departmental performance report 2012-13
[appeals]
[program description]
The CRA provides a dispute resolution process for taxpayers and benefit recipients who disagree with CRA decisions and seek relief. If taxpayers are not satisfied with the results of the process, they can appeal to the courts.
2012-2013 financial resources (thousands of dollars)
| Total budgetary expenditure | Planned spending (Footnote 1) |
Total authorities | Actual spending (Footnote 2) |
Difference |
|---|---|---|---|---|
| 153,855 | 171,830 | 212,453 | 192,046 | (20,216) |
| Sub-program | Planned spending | Actual spending | Difference |
|---|---|---|---|
| Income tax objections, determinations and appeals to the courts | 126,662 | 143,374 | (16,712) |
| Commodity taxes objections, determinations and appeals to the courts | 18,517 | 15,228 | 3,289 |
| Canada pension plan/employment insurance appeals to the Minister and appeals to the courts | 5,923 | 3,208 | 2,715 |
| Service complaints | 7,966 | 7,622 | 344 |
| Taxpayer relief | 12,762 | 22,614 | (9,852) |
| Total | 171,830 | 192,046 | (20,216) |
| Numbers may not add due to rounding. |
Footnote 1: Planned spending has been restated from what was shown in the Canada Revenue Agency 2012-2013 Report on Plans and Priorities in order to distribute the real property accommodations funding (previously centralized in the internal services program) to all applicable programs. It should also be noted that planned spending excludes severance payments, parental benefits and vacation credits, as this funding is received during the fiscal year and is only included in actual spending.
Footnote 2: This figure represents the actual spending for the program on a modified cash basis. Please refer to page 154 of the CRA Annual Report to Parliament 2012-2013 for an explanation of how this figure relates to the CRA Financial Statements - Agency Activities.
2012-2013 human resources (full-time equivalents)
| Sub-program | Planned | Actual | Difference |
|---|---|---|---|
| Income tax objections, determinations and appeals to the courts | 1,067 | 1,058 | 9 |
| Commodity taxes objections, determinations and appeals to the courts | 202 | 140 | 62 |
| Canada pension plan/employment insurance appeals to the Minister and appeals to the courts | 155 | 141 | 14 |
| Service complaints | 97 | 94 | 3 |
| Taxpayer relief | 133 | 261 | (128) |
| Total | 1,654 | 1,694 | (40) |
| Numbers may not add due to rounding. |
[sub-program description]
| Income tax objections, determinations, and appeals to the courts | The income tax objections, determinations, and appeals to the courts program provides a timely, impartial, and consistent dispute resolution process for taxpayers who disagree with decisions the CRA has made relating to assessments or determinations made under the Income Tax Act. By engaging in dialogue with the taxpayer, an appeals officer conducts an impartial review of the decision to try to resolve the dispute. This program is also responsible for working with the Department of Justice in the conduct of appeals before the courts. |
| Commodity taxes objections, determinations, and appeals to the courts | The commodity taxes objections, determinations, and appeals to the Courts program provides a timely, impartial, and consistent dispute resolution process for taxpayers who disagree with decisions the CRA has made relating to assessments or determinations made under the Excise and Excise Tax Act. By engaging in dialogue with the taxpayer, an appeals officer conducts an impartial review of the decision to try to resolve the dispute. This program is also responsible for working with the Department of Justice in the conduct of appeals before the courts. |
| Canada Pension Plan/Employment Insurance appeals to the Minister, and appeals to the Courts | The Canada Pension Plan/Employment Insurance appeals to the Minister and appeals to the Courts program provides a timely, impartial, and consistent dispute resolution process for taxpayers who disagree with decisions the CRA has made relating to assessments or rulings made under the Canada Pension Plan and the Employment Insurance Act. By engaging in dialogue with the taxpayer, an appeals officer conducts an impartial review of the decision to try to resolve the dispute. This program is also responsible for working with the Department of Justice in the conduct of appeals before the courts. |
| Service complaints | The Service Complaints Program provides a timely service complaints resolution process for taxpayers who are not satisfied with the level of service they have received from the CRA, as defined in the Taxpayer Bill of Rights. It identifies service-related problems and proposes solutions to taxpayers. |
| Taxpayer relief | The Taxpayer Relief Program provides relief to taxpayers who may not be able to meet their tax obligations due to personal misfortune or circumstances beyond their control. When taxpayers disagree with the application of the taxpayer relief provisions by the CRA, the Appeals Branch works with the Department of Justice in the conduct of litigation before the courts. |
[performance analysis and lessons learned]
The Appeals program provides a fair and impartial process to resolve disputes, service complaints, and requests for relief arising from decisions made under the legislation and programs administered by the CRA.
