Future-oriented Statement of Operations

Statement of Management Responsibility

We have prepared the accompanying Future-oriented Statement of Operations (FOSO) of the Canada Revenue Agency (CRA) for Agency activities which includes only those operational revenues and expenses which are incurred by the CRA to deliver its mandate. It is prepared according to the accounting principles consistent with those applied in preparing the financial statements of the Government of Canada. No FOSO was prepared for Administered Activities because it is analogous to information presented by the Department of Finance. Significant accounting policies are set out in note 4 of the FOSO. The FOSO is submitted for Part III of the Estimates (Departmental Plan). The information will also be presented in the CRA’s Departmental Results Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in this FOSO and for the process of developing assumptions. Assumptions and estimates are based upon information available and known to management at the time of development, reflect current business and economic conditions, and assume a continuation of governmental priorities and consistency in the CRA’s mandate and strategic objectives. Much of the FOSO is based on these assumptions, best estimates, and judgment and gives due consideration to materiality. At the time of preparation of this Statement of Operations, management believes the estimates and assumptions to be reasonable. However, as with all such assumptions, there is a measure of uncertainty surrounding them. This uncertainty increases as the forecast horizon extends.

The actual results achieved for the fiscal years covered in the accompanying FOSO will vary from the information presented and the variations may be material.

Approved by:

Bob Hamilton
Commissioner of Revenue and Chief Executive Officer of the CRA

Hugo Pagé
Chief Financial Officer and Assistant Commissioner 
Finance and Administration
Ottawa, Ontario

February 2, 2024

Canada Revenue Agency Future-oriented Statement of Operations – Agency Activities

Table 1: Future-oriented Statement of Operations for Agency Activities : the estimated results for 2024 and the planned results for 2025 (in thousands of dollars)

Future-oriented Statement of Operations for Agency Activities : the estimated results for 2024 and the planned results for 2025 (in thousands of dollars)
-
Estimated Results 2024
Planned Results 2025
Expenses (note 6)
Tax
5,259,376
5,451,356
Benefits
336,943
311,395
Internal Services
2,107,373
1,702,647
Taxpayers’ Ombudsperson
5,076
5,478
Total expenses
7,708,768
7,470,876
Non-Tax Revenues (note 7)
Tax
658,532
640,371
Benefits
88,614
69,904
Internal Services
300,867
273,674
Revenues earned on behalf of Government
(173,278)
(162,761)
Total non-tax Revenues
874,735
821,188
Net cost of operations
6,834,033
6,649,688

The accompanying notes are an integral part of this FOSO.

Notes to the Future-oriented Statement of Operations – Agency Activities

1. Authority and objectives

The Canada Revenue Agency (CRA) is an agent of His 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:

a) supporting the administration and enforcement of program legislation;

b) 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;

c) 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

d) 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, the Canada Worker Lockdown Benefit Act, the Cost of Living Relief Act, the Dental Benefit Act, the Rental Housing Benefit Act, the Select Luxury Items Tax Act, the Underused Housing Tax Act, the Canada Disability Benefit Act and others, including various provincial acts.

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

a) Tax: to ensure that Canada’s self-assessment tax system is sustained by clients 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 clients may disagree with an assessment or decision;

b) Benefits: to ensure that clients obtain the support and information they need to better understand which 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;

c) 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 10 distinct services that support program delivery in the organization, regardless of the Internal services delivery model in an agency or 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

d) Taxpayers’ Ombudsperson: Clients have access to trusted and independent review of service complaints about the CRA.

2. Methodology and significant assumptions

The FOSO has been prepared on the basis of government priorities and Agency plans as described in the Departmental Plan.

The information in the estimated results for fiscal year 2023–24 is primarily based on actual results as at October 31, 2023 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2024–25 fiscal year.

