Section II: Analysis of program activities by strategic outcome

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Strategic outcome

Taxpayers meet their obligations and Canada's revenue base is protected.

Program activity 2: Assessment of returns and payment processing

Program activity description

• Processing and validating taxpayer returns for both individuals and businesses through initial assessment, validation, accounting, and adjustments; registering businesses for the Business Number, establishing, and maintaining accounts; and receiving payments.

Performance summary and analysis of program activity

Taxpayer interactions

The CRA helps taxpayers make payments and file returns, and gives them other information they need so that they can comply with Canada's tax laws. We aim to be timely, efficient, and accurate in handling taxpayers' enquiries and transactions. Recognizing that taxpayers are more likely to comply if it is easy to do so, we aim for services that are easy to use and that reduce the compliance burden. Since many taxpayers prefer to use an authorized representative, the CRA provides services to assist tax intermediaries acting on behalf of their clients.

Online self-service

Many taxpayers and tax intermediaries prefer to carry out their business with the CRA on a self-service basis, using our secure online portals: My Account for individuals and My Business Account for businesses. Our Represent a Client portal enables tax intermediaries to carry out account-specific transactions on behalf of the individuals and businesses they represent. Our Quick Access service gives individuals immediate access to some of their information in My Account. In recent years, we have made it a priority to enhance our online portals: we see it as key to making compliance easier for individuals and for businesses.

My Account for individuals

• Our Quick Access self-serve Web pages had over 440,000 new unique users in 2011-2012 and about one million accesses each year since it was launched in 2007-2008.
• In 2011-2012, 5,837,173 users successfully logged in to My Account.
• We improved the look and feel to make it easier to navigate.
• We added seven new services and service enhancements to My Account during 2011-2012. Among the added features, My Account users can:
  • change marital status;
  • verify T4 and T4A slips to reduce reporting errors; and
  • view information such as tuition carry forward amounts.

My Business Account

• We added 23 new services and service enhancements to My Business Account during 2011-2012. Among the added features, My Business Account users can:
  • adjust a previously assessed GST/HST return online or file a GST/HST election online;
  • calculate instalment payments for the next filing period;
  • transfer payments from one program to another;
  • submit account-specific enquiries about GST/HST returns, GST/HST rebates, T2 corporation returns, and specialty business returns; and
  • view account-specific messages through the Message Centre on the My Business Account portal.
• Use of My Business Account has increased significantly since its introduction. In the last three years, the number of businesses enrolled in My Business Account increased by 70.9%.

Represent a Client

• We added new features to the Represent a Client portal to make it easier for tax preparers and professionals to manage accounts and make online requests to view their clients' transactions.
• There has been a substantial increase in the use of our Represent a Client service, which is a positive indicator that intermediaries are embracing this service.

Processing services

Each year, the CRA receives over 38.6 million tax and information returns from individuals, businesses, and third parties. The CRA processes these returns and enters the information into our systems. The information is used to update taxpayer accounts and determine current status of tax obligations. The returns are then filed for future reference. The CRA also processes over 34.7 million payments from a wide variety of sources and payment methods. Taxpayers count on the CRA to capture information accurately, and to fairly and quickly assess any remaining tax obligations, including any refunds or additional tax payable.

Returns

Individuals and businesses continue to shift to electronic transactions.

• Our electronic processing rates for corporate and GST/HST returns increased by 36.3% and 39.8% respectively in 2011-2012.
• Electronic processing of T4 and T5 information returns increased 2.8% and 32% respectively from last year.
• 91% of individuals filed their tax return on time.
• 85% of corporations with taxable income filed their tax returns on time.
• 94% of individuals and 90% of corporations paid their reported taxes on time.
• We processed 16.7 million individual tax returns filed electronically within 11 days of receiving them.
• For the 10.1 million individuals who filed paper returns, their returns were processed within 3.9 weeks of receipt.

When reviewing tax returns, we compare the information the taxpayer provided with available third–party information to ensure taxpayers have claimed the credits to which they are entitled. We adjust returns where needed and issue any applicable refund.