We believe that by listening to people's concerns and acting in a fair and responsible manner, we earn the trust and respect of Canadians on whom we rely to sustain our voluntary compliance system. We conduct impartial reviews by actively engaging in dialogue and utilizing alternative dispute resolution processes when appropriate. We also collaborate with the Department of Justice in cases where litigation is required.
[disputes]
If taxpayers disagree with an assessment, we strongly recommend that they first call or write to the tax centre that processed their tax return. Since disputes can sometimes be caused by lack of information or miscommunication, many disagreements are resolved in this way.
If a taxpayer still does not agree with an assessment, determination, or decision after talking with us or writing to us, they have the right to a formal review. The CRA provides a timely, impartial, and consistent review process to resolve disputes arising from decisions made under the laws we administer. We deal with disputes that arise from assessment of income tax, excise tax, goods and services tax, harmonized sales tax, air travellers security charges, and softwood lumber exports charges, as well as Canada Pension Plan and Employment Insurance rulings and assessments.
Filing a notice of objection is the first step in the formal redress process for resolving a dispute. Taxpayers can file an objection by using the Register my formal dispute option of My Account, or by completing and mailing the appropriate objections form to the CRA, or by mailing a signed letter addressed to the Chief of Appeals. Detailed information regarding the objections process is available on the CRA Web site under the Complaints and disputes page and taxpayers can download objection forms on our Forms and publications page.
To ensure impartiality, when taxpayers file a notice of objection, their review is completed by an appeals officer who was not involved in the original assessment, determination, or ruling. We ensure the decisions we make are in keeping with applicable legislation and jurisprudence.
The CRA sends an acknowledgement letter to all taxpayers who file objections. The CRA's goal and published external service standard is to mail an acknowledgement letter to taxpayers within 30 days of receipt of their Notice of Objection, 85% of the time. In 2012-2013, we substantially met this standard with a result of 84%. As this year's results demonstrate, the changes we are making to create new efficiencies by simplifying and centralizing some of our internal workflow processes are moving us closer to meeting this challenging service standard.
The CRA's objection workload is divided into three groups of files:
- Regular objection workload, including objections to income tax and GST/HST assessments from individual taxpayers, non-corporate business entities such as sole proprietorships or partnerships, corporations, and other entities that disagree with their assessments.
- Group files, including the aggressive tax planning (ATP) workload that is composed of income tax or GST/HST objections that have been identified as part of a tax planning scheme.
- Canada Pension Plan (CPP) and Employment Insurance Act (EI) Appeals to the Minister.
During 2012-2013, as part of our transformation agenda, we undertook a number of specific actions to optimize our dispute resolution and redress programs:
- We centralized the physical storage and upkeep for ATP objection files awaiting legal decisions on leading court cases, to more effectively control administrative costs.
- We completed the development of a Web-based information management system to aid in the coordination and processing of ATP files. This system will be fully implemented in 2013-2014 and will centralize, standardize, and simplify the processing of all documentation required to manage objections involving large groups of files.
- We piloted various changes in our resolution process, such as fast-track, and segmentation of objections to identify cost savings while maintaining quality decisions.
Key results:
- We received 87,017 income tax, commodity tax, and CPP/EI disputes
- We resolved 75,022 disputes
[litigation]
If a tax matter is not resolved to the taxpayer's satisfaction at the objections review, the taxpayer can appeal to the Tax Court of Canada (TCC) or the Federal Court. The courts are independent of the CRA and all other government departments. They hear appeals from assessments under the Income Tax Act, the Excise Tax Act (goods and services tax/harmonized sales tax), the Employment Insurance Act and the Canada Pension Plan, among others, and review the exercise of ministerial discretion. Cases heard by the courts include many diverse issues such as those related to the General Anti-Avoidance Rule, transfer pricing, and Aboriginal taxation. This level of review is referred to as litigation and is subject to the rules of the courts.
Key result:
- A total of 4,605 litigation cases were filed before the TCC
*These actions are initiated by individual taxpayers, and the Department of Justice is fully responsible for the conduct of cases before the courts.
[taxpayer relief]
The taxpayer relief provisions provide the Minister with discretion to cancel or waive certain late, amended, or revoked elections, and issue income tax refunds or reduce amounts payable beyond the normal three-year period. They also provide authority to cancel or waive penalties and interest otherwise payable. These provisions support a common-sense approach to assisting taxpayers who are unable to comply with certain tax obligations, such as filing a return by its due date, or paying or remitting an amount when required.