The main assumptions and considerations underlying the forecasts are as follows:

3. Variations and changes to the forecasted financial information

While every attempt has been made to forecast final results for the remainder of 2023–24 and for 2024–25, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this FOSO the CRA has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Factors that could lead to material differences between the FOSO and the historical statement of operations include:

Once the Departmental Plan is presented, the CRA will not be updating the forecasts for any changes in financial resources made in ensuing supplementary estimates. Variances will be explained in the Departmental Results Report.

4. 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 FOSO – Agency Activities include those operational revenues and expenses which are incurred by the CRA and utilized in to deliver its mandate. 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. No FOSO was prepared for Administered Activities because it is analogous to information presented by the Department of Finance.

The FOSO – Agency Activities has been prepared using accounting principles consistent with those applied in the preparation of the consolidated 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

b) Expense recognition

c) Revenue recognition

d) Vacation pay and compensatory leave

e) Employee future benefits

f) Amortization of 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.

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

Table 2: Useful lives by asset class

Useful lives by asset class
Asset class
Useful life
Software – In-house developed
5-10 years
Software – Purchased
3 years
Information technology equipment
5 years
Machinery, equipment, and furniture
10 years
Motor vehicles
5 years

Assets under construction or development are not amortized until completed and put into operation.

g) Provision for contingent liabilities

h) Related party transactions

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.

5. Parliamentary appropriations

The CRA receives most of its funding through annual Parliamentary appropriations. Items recognized in the FOSO 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 to be provided and requested:

Table 3: Parliamentary appropriations to be provided and requested for the estimated results for 2024 and the planned results for 2025 (in thousands of dollars)

Parliamentary appropriations to be provided and requested for the estimated results for 2024 and the planned results for 2025 (in thousands of dollars)
-
Estimated Results 2024 
Planned Results 2025 
Parliamentary appropriations – to be provided:
Vote 1 – Operating expenditures, contributions and recoverable expenses on behalf of the Canada Pension Plan and the Employment Insurance Act
5,924,372
5,128,129
Vote 5 – Capital expenditures
157,683
170,660
Spending of revenues received through the conduct of its operation pursuant to section 60 of the Canada Revenue Agency Act
403,407
338,773
Statutory expenditures:
Contributions to employee benefit plans
587,173
568,546
Children's special allowance paymentsFootnote 1
368,000
396,000
Distribution of fuel charges for the Canada Carbon RebateFootnote 1
9,595,000
11,358,000
Distribution of fuel charges to farming businessesFootnote 1
165,000
203,500
Distribution of fuel charges to provinces and territoriesFootnote 1
49,000
60,000
Minister of National Revenue – Salary and motor car allowance
95
99
Total parliamentary appropriations to be provided
17,249,730
18,223,707
Less:
Appropriations available for future yearFootnote 2 :
Vote 1
(564,407)
-
Vote 5
(79,844)
-
Appropriations lapsed:
Vote 1
(11,959)
-
Expenditures related to administered activitiesFootnote 1
(10,177,000)
(12,017,500)
Total appropriations available for future year, lapsed and expenditures related to administered activities
(10,833,210)
(12,017,500)
Total Parliamentary appropriations to be requested
6,416,520
6,206,207

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

Table 4: Reconciliation of net cost of operations before government funding and transfers for the estimated results in 2024 and the planned results for 2025 (in thousands of dollars)

Reconciliation of net cost of operations before government funding and transfers for the estimated results in 2024 and the planned results for 2025 (in thousands of dollars)
-
Estimated Results 2024
Planned Results 2025
Net cost of operations
6,834,033
6,649,688
Expenses not requiring the use of current year appropriations:
Amortization of tangible capital assets
(77,065)
(92,436)
Loss on disposal/write-off of tangible capital assets
(798)
(838)
Services to be provided without charge from other government departments and agencies (note 8)
(840,365)
(797,051)
Decrease in prior years' overpayment
(4,645)
-
Other
16,305
(66,982)
Total expenses not requiring the use of current year appropriations
(906,568)
(957,307)
Changes to assets affecting appropriations:
Acquisition of tangible capital assets
87,443
188,765
Variation in salary advances and overpayments
5,500
5,500
Total changes to assets affecting appropriations
92,943
194,265
Changes in future funding requirements:
Salary, vacation pay and compensatory leave
(5,295)
(14,317)
Employee severance benefits
3,093
812
Employee sick leave benefits
(5,093)
(5,707)
Total changes in future funding requirements
(7,295)
(19,212)
Non-tax revenues available for spending (note 7)
403,407
338,773
Total Parliamentary appropriations to be requested
6,416,520
6,206,207