• During 2011-2012, we corrected nearly 307,000 individual returns.
• This resulted in an average beneficial adjustment of $316 per return.

Payments

During 2011-2012, the CRA processed about 34.7 million tax payments; 33.4% were electronic payments. The total value of the payments processed was approximately $419 billion.

Electronic payment makes payment of taxes owing convenient and easy for taxpayers. If taxpayers elect to pay by cheque, the CRA promptly deposits payments so that taxpayers can be certain of the status of their tax affairs.

• For the greater part of 2011-2012, we exceeded our target of depositing payments within 24 hours of receipt.
• The Canada Post labour dispute in June and July had an impact on our ability to meet our service targets for payment processing. As a result, our average for the year was 94% of payments deposited in 24 hours.
• We processed almost 1.5 million more electronic payments during 2011-2012 than in 2010-2011.
• We promoted the benefits of paying online to taxpayers during the 2011 filing season through the CRA Web site, news releases, videos, Twitter, and our tax filing season fact sheet. Our main message was “Save time, pay online!”

We are investigating future opportunities for improved ease and access for individuals and businesses, and we continue to move forward with our payment strategy to use new, secure technologies where possible.

Early intervention

Information technology, business intelligence, and our risk-assessment system are the cornerstone of our early intervention approach.

In 2011-2012, we processed approximately:

• 27 million individual and trust returns;
• 2 million corporate returns; and
• 7.5 million GST/HST returns.

All tax returns go through an extensive set of system validations for error detection and correction. This allows us to identify certain discrepancies in amounts, deductions, and credits that taxpayers reported on their tax return. We correct errors and omissions through an automated process and send a notice of assessment to the taxpayer explaining the results.

In addition, we use risk assessment models to identify tax returns for further review. We have four major early intervention processing review programs: confidence validity, processing review, individual matching, and the corporate assessing review program.

This early intervention review identified over $1 billion of non-compliance in 2011-2012, similar to the dollar value identified last year.

The common areas of misunderstanding that we identify in this initial review process are analyzed to detect trends or gaps in services. Where appropriate, this information is entered into our risk-assessment systems to help us identify files for more in-depth review.

Confidence validity program

Our confidence validity program identifies and corrects errors and inadmissible claims on individuals' returns before finalizing a notice of assessment.

• In 2011-2012, we identified an average of $445 per return in additional taxes assessed, for a total of $156 million

Processing review program

After the notice of assessment for individual income tax is issued, our processing review program selects files that have been identified through our risk-scoring process for more in-depth review of specific elements like tax credits. We then ask taxpayers for more information to verify their claims.

• In 2011-2012, we identified $213 million in federal, provincial, and territorial taxes through processing review.

Matching program

This step in our review process compares information we have from third parties with the tax returns that individuals filed. We correct information that is not accurate or complete in the original return.

• In 2011-2012, the matching program generated $665 million in additional individual tax assessments.

Corporate assessing review program

This program validates and reviews corporate income tax returns to make sure that assessments are accurate. Since the reviews are conducted soon after the initial assessments are carried out, we find and correct errors early. This process minimizes the risk of paying penalties and interests.

This past year we reviewed 68,222 returns, an increase of 41% from last year, and identified $51.8 million in additional tax. Our reviews also resulted in adjustments of $273.8 million to corporate loss pool balances reported on corporation income tax returns.

Lessons learned

The growth in uptake of our online services tells us that the CRA is successfully responding to expectations for electronic self-services. Our enhancements to electronic services such as My Business Account, My Account, Quick access, and our Represent a Client service were well received. There were significant increases in the number of successful log-ins and new users. Promotion of electronic payment also resulted in greater use of this service than in prior years.We will continue to pursue future opportunities for improved ease and access for individuals and businesses, and we will continue to move forward with our payment strategy to use new, secure technologies where possible.

We will continue to use our online information and interactive services to advance our goal of making compliance easier for individuals and businesses, and helping tax intermediaries ably and accurately represent their clients.

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