Report on Plans and Priorities 2014–15

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Statement of Management Responsibility

We have prepared the accompanying Future-oriented Statement of Operations of the Canada Revenue Agency (CRA) according to the accounting principles consistent with those applied in preparing the financial statements of the Government of Canada. Significant accounting policies are set out in note 4 to the Future-oriented Statement of Operations. The Future-oriented Statement of Operations is submitted for Part III of the Estimates (Report on Plans and Priorities). The information will also be presented in the CRA's Departmental Performance Report to compare with actual results.

Management is responsible for the integrity and objectivity of the information contained in this Future-oriented Statement of Operations 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 current governmental priorities and consistency in the CRA's mandate and strategic objectives. Much of the Future-oriented Statement of Operations 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 Future-oriented Statement of Operations will vary from the information presented and the variations may be material.

Approved by:

original signed by

Andrew Treusch
Commissioner of Revenue and Chief Executive Officer of the CRA

original signed by

Roch Huppé
Chief Financial Officer and Assistant Commissioner, Finance and Administration
Ottawa, Ontario
January 13, 2014

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

The accompanying notes are an integral part of this future-oriented statement of operations.

Notes to the future-oriented statements of Operations - Agency Activities

1. Authority and objectives

The Canada Revenue Agency (CRA) is an agent of Her 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 collects 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 collects amounts, including Canada Pension Plan contributions, for other groups or organizations. It is responsible for administering and enforcing of the following acts or parts of acts: the Air Travellers Security Charge Act, the Canada Revenue Agency Act, the Children's Special Allowances Act, Part V.1 of the Customs Act, section 2 of the Energy Costs Assistance Measures 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 Softwood Lumber Products Export Charge Act, 2006, the Universal Child Care Benefit Act, and others including various provincial acts.

In delivering its mandate, the CRA operates under the following program activities:

(a) Internal services: Provides internal services across the CRA, such as human resources management, financial management and information technology, to support the needs of programs and corporate obligations;

(b) Reporting compliance: Verifies complete and accurate disclosure by taxpayers of all required information to establish tax liabilities;

(c) Collections and returns compliance: Identifies and addresses non-compliance with taxpayer filing and remittance requirements;

(d) Assessment of returns and payment processing: Processes and validates taxpayer returns; registers, establishes, and maintains taxpayer accounts; and, receives payments;

(e) Taxpayer and business assistance: Assists taxpayers in meeting their obligations under the self-assessment;

(f) Appeals: Provides a dispute resolution process for taxpayers who disagree with decisions taken by the CRA;

(g) Benefit programs: Provides Canadians certain income-based benefits, credits and other services on behalf of federal, provincial (except Quebec), and territorial governments;

(h) Taxpayers' Ombudsman: Addresses requests for reviews made by taxpayers and benefit recipients with respect to service matters.

2. Methodology and significant assumptions

The Future-oriented Statement of Operations has been prepared on the basis of government priorities and departmental plans as described in the Report on Plans and Priorities.

The information in the estimated results for fiscal year 2013-2014 is based on actual results as at November 30, 2013 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2014-2015 fiscal year.

The main assumptions underlying the forecasts are as follows:

(a) The CRA's activities will remain substantially the same as for the previous year;

(b) Expenses and revenues, including the determination of amounts internal and external to the government, are based on historical experience.

The general historical pattern is expected to continue.

3. Variations and changes to the forecast financial information

While every attempt has been made to forecast final results for the remainder of 2013-2014 and for 2014-2015, actual results achieved for both years are likely to vary from the forecast information presented, and this variation could be material.

In preparing this Future-oriented Statement of Operations 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 Future-oriented Statement of Operations and the historical statement of operations include:

(a) The timing and amount of acquisitions and disposals of tangible capital assets may affect gains/losses and amortization expense.

(b) Implementation of new collective agreements.

(c) Further changes to the operating budget through additional new initiatives or technical adjustments later in the year.

Once the Report on Plans and Priorities 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 Performance Report.

4. Summary of significant accounting policies

For financial reporting purposes, the activities of the CRA have been divided into two sets of financial statements: Agency Activities and Administered Activities. The Future-oriented Statement of Operations - Agency Activities include only those operational revenues and expenses which are managed by the CRA and utilized in running the organization. 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 future-oriented financial statements were prepared for Administered Activities because it is analogous to information presented by the Department of Finance.

