Report on Plans and Priorities 2016-17

CRA Sustainable Development Strategy

Overview of the Federal Government's Approach to Sustainable Development

The Federal Sustainable Development Strategy (FSDS) 2013-16 presents the Government of Canada's sustainable development activities, as required by the Federal Sustainable Development Act. In keeping with the objectives of the Act to make environmental decision making more transparent and accountable to Parliament, the Canada Revenue Agency supports the implementation of the FSDS through the activities in this supplementary information table.

This Departmental Sustainable Development Strategy presents the planned contributions and expected results for FSDS Theme IV – Shrinking the Environmental Footprint – Beginning with Government.

Theme IV: Targets and Implementation Strategies

Goal 6: GHG Emissions and Energy

Target 6.1: GHG Emissions Reduction

The Government of Canada will reduce greenhouse gas (GHG) emissions from its buildings and fleets by 17% below 2005 levels by 2020.

CRA Target

A minimum of 17% below 2005 levels by 2020.

Performance Measurement
Expected result: Reduce the carbon footprint and energy consumption of federal operations.
Performance Indicator Targeted Performance Level
Updated GHG reduction implementation plan in place by March 31, 2015.  Yes-March 31, 2015
GHG emissions (kt CO2 equivalent) in fiscal year 2005-06.  403 tonnes
GHG emissions (kt CO2 equivalent) in fiscal year 2016-17  334 tonnes
Percentage change in GHG emissions from fiscal year 2005-06 to fiscal year 2016-17  17% decrease
Adjustments made to base year GHG emissions.  No

Goal 7: Waste and Asset Management

Target 7.2: Green Procurement

As of April 1, 2014, the Government of Canada will continue to take action to embed environmental considerations into public procurement, in accordance with the federal Policy on Green Procurement.

Performance Measurement
Expected result: Environmentally responsible acquisition, use and disposal of goods and services.
Performance Indicator Targeted Performance Level
Departmental approach to further the implementation of the Policy on Green Procurement in place as of April 1, 2014.  Yes-April 1, 2014
Number and percentage of procurement and/or materiel management specialists who completed the Canada School of Public Service Green Procurement course (C215) or equivalent, in fiscal year 2016-17.  100%
(number will be reported in DPR)
Number and percentage of managers and functional heads of procurement and materiel whose performance evaluation includes support and contribution toward green procurement, in fiscal year 2016-17.  100%
(number will be reported in DPR)
Target
By March 31, 2017, 90% of vehicles purchased are the right size for operational needs and are the most fuel-efficient vehicle in their class available at the time of purchase.
Performance Indicator Targeted Performance Level
Number and percentage of vehicles purchased that meet the requirements in the given fiscal year 90%
(number will be reported in DPR)
Target
By 2021, the CRA will reduce greenhouse gas emissions from business-related air travel by a minimum of 25% relative to 2008-09 levels.
Performance Indicator Targeted Performance Level
GHG emissions (CO2 equivalent) in fiscal year 2008-09 11,572 tonnes CO2 equivalent
Emissions associated with business-related air travel (CO2 equivalent) in the given fiscal year 8,679 tonnes CO2 equivalent
Percentage change in GHG emissions from fiscal year 2008-09 to the current fiscal year 25% decrease
Target
By March 31, 2017, 90% of copy paper, publications, and envelopes purchased will contain a minimum of 30% recycled content paper that is certified to a recognized environmental standard to reduce the environmental impact of its production.
Performance Indicator Targeted Performance Level
Percentage of copy paper, publications, and envelopes purchased that meet the requirements in the given fiscal year  90%
Implementation Strategy Element
Leverage common-use procurement instruments where available and feasible  Seeking to reach "Achieved"
Train acquisition cardholders on green procurement.  Seeking to reach "Achieved"
Increase awareness of the Policy on Green Procurement among managers.  Seeking to reach "Achieved"
Target 7.3: Sustainable Workplace Operations

As of April 1, 2015, the Government of Canada will 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 Targeted Performance Level
Approach to maintain or improve the sustainability of the CRA workplace in place as of March 31, 2015.  Yes—April 1, 2014
Implementation Strategy Element
Engage employees in greening government operations practices. Seeking to reach "Achieved"
Integrate environmental considerations into corporate policies, processes and practices in accordance with departmental refresh cycles. Seeking to reach "Achieved"
Maintain or improve existing approaches to sustainable workplace practices (printer ratios, paper usage, and green meetings). Seeking to reach "Achieved"
Minimize the ratio of information technology (IT) assets per employee. Seeking to reach "Achieved"
Select and operate IT and office equipment in a manner that reduces energy consumption and material usage. Seeking to reach "Achieved"
Dispose of e-waste in an environmentally sound and secure manner. Seeking to reach "Achieved"
Reuse or recycle workplace materiel and assets in an environmentally sound and secure manner. Seeking to reach "Achieved"
Minimize all non-hazardous solid waste generated, and leverage service offerings to maximize the diversion of waste. Seeking to reach "Achieved"
Increase the population density in office buildings, and increase space utilization in special purpose buildings. Seeking to reach "Achieved"
Target 7.4: Greening Services to Clients

By March 31, 2015, departments will establish SMART targets to reduce the environmental impact of their services to clients.