The CRA understands that natural disasters may cause great difficulties for affected taxpayers whose primary concerns during this time are their families, homes, and communities. Therefore, the CRA issues media releases on its Web site to advise taxpayers who have been affected by natural disasters that they will have access to the taxpayer relief provisions if they are unable to meet their tax obligations. For example, in 2012, Canadians from several regions, including British Columbia, the Yukon, and Saskatchewan, had to rebuild because of flooding and severe wind. On July 29, 2012, the Minister highlighted that Canadians affected by these devastating weather conditions could apply for relief if they could not meet their tax obligations due to these extreme weather events.
The CRA Web site provides taxpayers with information on how to submit a taxpayer relief request. It also provides details about the limitation period for requesting relief and the information to include with a request. Four intake centres are responsible for registering relief requests in the CRA's Taxpayer Relief Registry System and sending confirmation letters to taxpayers acknowledging receipt of their requests. These relief requests are then considered by trained staff in four centres of expertise across the country.
Key results:
- We cancelled and waived $480 million in penalties and interest for approximately 494,000 requests (taxpayer requested and automated)
- We updated the CRA Web site to improve accessibility and enhance content
- We conducted a learning needs analysis and revised our procedures manuals to include guidelines that will improve consistency and simplify processes
[service complaints]
Our Service Complaints Program offers a three-step process to resolve service-related issues resulting from mistakes, undue delays, unclear or misleading information, and concerns about the behaviour of CRA staff. Since some service complaints are caused by a lack of information or simple miscommunication, we first encourage taxpayers to talk to us. Taxpayers who do not agree with the way their complaint was handled may file a formal complaint with the CRA's Service Complaints Program. If taxpayers are not satisfied with the resolution of their issue through our Service Complaints Program, they also have the right to submit a complaint to the Office of the Taxpayers' Ombudsman.
In 2012-2013, we performed a trend analysis of service-related issues identified through our Service Complaints Program. This business intelligence on taxpayers' concerns has helped the CRA to identify and confirm service gaps and to prioritize needs for service improvements. The intelligence gathered has supported CRA decisions to:
- centralize residency determination requests in the International Tax Services Office to improve consistency in responses to taxpayers;
- improve the non-resident payroll source deductions system to minimize cases when a late-remitting penalty was charged in error for estates or trusts making a one-time distribution to non-resident beneficiaries; and
- collaborate with provincial partners, in a project to ensure that we had the most current corporation director's information in our Business Number system. This project will ensure businesses are able to quickly authorize employees or third-party representatives to act on their behalf for tax matters with the CRA, and will help ensure they receive timely responses to their business enquiries.
During the period, we made a concerted effort to increase public awareness of the CRA's Service Complaints Program. We released a webinar on the Taxpayer Bill of Rights and our Service Complaints Program and improved the program's Web site. We also conducted awareness sessions and meetings with CRA employees at various tax services offices and taxation centres to build up employee awareness of the Service Complaints Program and the service rights of taxpayers. These sessions helped identify potential systemic service issues and provided an opportunity to proactively reduce the occurrence of service issues.
Key results:
- We resolved 2,314 service complaints
- 94.3% of the service complaints were resolved within 30 business days
Tax appeals evaluation
During 2012-2013, we conducted an internal evaluation of the effectiveness in addressing taxpayer contested decisions. The evaluation found that the program is set up to provide taxpayers with a process to obtain an impartial review of their tax situation. However, the significant growth in aggressive tax planning is impacting the program’s ability to resolve taxpayer contested decisions in a timely manner. New legislation has been introduced to formally bind the result of groups of objections to court decisions to reduce the cost of litigation. Details can be found on the CRA Web site www.cra-arc.gc.ca/gncy/ntrnl/2012/txpplsvltn-eng.html.
[conclusion]
In 2012-2013, we continued to work hard to ensure that taxpayers received an impartial and timely review of contested decisions made under the legislation we administer.
When taxpayers needed some flexibility to meet their tax obligations, due to circumstances beyond their control, we reviewed these requests and applied the taxpayer relief provisions in a fair and consistent manner. When Canadians were affected by the devastating weather conditions in July 2012, we highlighted the availability of taxpayer relief measures on our Web site to make those affected more aware that support was available and could be easily accessed.