6. Expenses by category

In the FOSO, expenses are presented by core responsibility. The following table presents the expenses by major object of expense.

Table 5: Expenses by category for the estimated results in 2024 and the planned results for 2025 (in thousands of dollars)

Expenses by category for the estimated results in 2024 and the planned results for 2025 (in thousands of dollars)
-
Estimated Results 2024
Planned Results 2025
Personnel:
Salaries
4,228,316
4,258,576
Other allowances and benefits (including employee benefits)
1,588,371
1,599,738
Total personnel
5,816,687
5,858,314
Professional and business services
886,639
763,231
Accommodation
314,415
293,712
Federal sales tax administration costs by the Province of Québec
273,665
168,200
Transportation and communications
108,536
93,429
Equipment purchases
81,958
70,550
Amortization of tangible capital assets
77,065
92,436
Other services and expenses
63,303
54,491
Equipment rentals
28,186
24,263
Advertising, information and printing services
26,602
22,899
Materials and supplies
18,400
15,839
Interest on average accrued benefit obligations
10,898
11,283
Repair and maintenance
1,616
1,391
Loss on disposal/write-off of tangible capital assets
798
838
Total expenses
7,708,768
7,470,876

7. Non-tax revenues by category

In the FOSO, non-tax revenues are presented by core responsibility. The following table presents the non-tax revenues by major type of non-tax revenues. The nature of each category is defined by the treatment permitted from a Parliamentary appropriations perspective.

Table 6: Non-tax revenues by category for the estimated results in 2024 and the planned results for 2025 (in thousands of dollars)

Non-tax revenues by category for the estimated results in 2024 and the planned results for 2025 (in thousands of dollars)
-
Estimated Results 2024
Planned Results 2025
Non-tax revenues credited to Vote 1
Fees for administering the Canada Pension Plan
256,284
261,670
Fees for administering the Employment Insurance Act
215,044
220,744
Total non-tax revenues credited to Vote 1
471,328
482,414
Non-tax revenues available for spending
Administration services – other government entities
310,170
260,475
Administration services – provinces and territories
91,377
76,736
Miscellaneous revenues
1,860
1,562
Total non-tax revenues available for spending
403,407
338,773
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
171,984
161,467
Miscellaneous revenues
1,294
1,294
Total non-tax revenues not available for spending
173,278
162,761
Total non-tax revenues before revenues earned on behalf of Government
1,048,013
983,948
Revenues earned on behalf of Government
(173,278)
(162,760)
Total non-tax revenues
874,735
821,188

8. 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 are expected to occur at a value different from that which would have been arrived at if the parties were unrelated:

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

The CRA is expected to receive 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 have been recorded at their estimated carrying value in the FOSO as follows:

Table 7: Services to be provided without charge for the estimated results in 2024 and the planned results for 2025 (in thousands of dollars)

Services to be provided without charge for the estimated results in 2024 and the planned results for 2025 (in thousands of dollars)
-
Estimated Results 2024
Planned Results 2025
Information technology services – Shared Services Canada
401,947
401,947
Employer’s contribution to the health and dental insurance plans – Treasury Board Secretariat
402,164
358,431
Legal services – Justice Canada
31,491
31,860
Audit services – Office of the Auditor General of Canada
3,899
4,015
Workers’ compensation benefits – Employment and Social Development Canada
864
798
Total
840,365
797,051

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 FOSO.

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