Performance Measurement
Expected result: CRA services to clients, taxpayers, and benefit recipients have a reduced environmental impact
Performance Indicator Targeted Performance Level
An approach to further greening of services to clients, taxpayers, and benefit recipients is in place by March 31, 2015  Yes–April 1, 2014

Strategic Environmental Assessment

The Canada Revenue Agency will report on the results of its preliminary scans and strategic environmental assessments through its Departmental Performance Report. The CRA will continue to ensure that its decision-making process includes consideration of FSDS goals and targets through the Strategic Environmental Assessment process. An Strategic Environmental Assessment for policy, plan or program proposals includes an analysis of the impacts of the given proposal on the environment, including on FSDS goals and targets.

Public statements on the results of CRA's detailed assessment will be made public when an initiative is announced. The purpose of the public statement is to demonstrate that the environmental effects, including the impacts on achieving the FSDS goals and targets, of the approved policy, plan or program have been considered during proposal development and decision making.

Details on Transfer Payment Programs of $5 Million or More

Children's Special Allowance Payments (Statutory)

Start date: August 28, 19951

End date: Ongoing

Type of transfer payment: Other transfer payment

Type of appropriation: Annually through Estimates

Fiscal year for terms and conditions: 2015-16

Strategic Outcome: Eligible families and individuals receive timely and accurate benefit payments.

Link to CRA program alignment architecture:

  • Program: Benefit Programs
  • Subprogram: Statutory Children's Special Allowance payments

Description: 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 and Universal Child Care Benefit payments and are governed by the Children's Special Allowances Act, which provides that this allowance be paid out of the Consolidated Revenue Fund.

Expected Results: Not applicable

Fiscal year of last completed evaluation: Not applicable

Decision following the results of last evaluation: Not applicable

Fiscal year of planned completion of next evaluation: Not applicable

General targeted recipient groups: Persons

Initiatives to engage applicants and recipients: Not applicable

Planning Information (dollars)
Type of Transfer Payment 2015-16
Forecast Spending
2016-17
Planned Spending
2017-18
Planned Spending
2018-19
Planned Spending
Total Grants 0 0 0 0
Total Contributions 0 0 0 0
Total Other Types of Transfer Payments1 237,000,000 289,000,000 294,000,000 299,000,000
Total Transfer Payments 237,000,000 289,000,000 294,000,000 299,000,000

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

Start date: October 12, 2006

End date: October 12, 2015

Type of transfer payment: Other transfer payment

Type of appropriation: Annually through Estimates

Fiscal year for terms and conditions: 2015-16

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

Link to CRA program alignment architecture:

  • Program: Taxpayer and Business Assistance
  • Subprogram: Policy, Ruling, and Interpretations

Description: 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 Global Affairs 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 Results: Disbursements to Provinces under Softwood Lumber Products Export Charge Act, 2006 are accurate, complete and made in a timely manner.

Fiscal year of last completed evaluation: January 2011

Decision following the results of last evaluation: Continuation

Fiscal year of planned completion of next evaluation: Not applicable

General targeted recipient groups: Provinces

Initiatives to engage applicants and recipients: Not applicable

Planning Information (dollars)
Type of Transfer Payment 2015-16
Forecast Spending
2016-17
Planned Spending
2017-18
Planned Spending
2018-19
Planned Spending
Total Grants 0 0 0 0
Total Contributions 0 0 0 0
Total Other Types of Transfer Payments1, 2 0 128,000,000 N/A N/A
Total Transfer Payments 0 128,000,000 0 0