We continue to promote our redress services to ensure that Canadians are fully aware of their rights. We have done this through the improvement of our Web site and by the use of innovative approaches such as the production of Web casts. In 2012-2013 we took several steps to simplify and improve our workload management processes. This has resulted in a reduction of the average age of the disputes in our inventory. As we move forward, we will continue to pursue efforts to simplify our workload management, control costs, and improve the timeliness of our Appeals Program.
| Expected results | Indicators | Targets | 2010-2011 | 2011-2012 | 2012-2013 |
|---|---|---|---|---|---|
| Canadians have access to impartial and timely review of contested decisions | Average age of workable inventory - income tax files | 228 days | 238 days | 259 days | |
| First contact letter for dispute | 85% | n/a (Footnote 1) | n/a (Footnote 1) | 84% (Footnote 1) | |
| Appeals activities that met standards for consistency - income tax files | 97% | 98.8% | 99% | 98.5% | |
| Appeals activities that met standards for transparency - income tax files | 98% | 98.8% | 99% | 99.6% | |
| Taxpayer relief provisions - consistent application (per Quality Assurance Program) | 95% | 97% | 97% | 99.8% | |
| Taxpayers receive a timely review of contested decisions made under legislation administered by the CRA and the handling of service complaints is timely and consistent | Targeted levels of timeliness and consistency for income tax and commodity tax objections, CPP/EI appeals to the Minister, and service complaints, are met | 98% | n/a | n/a | 100% |
| Taxpayers receive an impartial review of contested decisions made under legislation administered by the CRA Taxpayers receive an impartial review of contested decisions made under legislation administered by the CRA | 98% | n/a | 99.2% | 100% | |
| Taxpayers receive an impartial and responsive review of contested decisions made under the Income Tax Act | Taxpayers receive an impartial and responsive review of contested decisions made under the Income Tax Act | 195 workable days | 196 days | 192 days | 174 days |
| Percentage of decisions on objections filed under the Income Tax Act confirmed by quality assurance reviews | 90% | 98.7% | 98.9% | 98.3% | |
| Percentage of decisions on objections filed under the Income Tax Act determined to be impartial meets or exceeds target | 95% | 99.4% | 99.6% | 99.4% | |
| Taxpayers receive a timely review of contested decisions made under the Excise and Excise Tax Acts | Decisions on objections filed under the Excise and Excise Tax Acts are completed in 300 workable days on average | 300 workable days | 177 days | 182 days | 193 days |
| Percentage of decisions on objections filed under the Excise and Excise Tax Acts confirmed by quality assurance reviews | 97% | 94.2% | 94.3% | 95.4% | |
| Taxpayers receive an impartial review of contested decisions made under the Excise and Excise Tax Acts | Percentage of decisions on objections filed under the Excise and Excise Tax Acts determined to be impartial meets or exceeds target | 96% | 98.4% | 98.6% | 98.4% |
| Taxpayers receive a timely review of contested decisions made under the Canada Pension Plan or Employment Insurance Act | Reviews of appeals to the Minister filed under the Canada Pension Plan or Employment Insurance Act are completed within 140 days on average | 140 workable days | 155 days | 135 days | 150 days (Footnote 2) |
| Taxpayers receive an accurate review of contested decisions made under the Canada Pension Plan or Employment Insurance Act | Percentage of decisions regarding CPP/EI appeals to the Minister confirmed by quality assurance reviews | 98% | 99.8% | 99.6% | 99.6% |
| Taxpayers receive an impartial review of contested decisions made under the Canada Pension Plan or Employment Insurance Act | Percentage of decisions of CPP/EI appeals to the Minister determined to be impartial | 97% | 99.8% | 99.6% | 99.6% |
| Taxpayers receive timely updates to their service complaints | Percentage of service complaints acknowledged within 48 hours (2 business days) | 80% | 96.6% | 97.2% | 92% |
| Percentage of taxpayers contacted within 15 days to provide an update on the status of their complaint |
90% | 93.1% | 96.1% | 93.6% | |
| Taxpayers receive timely resolution of their service complaints |
Percentage of service complaints resolved within 30 business days | 80% | 91.8% | 94.5% | 94.3% |
(Footnote 1): In 2012-2013 this measurement was revised to more accurately report results by calculating the percentage of first contact letters sent within 30 days based on a measurement when the letters are sent, rather than when the file is closed. This impacts data comparability with previous year results.
(Footnote 2): This workload was affected by a significant increase in major investigations that have a target of 265 days to complete (an increase from 8 in 2011-2012 to 349 in 2012-2013).
n/a: This is a new indicator for 2012-2013. Prior year results not available
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