The Future-oriented Statement of Operations - Agency Activities has been prepared using Government's accounting policies that came into effect for the 2013-2014 fiscal year which are based on Canadian public sector accounting standards. The presentation and results using the stated accounting policies do not result in any significant differences from Canadian public sector accounting standards. A summary of significant accounting policies follows:

(a) Parliamentary appropriations

The CRA is financed by the Government of Canada through Parliamentary appropriations. Accounting for appropriations provided to the CRA does not parallel financial reporting according to Canadian public sector accounting standards, as they are based in large part on cash flow requirements. Consequently, items recognized in the Future-oriented Statement of Operations may be different from those provided through appropriations from Parliament. Note 5(a) provides a high-level reconciliation between the two bases of reporting.

(b) Expenses

Expenses for the CRA's operations are recognized, on an accrual basis, when goods are received and/or services are rendered.

(i) Services provided without charge from other government agencies and departments

Costs for services received without charge from other government agencies and departments are included in expenses and are recognized at their estimated cost (see note 8).

(ii) Vacation pay and compensatory leave

Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.

(iii) Post-employment benefits

(iii.1) Pension benefits

All eligible employees participate in the Public Service Pension Plan administered by the Government of Canada. The CRA's contributions reflect the full cost as employer. These amounts are currently based on a multiple of an employee's required contributions and may change over time depending on the experience of the Plan. The CRA's contributions are expensed during the year in which the services are rendered.

(iii.2) Severance benefits

Some employees are entitled to severance benefits, as provided for under labour contracts and conditions of employment. The cost of these benefits is accrued as employees render the services necessary to earn them.

(iv) Other benefits

(iv.1) Health and dental benefits

The Government of Canada sponsors an employee benefit plan (health and dental) in which the CRA participates. Employees are entitled to health and dental benefits, as provided for under labour contracts and conditions of employment. The CRA's contributions to the plan, which are provided without charge by the Treasury Board Secretariat, are recorded at cost based on a percentage of the salary expenses and charged to personnel expenses in the year incurred.

(iv.2) Sick leave benefits

Employees are eligible to accumulate sick leave benefits until retirement or termination according to their terms of employment. Sick leave benefits are earned based on employee services rendered and are paid upon an illness or injury related absence. These are accumulating non-vesting benefits that can be carried forward to future years, but are not eligible for payment on retirement or termination, nor can these be used for any other purpose.

(v) Allowance for doubtful accounts

An allowance for doubtful accounts is recorded where the recovery of account receivables and advances is considered uncertain.

(vi) 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. 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:

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

(vii) Provision for contingent liabilities

Contingent liabilities are potential liabilities that may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded.

(c) Revenues

Non-tax revenues are recognized when the services are rendered by the CRA.

Non-tax revenues that are not available for spending cannot be used to discharge the CRA's liabilities. While management is expected to maintain accounting control, it has no authority regarding the disposition of non-respendable revenues. As a result, non-respendable revenues are considered to be earned on behalf of the Government of Canada and are therefore presented in reduction of the CRA's gross revenues.

5. Parliamentary appropriations

The CRA receives most of its funding through annual Parliamentary appropriations. Items recognized in the Future-oriented Statement of Operations 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:

b) Reconciliation of net cost of operations to Parliamentary appropriations requested:

6. Expenses by category

In the Future-oriented Statement of Operations, expenses are presented by program activity. The following presents expenses by category.

7. Non-tax revenues by category

In the Future-oriented Statement of Operations, non-tax revenues are presented by program activity. The following presents non-tax revenues by category. The nature of each category is defined by the treatment permitted from a Parliamentary appropriations perspective.

8. Related party transactions

The CRA is related in terms of common ownership to all Government of Canada departments, agencies, and Crown corporations. Transactions with Crown corporations entered into by the CRA are in the normal course of business and on normal trade terms applicable to all individuals and enterprises. Transactions with other Government of Canada departments and agencies are conducted on a cost recovery basis.

The CRA is expected to receive various services without charge from other government agencies and departments in the coming years. The estimated costs for significant services to be provided without charge that have been recorded include:

Supplementary information tables

Details on transfer payment programs

Children's Special Allowance Payments (Statutory)

Start Date: August 28, 1995 ^{Footnote 3}

End Date: Ongoing

Fiscal year: 2014-15

Strategic Outcome: Eligible families and individuals receive timely and correct benefit payments

Program and sub-program: Benefit programs, Statutory Children's Special Allowance payments

Description of Transfer Payment Program: Tax-free monthly payments made to agencies and institutions who are licensed by provincial or federal governments to provide for the care and education of children under the age of 18 who physically reside in Canada and who are not in the care of their parents. Children's Special Allowance payments are equivalent to Canada Child Tax Benefit payments. Children's Special Allowance payments are governed by the Children's Special Allowance Act which provides that this allowance be paid out of the Consolidated Revenue Fund.