Upcoming Internal Audits and Evaluations Over the Next Three Fiscal Years

Internal Audits 3
Title of Internal Audit Internal Audit type Status Expected completion date
Audit Quality Review Program (phase 1) Service/compliance – Thematic Assurance Plan for Agency Compliance Activities Underway 2016
Risk Assessment and Audit File Selection for Compliance Programs Other – Thematic Assurance Plan for Agency Compliance Activities Underway 2016
Major Project Investment Oversight Process Other Underway 2016
ATIP Information Management Integrity Planned 2016
MOU relating to mutual cooperation and joint initiatives between the CRA and the Workplace Safety and Insurance Board of Ontario Integrity Planned 2016
MOU relating to information sharing between the CRA and the Saskatchewan Government Insurance Integrity Planned 2016
Matching and/or Processing Review Programs Service/compliance – Thematic Assurance Plan for Agency Compliance Activities Planned 2017
Implementation of Liaison Officer Program Service/compliance – Thematic Assurance Plan for Agency Compliance Activities Planned 2017
Security Assessment and Authorization Integrity/security – Thematic Assurance Plan for IT Security Planned 2017
IT Asset Disposal Integrity/security – Thematic Assurance Plan for IT Security Planned 2017
CPP/EI Base 2014-2015 Year Administrative Costs Service/compliance   Planned 2017
Financial Administration Act (FAA) Accountabilities Audit – Administered Activities/bulk disbursements (Benefits) Other Planned 2017
2011 Audit on Leave Management Action Plans (follow-up) Follow-up Planned 2017
Management of Discipline (follow-up) Follow-up Planned 2017
Agency Underground Economy Initiative Service/compliance – Thematic Assurance Plan for Agency Compliance Activities Planned 2018
Audit Quality Review Program (phase 2) Service/compliance – Thematic Assurance Plan for Agency Compliance Activities Planned 2018
Records Storage and Retrieval Integrity Planned 2018
Contract Bidding and Awards (follow-up) Integrity/security – Thematic Assurance Plan for Procurement (follow-up) Planned 2018
Application Development Service/compliance Planned 2018
Governance of non-RIMC IT Investments Innovation   Planned 2018
IT Service Desk Innovation  Planned  2018
Criminal Investigations Directorate Service/compliance – Thematic Assurance Plan for Agency Compliance Activities Planned 2019
IT Application Incident Management Integrity Planned 2019
Contract Management Integrity/security – Thematic Assurance Plan for Procurement Planned 2019
User Access Management (follow-up) Integrity/security – Thematic Assurance Plan for IT Security Planned 2019
Professional Services Supply Chain (PSSC), related Task Authorisations (TA) and Qualified Suppliers List Integrity/security – Thematic Assurance Plan for Procurement Planned 2020
Evaluations 4
Link to CRA Program Alignment Architecture Title of the Evaluation Planned Evaluation Start Date Planned Commissioner Approval Date
Program: Taxpayer and Business Assistance
  • Subprogram: Registered Plans
Tax Free Savings Account Underway 2016
Program: Collections, Compliance, and Verification
  • Subprogram: Compliance and Verification
Employer Compliance Audit (ECA) Underway 2016
Program: Assessment of Returns and Payment Processing
  • Subprogram: Individual Returns
Program: Collections, Compliance, and Verification
  • Subprogram: Tax and Government Programs
Program: Reporting Compliance
  • Subprogram: Small and Medium Enterprises
Horizontal Compliance Management – T1 Self-Employed (phase 2) Underway 2017
Program: Assessment of Returns and Payment Processing
  • Subprogram: Individual Returns
Trust (T3) Returns 2016 2018
Program: Assessment of Returns and Payment Processing
  • Subprogram: Individual Returns
Electronic Services – Individual Compliance Behaviour 2016 2018
Program: Reporting Compliance
  • Subprogram: International and Large Business
Comprehensive Review – International Tax (follow-up) 2017 2018
Program: Appeals
  • Subprogram: Taxpayer relief
Taxpayer Relief 2018 2019

Program: Assessment of Returns and Payment Processing

  • Subprogram: Individual Returns
  • Subprogram: Business Returns

Program: Collections, Compliance, and Verification

  • Subprogram: Compliance and Verification

Program: Reporting Compliance

  • Subprogram: International and Large Business
  • Subprogram: Small and Medium Enterprises
Corporate Intelligence and Risk Identification (formerly Compliance Risk Assessment) 2019 To be determined

