Report on Plans and Priorities 2014–15

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Program: Appeals

Program description

The CRA's redress process provides a fair and impartial means of resolving disputes, service complaints, and requests for relief arising from decisions made by the CRA.

What we want to achieve

To have a responsive redress process that promotes voluntary compliance and fosters trust in the integrity of the CRA. To conduct fair and impartial reviews by actively engaging in dialogue and using alternative processes when appropriate.

Strategic context

The CRA's Appeals Program provides an important redress service for taxpayers and benefit recipients who feel that the CRA's assessment decision was incorrect, who wish to claim taxpayer relief of penalties and interest because of exceptional circumstances, and who are unhappy with the CRA's services. The demand for these services depends on a range of factors; for example, the introduction of new legislative sanctions can lead to objections against the imposition of these sanctions, and the CRA's decision to challenge an aggressive tax planning scheme may lead to objections from those who participated in the scheme. Our Appeals workload has grown in recent years and we expect this growth to continue due to the increasing number of taxpayers who participate in aggressive tax planning schemes and the CRA's consequent compliance activities to combat these risks to the revenue base.

Improving the timeliness of our appeals process is a red tape reduction priority for the Agency, with a particular focus on improving the turn-around time of low complexity objections not related to an aggressive tax planning scheme.

Income and commodity tax objections

In recent years, there has been an increase in the number of income tax objections and subsequent appeals to the courts, specifically relating to tax avoidance and aggressive tax planning schemes.

To handle the increase in the Appeals workload while maintaining our commitment to reducing costs, the CRA is introducing innovative ways to increase efficiency. For example, as part of our red tape reduction efforts, we have streamlined the way we process less complex objections, which frees up resources to focus on more complex cases.

Over the planning period, we will:

• work closely with our field operations to pilot various processing initiatives, so we can introduce more cost-effective and efficient ways of doing business
• explore ways to expand our use of technology both internally and in our interactions with taxpayers
• establish work plans for addressing large groups of aggressive tax planning files

Litigation

If a tax matter is not resolved by the CRA to the taxpayer's satisfaction, the taxpayer can appeal to the Tax Court of Canada and subsequently to the Federal Court of Appeal, and, with leave, to the Supreme Court of Canada. When litigation becomes necessary, the CRA collaborates with the Department of Justice Canada in handling the court cases.

A recent amendment to the Income Tax Act will allow the Tax Court to hear a question arising out of substantially similar transactions or occurrences. The Tax Court decision may now be binding on all other taxpayers named in the application to an appeal of another taxpayer if, for example, their income tax filings raise issues that arise from transactions that are identical or substantially similar to those relevant to the appeal. We expect this change to provide efficiencies for future litigation and help reduce the cost of legal services. Over the planning period, we will:

• use the new legislative tool to improve the CRA's ability to efficiently manage and resolve large groups of objections involving similar issues, resulting in reduced litigation costs
• work with the Department of Justice to achieve additional efficiencies in litigation

Canada pension plan/employment insurance

The CRA is responsible for issuing rulings on the insurability and pensionability of a worker's employment under the Canada Pension Plan and the Employment Insurance Act. Any affected party who disagrees with the ruling, or an employer who disagrees with the assessment, may file an appeal to the Minister. A decision will then be issued on behalf of the Minister, which may be appealed to the Tax Court, Federal Court of Appeal, and, with leave, to the Supreme Court of Canada.

Service complaints

The CRA's Service Complaints Program offers taxpayers a redress mechanism when they are not satisfied with the service they received or when their issues have not been resolved through normal procedures. If taxpayers are not satisfied with the service received, they have the right to make a complaint.

Over the planning period, we will:

• strengthen our business analytics capacity to better identify trends in service complaints and use the information to address service issues before they arise

Taxpayer relief

Taxpayer Relief Provisions allow the CRA to help taxpayers who are unable to meet their tax obligations because of circumstances beyond their control. The provisions may allow for: cancelling and/or waiving penalties and interest; accepting a late, amended, or revoked income tax election; and issuing a refund or adjustment beyond the normal three-year period for individuals and testamentary trusts. Over the planning period, we will:

• work with our regional offices to reduce processing times for requests for taxpayer relief
• explore opportunities for taxpayers to send documents electronically

Conclusion

Our red tape reduction priority is to reduce the time it takes to make a decision on low complexity objections not related to an aggressive tax planning scheme. By reorganizing our business processes, we expect to improve turn-around time for these objections. Implementing a recent change to the Income Tax Act will allow us to manage objections related to similar transactions, like an aggressive tax planning scheme, as a group linked to one appeal. We will continue to search for new cost-effective ways to do our business to help us manage the growth in the objections workload while improving turn-around times.

Our Service Complaints Program is an important source of information for continual improvement of our service to Canadians. We analyse service complaints to identify and address systemic issues. Building our business analytics capacity will enable quick, accurate feedback about service issues and help our services continue to evolve in response to taxpayer needs and expectations.

Strategic outcome: Taxpayers meet their obligations and Canada's revenue base is protected

We use the following expected results and performance indicators to assess whether we are meeting our overall strategic outcome.

Program: Appeals

Sub-program: Income and commodity tax objections

Sub-program: Canada pension plan/employment insurance

Sub-program: Service complaints

Sub-program: Taxpayer relief

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