions 1,504, the disposals (431), the transfers to other government departments nil, and the closing balance 11,539.
  • Total cost: the opening balance is 1,288,668, the acquisitions 88,679, the disposals (7,296), the transfers to other government departments nil, and the closing balance 1,370,051

Accumulated amortization

  • Machinery, equipment and furniture: the opening balance is 4,421, the amortization expense 463, the disposals (418), the transfers to other government departments nil, and the closing balance 4,466.
  • Software (purchased and in-house developed and/or in development): the opening balance is 854,352, the amortization expense 53,897, the disposals (5,610), the transfers to other government departments nil, and the closing balance 902,639.
  • Motor vehicles: the opening balance is 1,272, the amortization expense 163, the disposals (157), the transfers to other government departments nil, and the closing balance 1,278.
  • Information technology equipment: the opening balance is 8,214, the amortization expense 941, the disposals (431), the transfers to other government departments nil, and the closing balance 8,724.
  • Total accumulated amortization: the opening balance is 868,259, the amortization expense 55,464, the disposals (6,616), the transfers to other government departments nil, and the closing balance 917,107.

Net book value

  • Machinery, equipment and furniture: 2021 is 2,412 and 2020 is 2,497.
  • Software (purchased and in-house developed and/or in development): 2021 is 447,140 and 2020 is 415,211.
  • Motor vehicles: 2021 is 577 and 2020 is 449.
  • Information technology equipment: 2021 is 2,815 and 2020 is 2,252.
  • Total net book value: 2021 is 452,944 and 2020 is 420,409.

The cost of software in development, which is not amortized, is $74.4 million as at March 31, 2021 ($129.4 million as at March 31, 2020).

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

Expenses incurred for the main core responsibilities, by major object of expense (in thousands of dollars).

Personnel:

  • Salaries: Tax 2,499,276, Internal services 491,521, Benefits 97,325 and Taxpayers' Ombudsperson 2,602. The sub-total for salaries for 2021 is 3,090,724 and for 2020 is 2,994,236.
  • Other allowances and benefits (including employee benefits described in note 5): Tax 1,145,032, Internal services 224,842, Benefits 43,384 and Taxpayers' Ombudsperson 1,179. The sub-total for other allowances and benefits for 2021 is 1,414,437 and for 2020 is 1,223,200.
  • Total for personnel: Tax 3,644,308, Internal services 716,363, Benefits 140,709 and Taxpayers' Ombudsperson 3,781. The total for all core responsibilities for 2021 is 4,505,161 and for 2020 is 4,217,436.
  • Professional and business services: Tax 136,777, Internal services 460,932, Benefits 4,266 and Taxpayers' Ombudsperson 445. The total is 602,420 for 2021 and 567,714 for 2020.
  • Accommodation: Tax 228,204, Internal services 62,453, Benefits 8,331 and Taxpayers' Ombudsperson 220. The total is 299,208 for 2021 and 296,660 for 2020.
  • Federal sales tax administration costs by the Province of Québec: Tax 140,843, nil for Internal services, Benefits and Taxpayers' Ombudsperson. The total is 140,843 for 2021 and 141,828 for 2020.
  • Transportation and communications: Tax 54,291, Internal services 6,112, Benefits 27,324 and Taxpayers' Ombudsperson 6. The total is 87,733 for 2021 and 119,017 for 2020.
  • Equipment purchases: Tax 14,985, Internal services 60,940, Benefits 358 and Taxpayers' Ombudsperson 23. The total is 76,306 for 2021 and 40,493 for 2020.
  • Amortization of tangible capital assets (note 7): Tax 44,265, Internal services 9,746, Benefits 1,451 and Taxpayers' Ombudsperson 2. The total is 55,464 for 2021 and 60,048 for 2020.
  • Other services and expenses (recoveries): Tax 34,072, Internal services (59), Benefits 12,321 and Taxpayers' Ombudsperson 61. The total is 46,395 for 2021 and 31,736 for 2020.
  • Advertising, information and printing services: Tax 13,540, Internal services 11,309, Benefits 25 and Taxpayers' Ombudsperson 47. The total is 24,921 for 2021 and 17,044 for 2020.
  • Equipment rentals: Tax 12,337, Internal services 8,678, Benefits 1,054 and Taxpayers' Ombudsperson 76. The total is 22,145 for 2021 and 16,547 for 2020.
  • Materials and supplies: Tax 10,940, Internal services 1,790, Benefits 1,537 and Taxpayers' Ombudsperson 9. The total is 14,276 for 2021 and 17,541 for 2020.
  • Interest on average accrued benefit obligations (note 5): Tax 3,512, Internal services 694, Benefits 135 and Taxpayers' Ombudsperson 4. The total is 4,345 for 2021 and 7,381 for 2020.
  • Repair and maintenance: Tax 814, Internal services 494, Benefits 77 and Taxpayers' Ombudsperson nil. The total is 1,385 for 2021 and 1,738 for 2020.
  • Loss on disposal/write-off of tangible capital assets: Tax 104, Internal services 576, Benefits nil, Taxpayers' Ombudsperson nil. The total is 680 for 2021 and 1,557 for 2020.
  • Total expenses: Tax 4,338,992, Internal services 1,340,028, Benefits 197,588 and Taxpayers' Ombudsperson 4,674. The total expenses for all core responsibilities for 2021 is 5,881,282 and for 2020 is 5,536,740.

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

Non-tax revenues generated for the main core responsibilities, by major type of non-tax revenues (in thousands of dollars).