Planned Spending and Full-Time Equivalents

Main Estimates, Planned Spending and Full-Time Equivalents (in dollars)
Main Estimates, Planned Spending and Full-Time Equivalents 2015-16
Forecast
2016-17
Planned
2017-18
Planned
2018-19
Planned
Total Main Estimates 3,804,844,388 4,085,718,183 3,931,353,039 3,921,865,822
Taxpayers' Ombudsman included in Main Estimates above (3,198,657) (3,235,854) (3,227,940) (3,234,541)
Supplementary Estimates
2015 Federal Budget – Legislative Measures 30,516,460
2015 Federal Budget – Enhancements to Compliance Measures 33,422,105
2015 Federal Budget – "Get in Writing Campaign" for Canadian Home Builders' Association (250,040)
Transfer from Public Services and Procurement Canada for accommodation and real property services 19,616,890
Other Adjustments:
Adjustment to the respendable non-tax revenues (1,068,775)
Planned Base Spending 3,883,882,371 4,082,482,329 3,928,125,099  3,918,631,281
Taxpayers' Ombudsman 3,198,657 3,235,854 3,227,940 3,234,541
Items not yet included in outer years' planned spending 
Carry Forward from 2014-15 261,445,115
Maternity and Severance payments 73,000,000
Total Planned Spending5 4,221,526,143 4,085,718,183 3,931,353,039 3,921,865,822
Respendable non-tax revenues pursuant to the Canada Revenue Agency Act (168,397,480) (166,604,106) (161,082,878) (160,234,943)
Cost of services received without charge 448,893,534 452,470,955 452,350,893 451,280,463
Total CRA Spending 4,502,022,197  4,371,585,032 4,222,621,054 4,212,911,342
Human Resources (Full-Time Equivalents)
Canada Revenue Agency 39,289 37,847 37,444 36,971
Taxpayers' Ombudsman 31 31 31 31
Total Full-Time Equivalents 39,320 37,878 37,475  37,002
Planned Spending by program and Full-Time Equivalents (in dollars)
Planned Spending by program and Full-Time Equivalents 2015-16
Forecast
2016-17
Planned
2017-18
Planned
2018-19
Planned
Taxpayer and Business Assistance 290,364,894 412,286,804 280,544,765 281,256,789
Assessment of Returns and Payment Processing 687,698,295 503,182,149 496,115,166 493,780,046
Reporting Compliance 1,092,386,302 1,067,140,214 1,062,160,684 1,054,616,518
Collections, Compliance and Verification 491,303,158 632,051,666 618,542,264 616,220,531
Appeals 182,669,682 185,568,739 185,234,324 185,573,890
Benefit Programs 389,834,229 434,832,503 441,578,904 447,739,404
Internal Services 1,084,008,294 847,420,254 843,948,992 839,444,103
Taxpayers' Ombudsman 3,261,289 3,235,854  3,227,940 3,234,541
Total Planned Spending5 4,221,526,143  4,085,718,183 3,931,353,039 3,921,865,822
Respendable non-tax revenue pursuant to Canada Revenue Agency Act (168,397,480) (166,604,106) (161,082,878) (160,234,943)
Cost of services received without charge 448,893,534 452,470,955 452,350,893 451,280,463
Total CRA Spending 4,502,022,197  4,371,585,032 4,222,621,054 4,212,911,342
Human Resources (Full-Time Equivalents) 39,320 37,878 37,475 37,002