Expected results: N/A

Fiscal year of last completed evaluation: N/A

Decision following the results of last evaluation: N/A

General targeted recipient group: Persons

Initiative to engage applicants and recipients: N/A

Disbursements to Provinces under the Softwood Lumber Products Export Charge Act, 2006 (Statutory)

Start Date: October 12, 2006

End Date: October 12, 2015

Fiscal year: 2014-15

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

Program and sub-program: Taxpayer and business assistance; Policy, ruling and interpretations

Description of Transfer Payment Program: The export charge, to be levied by Canada on exports of softwood lumber products to the United States, is collected and administered by the Canada Revenue Agency with support from the Department of Foreign Affairs, Trade and Development Canada. Under the Softwood Lumber Products Export Charge Act, 2006, the CRA is responsible for making statutory disbursements to the provinces of the charge collected over the course of the application of the Softwood Lumber Agreement, 2006. These disbursements are reduced by several factors: refunds paid to the industry, costs for the administration and implementation of the Agreement and the Act as well as the costs incurred for certain litigation resulting from the Agreement or Act. The Act applies to the following regions: British Columbia Interior, British Columbia Coastal, Alberta, Saskatchewan, Manitoba, Ontario and Quebec. Exports from the remaining provinces and territories are excluded.

Expected result: Non-compliance with the Excise Act and the Excise Act, 2001 with respect to dutiable products is detected and addressed

Fiscal year of last completed evaluation: January 2011

Decision following the results of last evaluation: Continuation

General targeted recipient group: Provinces and territories

Initiative to engage applicants and recipients: N/A

Greening government operations

CRA strategies for greening government operations target

Goal: Greenhouse gas emissions

Target: GHG emissions reduction

By 2020, the CRA will reduce greenhouse gas emissions from its fleets by a minimum of 17% relative to 2005-2006 levels.

Performance measurement

Expected result

Reduce the carbon footprint of federal operations.

Goal: Waste and asset management

Target: Green procurement

As of April 1, 2014, the CRA will continue to take action to embed environmental considerations into Crown procurement.

Performance measurement

Expected result

Environmentally responsible acquisition, use, and disposal of goods and services.

Implementation strategy element: Improve sustainable business travel
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Leverage common use procurement instruments where available and feasible.
Targeted performance level: Seeking to reach "Achieved"

Target: Sustainable workplace operations

As of April 1, 2014, the CRA will continue to update and adopt policies and practices to improve the sustainability of its workplace operations.

Performance measurement

Expected result

CRA workplace operations have a reduced environmental impact.

Performance indicator: An approach to improve the sustainability of CRA workplace operations in place by March 31, 2015.
Targeted performance level: Yes (April 1, 2014)

Implementation strategy element: Engage employees in greening government operations practices.
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Integrate environmental considerations into corporate policies, processes, and practices in accordance with departmental refresh cycles.
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Maintain or improve existing approaches to sustainable workplace practices (i.e., printer ratios, paper usage, and green meetings).
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Minimize the ratio of information technology assets per employee.
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Select and operate IT and office equipment in a manner that reduces energy consumption and material usage.
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Dispose of e-waste in an environmentally sound and secure manner.
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Reuse or recycle workplace materiel and assets in an environmentally sound and secure manner.
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Minimize all non-hazardous solid waste generated and leverage service offerings to maximize the diversion of waste.
Targeted performance level: Seeking to reach "Achieved"

Implementation strategy element: Increase the population density in office buildings and space utilization in special purpose buildings.
Targeted performance level: Seeking to reach "Achieved

Target: Greening services

As of April 1, 2014, the CRA will continue to take action to develop and enhance e-service options to reduce the environmental impacts of its services to clients, taxpayers, and benefit recipients.

Performance measurement

Expected result

CRA services to clients, taxpayers, and benefit recipients have a reduced environmental impact.

Performance indicator: An approach to further greening of services to clients, taxpayers, and benefit recipients is in place by March 31, 2015.
Targeted performance level: Yes (April 1, 2014)

Upcoming internal audits and evaluations over the next three fiscal years

Sources of respendable non-tax revenue and non-respendable non-tax revenue

Summary of capital spending by program

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