Non-tax revenues credited to Vote 1

  • Fees for administering the Canada Pension Plan: Tax 192,701, Internal services 47,678 and Benefits nil. The total is 240,379 for 2021 and 204,410 for 2020.
  • Fees for administering the Employment Insurance Act: Tax 191,689, Internal services 41,059 and Benefits 1,062. The total is 233,810 for 2021 and 185,084 for 2020.
  • Total non-tax revenues credited to Vote 1: Tax 384,390, Internal services 88,737 and Benefits 1,062. The total for all core responsibilities is 474,189 for 2021 and 389,494 for 2020.

Non-tax revenues available for spending

  • Services fees: Tax 67,638, Internal services 160,657 and Benefits 3,107. The total is 231,402 for 2021 and 65,623 for 2020.
  • Administration fees - provinces and territories: Tax 48,985, Internal services 46,507 and Benefits 18,755. The total is 114,247 for 2021 and 120,316 for 2020.
  • Miscellaneous respendable revenues: Tax 1,114, Internal services 886 and Benefits 12. The total is 2,012 for 2021 and 1,991 for 2020.
  • Total non-tax revenues available for spending: Tax 117,737, Internal services 208,050 and Benefits 21,874. The total for all core responsibilities is 347,661 for 2021 and 187,930 for 2020.

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 102,040, Internal services 26,975 and Benefits 1,566. The total is 130,581 for 2021 and 79,154 for 2020.
  • Miscellaneous non-tax revenues: Tax 624, Internal services 308 and Benefits nil. The total is 932 for 2021 and 865 for 2020.
  • Total non-tax revenues not available for spending: Tax 102,664, Internal services 27,283 and Benefits 1,566. The total for all core responsibilities is 131,513 for 2021 and 80,019 for 2020.
  • Total non-tax revenues before revenues earned on behalf of Government: Tax 604,791, Internal services 324,070 and Benefits 24,502. The total for all core responsibilities is 953,363 for 2021 and 657,443 for 2020.

Revenues earned on behalf of Government: Tax (102,664), Internal services (27,283) and Benefits (1,566). The total is (131,813) for 2021 and (80,019) for 2020.

Total non-tax revenues: Tax 502,127, Internal services 296,787 and Benefits 22,936. The total non-tax revenues for all core responsibilities is 821,850 for 2021 and 577,424 for 2020.

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

Services received without charge by other government departments and agencies and recorded at their carrying value (in thousands of dollars).

  • Employer's contribution to the health and dental insurance plans – Treasury Board Secretariat: 339,177 for 2021 and 295,043 for 2020.
  • Information technology services - Shared Services Canada: 311,420 for 2021 and 314,606 for 2020.
  • Legal services – Justice Canada: 35,745 for 2021 and 31,852 for 2020.
  • Audit services – Office of the Auditor General of Canada: 3,912 for 2021 and 2,680 for 2020.
  • Workers' compensation benefits – Employment and Social Development Canada: 869 for 2021 and 998 for 2020.
  • Total services received without charge by other government departments and agencies: 691,123 for 2021 and 645,179 for 2020.

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.

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 for services provided from or to other government departments and agencies recorded at their exchange amount (in thousands of dollars).

  • Expenses – Other government departments and agencies: 1,110,847 for 2021 and 930,151 for 2020.
  • Revenues – Other government departments and agencies: (725,757) for 2021 and (456,568) for 2020.

Expenses for services provided by other government departments and agencies are mainly comprised of: $601 million as at March 31, 2021 for employer contributions to employee benefit plans charged by Treasury Board Secretariat, $299 million for accommodation costs charged by Public Services and Procurement Canada and $99 million for information technology services charged by Shared Services Canada ($462 million, $298 million and $69 million respectively as at March 31, 2020).

Revenues for services provided to other government departments and agencies primarily relate to cost recoveries totaling, as at March 31, 2021, $668 million for the administration and enforcement of the Canada Pension Plan, the Employment Insurance program and the COVID-19 emergency measures on behalf of Employment and Social Development Canada ($405 million as at March 31, 2020).

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

The expenses relating to the board's activities for the year included in the net cost of operations (in thousands of dollars).

Board of Management

  • Compensation: the amount for 2021 is 320 and the amount for 2020 is 367.
  • Professional services and other expenses: the amount for 2021 is 113 and the amount for 2020 is 130.
  • Travel: the amount for 2021 is 10 and the amount for 2020 is 117.
  • Total for the Board of Management: the amount for 2021 is 443 and the amount for 2020 is 614.

Other related costs

  • Board Secretariat support: the amount for 2021 is 709 and the amount for 2020 is 639.

Total expenses relating to the board’s activities: 1,152 for 2021 and 1,253 for 2020.

11. Contingent liabilities and contingent assets

a) 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. These claims include items with pleading amounts and other for which no amount is specified. While the total amount claimed in these actions is significant, their outcomes are not known in all cases. The CRA has recorded an allowance for claims and litigations where it is likely that there will be a future payment and a reasonable estimate of the loss can be made. An allowance is also recorded for claims and litigations that were previously assessed as likely to be lost and recognized as liabilities and for which the likelihood has now been reassessed as undeterminable. This allowance has been recorded in accounts payable and accrued liabilities and is based on management’s best estimate of the potential loss, determined using relevant historical experience, facts and circumstances. 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 when a reasonable estimate can be made. As at March 31, 2021, these contingent liabilities are estimated at $15.6 million ($61.4 million as at March 31, 2020) which is based on management’s best estimate determined on a case by case basis.

b) Contingent assets

The CRA has a contingent asset which derives from an overpayment for services provided by a third party over multiple years and where the recovery of funds is likely to be received. The amount depends on the terms of the agreement between both parties which are still under negotiation. The amount is not disclosed in order not to cause any prejudice to the on-going negotiation. Contingent assets are not recorded in the financial statements.

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 $44.3 million as at March 31, 2021 ($39.9 million as at March 31, 2020), 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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