2015-16 Report on Plans and Priorities

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Section 2: Analysis of programs by strategic outcome

Program: Collections and returns compliance

The collections and returns compliance program identifies, addresses, and prevents non-compliance to help ensure tax debt is resolved on a timely basis. The CRA takes a progressive approach to compliance and debt collection, beginning with education and outreach activities to remind taxpayers of their compliance obligations. We work with individuals and businesses who have outstanding tax returns or remittances, or who owe money to assist them in meeting their tax obligations and paying their outstanding debt. When needed, we take action to address non-compliance by using a range of activities to enforce compliance with Canada's tax laws for registration, filing, withholding, and payment of debt obligations.

Budgetary financial information

Human resources

Performance measurements

Planning highlights

Over 92% of all individuals filed and paid their taxes last year without CRA intervention. This high rate of voluntary compliance allows the Agency to concentrate on addressing non-compliance. Recent advances in information technology and data analysis are changing the CRA's approach to collections and returns compliance. Using these tools, the Agency can more accurately assess and predict taxpayer behaviour, which in turn helps to identify lower-risk taxpayers. A well-directed phone call or a nudge letter is often enough to remind these taxpayers of their obligations, to increase awareness of the consequences of failing to file a tax return or pay a debt, and to offer assistance as needed. Using quick, low-cost methods to help lower-risk taxpayers enables the CRA to focus more resources on taxpayers who are at a much higher risk of non-compliance.

During the planning period, the CRA will advance its three-year Non-Audit Compliance Initiative to boost efforts to identify higher-risk taxpayers in three key areas: trust accounts, non-filers, and GST delinquent filers. This initiative will further protect Canada's revenue base by: increasing examination coverage of employer payroll and GST registrant books and records, to ensure source deductions are properly withheld and remitted as required; identifying additional non-filers who have tax amounts owing; and expanding coverage of sectors at higher risk for underground economy activity.

Subprogram: Trust accounts—compliance

The trust accounts—compliance subprogram enforces registration, withholding, remitting, reporting, and filing obligations for payroll deductions, GST/HST, other levies, and non-resident taxes. In order to protect the revenues that governments need for programs and services, we encourage individuals, businesses and trusts to register as required and file on time. We also provide education on legal tax obligations and assistance with filing and paying amounts due.

Budgetary financial information

Human resources

Performance measurements

Planning highlights

Employers form a critical role in Canada's self-assessment tax system by collecting income tax at source. Each year, the CRA collects more than $200 billion through source deductions remitted by approximately 1.6 million employers.

The CRA works with employers to make sure they fulfil their obligations in a timely manner, such as withholding, remitting, reporting, and filing for payroll deductions, GST/HST, other levies, and non-resident taxes. To assess whether employers meet these requirements, the Agency reviews more than 480,000 payroll accounts annually, and resolves more than 240,000 GST/HST files through its GST/HST delinquent filer program. Each year, the CRA conducts employer compliance audits and identifies over $1.8 billion in non-compliance, including source deductions.

Data analysis is helping the CRA to prevent employer non-compliance. For example, the Agency can more readily identify key points in the life cycle of employers, such as when businesses hire new employees or register for the GST/HST. Based on this knowledge, the CRA uses cost-effective, educational, and proactive approaches such as webinars, automated phone calls, and letters to remind employers of their obligations associated with payroll deductions, GST/HST, and other levies.

Deliverables

• In 2015-2016, the CRA will expand its work to educate employers regarding taxable benefits, ensuring employers have a better understanding of their obligations to withhold, report, and remit taxes on employee benefits.
• By the end of 2015-2016, the CRA will improve the predictive capability of its data mining tools and automate certain processes to assess GST/HST amounts owed by select registrants who have not complied with their obligation to file.
• The CRA is investing in technology to allow for improved risk-based management of the GST/HST non-registrant workload. Effective in early 2015, the new technology will allow the Agency to better leverage available business intelligence and eliminate manual processes.

Subprogram: Non-filer—compliance

The non-filer—compliance subprogram identifies filing non-compliance through reviews. We encourage individuals, businesses, and trusts to file on time, educate them on their tax obligations, and assist them with their filing obligations.'

Budgetary financial information

Human resources

Performance measurements

Planning highlights

The CRA encourages individuals, businesses, and trusts to file tax returns on time. In most instances, this means ensuring taxpayers understand their tax obligations or offering assistance with filing requirements. However, the CRA is also responsible for identifying filing non-compliance and pursuing individuals, corporations, or trusts who do not file tax returns despite a legal obligation to do so. Each year, the Agency's efforts to identify and pursue non-filers bring in over 600,000 additional income tax and information returns, and help identify over $2.7 billion in non-compliance.

As part of the Non-Audit Compliance Initiative, the CRA will expand efforts to identify non-filers in other areas, for example those participating in the underground economy. The Agency will use such proven methods as automated system checks to match information slips and corporate business numbers against submitted tax returns, the matching of employer reports on taxable benefits, and income earned to individual income tax and benefit returns, as well as the review of informant leads and information from various other reporting sources.

Deliverables

• The CRA will expand its efforts to identify non-filers participating in the underground economy (UE). This will include projects such as a cheque-cashing project running until March 2017.
• The CRA will enhance the effectiveness of its non-filer data mining model to improve the risk scoring of account selection and to improve related workload strategies. A product is anticipated to be ready for testing and validation by October 2015.
• The CRA will increase the use of the Debt Management Call Centre in 2015-2016, by redirecting greater numbers of non-filer accounts to the call centre and assessing the impacts of this lower-cost intervention.

Subprogram: Collections—tax and government programs

The collections—tax and government programs collect tax debts on behalf of the federal, provincial and territorial governments, and other government departments and agencies. We also collect non-tax debts including social program overpayments and defaulted Canada Student Loan debt on behalf of such government programs which have transferred collection responsibilities to the CRA.

Budgetary financial information

Human resources

Performance measurements

Planning highlights

To be fully compliant, individual and business taxpayers must pay all taxes on time. The CRA collects tax debts on behalf of federal, provincial, and territorial governments. It also collects debts for such government programs as defaulted Canada Student Loan amounts, employment insurance overpayments, and Canada Pension Plan overpayments.

Managing tax debt is critical to protecting Canada's revenue base and providing the Government of Canada with the revenue it needs to support programs and priorities. Each year, the Agency resolves billions of dollars in outstanding debt through tax services offices and the call centre.

Using improved information technology and data analysis, the CRA is taking a more targeted and risk-based approach to collecting tax debt. For example, data analysis helps to distinguish various taxpayer segments including those who can and want to pay, those who owe but cannot pay immediately, and those who are unwilling to pay. Based on these insights, the CRA can better identify the lower-risk accounts most likely to self-resolve and, in those cases, use lower-cost strategies such as automated letters and telephone calls. This approach will allow the Agency to redirect more compliance resources towards accounts representing the highest risk of loss.

Deliverables

• A 10-year collection limit on most tax debts took effect in March 2014. The CRA is developing an automated system so the Agency can track and resolve debts within the time limit. This is a multi-year project with system changes scheduled for February 2015, October 2015, and 2016.
• By 2015-2016, the CRA will develop specialized strategies to manage the unique risks associated with tax debt on complex workloads, such as international accounts and tax avoidance schemes.
• By 2015-2016, the CRA will identify ways to more efficiently and effectively manage debts associated with Government programs, including defaulted Canada Student Loan amounts, Employment Insurance overpayments, and Canada Pension Plan overpayments.
• To ensure clarity in its communications with taxpayers regarding tax debt collection, the CRA will make sure all correspondence uses easy to understand plain language.

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