Sources of Respendable Non-Tax Revenue and Non-Respendable Non-Tax Revenue

Respendable Non-Tax Revenue (in dollars)
Respendable Non-Tax Revenue 2015-16
Forecast Revenue
2016-17
Planned Revenue
2017-18
Planned Revenue
2018-19
Planned Revenue
Taxpayer and Business Assistance 3,361,751 2,789,619 2,726,500 2,510,566
Assessment of Returns and Payment Processing 15,735,348 11,844,140 11,828,153 11,857,536
Reporting Compliance 30,235,754 30,221,930 30,246,250  30,264,170
Collections, Compliance and Verification 5,942,109 9,662,139 5,606,644 5,197,033
Appeals 4,521,570 5,620,327 5,215,027 4,708,536
Benefit Programs 20,736,560 20,670,754 21,084,169 21,505,852
Internal Services 87,864,388 85,795,197 84,376,135 84,191,250
Total respendable non-tax revenue 168,397,480 166,604,106 161,082,878 160,234,943
Details
Refund of Previous Year's Expenditures 1,038,478 1,038,478 1,038,478 1,038,478
Advance Income Tax Ruling Fees 1,659,259 1,416,519 1,416,519  1,416,519
Advance Pricing Agreements 348,849 348,849 348,849 348,849
Other Services of a Regulatory Nature 97,530 38,471 38,471 38,471
Administration of Provincial Programs6 111,356,125 110,977,196 105,626,379 105,000,085
Other Services of a Non-Regulatory Nature 305,446 306,214 306,386 306,565
Sales of Goods and Information Products 172,616 161,792 161,792 161,792
Other Fees and Charges 387,929 388,223 388,223 388,223
Services to Other Government Departments7 53,031,248 51,928,364 51,757,781 51,535,961
Total Respendable Non-Tax Revenue 168,397,480 166,604,106 161,082,878 160,234,943
Non-Respendable Non-Tax Revenue (Agency Activities) (in dollars)
Non-Respendable Non-Tax Revenue 2015-16
Forecast Revenue
2016-17
Planned Revenue
2017-18
Planned Revenue
2018-19
Planned Revenue
Taxpayer and Business Assistance 9,071,603 8,613,707 8,556,357 8,550,456
Assessment of Returns and Payment Processing 6,592,250  6,300,063 6,191,352 6,172,628
Reporting Compliance 8,652,818 8,608,030 8,024,290 7,923,754
Collections, Compliance and Verification 28,533,012 25,956,924 25,465,057 24,823,837
Appeals 2,754,261 2,540,714 2,504,873 2,498,700
Benefit Programs 2,126,124 2,091,954 1,954,779 1,931,153
Internal Services 8,828,264 9,598,753 9,613,144  9,786,134
Total Non-Respendable Non-Tax Revenue 66,558,332 63,710,145  62,309,852  61,686,662
Details (Other Fees and Charges)
Recovery of Employee Benefits Costs 66,111,083 63,262,895 61,862,603 61,239,413
Miscellaneous 447,249 447,250 447,249 447,249
Total Non-Respendable Non-Tax Revenue8 66,558,332 63,710,145 62,309,852 61,686,662
Services Received Without Charge (in dollars)
Services Received Without Charge 2015-16
Forecast Spending
2016-17
Planned Spending
2017-18
Planned Spending
2018-19
Planned Spending
Contributions covering employer's share of employees' insurance premiums and expenditures (excluding revolving funds) and employer's contribution to employees' insured benefits plans and expenditures, both paid by Treasury Board of Canada Secretariat 229,888,767 234,038,643 233,729,031 232,739,698
Salary and associated expenditures of legal services provided by Justice Canada 31,363,597 31,009,862 31,310,926  31,310,926
Audit services by the Office of the Auditor General 2,594,000 2,594,000 2,594,000 2,594,000
Workers' compensation coverage provided by Employment and Social Development Canada 1,287,502 1,223,126 1,161,970  1,103,872
Payroll services provided by Public Services and Procurement Canada 4,285,880 4,131,536 4,081,178 4,058,179
Information technology services – Shared Services Canada 179,473,788 179,473,788 179,473,788  179,473,788
Total Services Received Without Charge 448,893,534 452,470,955 452,350,893 451,280,463
Summary of Capital Spending by program (in dollars)
Summary of Capital Spending by program 2015-16
Forecast Spending
2016-17
Planned Spending
2017-18
Planned Spending
2018-19
Planned Spending
Taxpayer and Business assistance 903,185 1,710,300 1,809,663 1,533,730
Assessment of Returns and Payment Processing 14,778,630 9,759,850 8,595,800 7,041,000
Reporting Compliance 6,253,000 1,860,572 1,299,568 951,893
Collections, Compliance and Verification 1,015,000 1,000,250 886,376  2,709,500
Appeals 415,000 59,000 25,000 25,000
Benefit Programs 1,284,000 1,446,000 1,878,000 2,881,000
Internal Services 104,044,022 21,230,028 38,521,459 16,698,548
Taxpayers' Ombudsman
Total of Capital Spending 128,692,837 37,066,000 53,015,866 31,840,671

Future-Oriented Statement of Operations

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 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

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

Original signed

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

January 7, 2016

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

Future-oriented Statement of Operations – Agency Activities
for the year ended March 31
(in thousands of dollars)
Agency activity Estimated results
2016
Planned results
2017
Expenses (note 6)
Internal services 1,286,989 1,220,307
Reporting compliance 1,144,173 1,164,486
Collections, compliance, and verification 803,421 858,143
Assessment of returns and payment processing 601,705 590,640
Taxpayer and business assistance 355,083 366,525
Appeals 236,583 244,464
Benefit programs 157,753 157,512
Taxpayers' Ombudsman 3,422 3,516
Total expenses 4,589,129 4,605,593
Non-Tax Revenues (note 7)
Internal services 155,015 158,189
Reporting compliance 38,889 38,830
Collections, compliance, and verification 200,260 187,484
Assessment of returns and payment processing 56,731 46,684
Taxpayer and business assistance 62,927  60,407
Appeals 20,134 22,042
Benefit programs 23,404 23,171
Revenues earned on behalf of Government (66,558) (63,710)
Total non-tax revenues 490,802 473,097
Net cost of operations 4,098,327 4,132,496

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

Notes to the Future-oriented Statement 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) Assessment of returns and payment processing: Processes and validates taxpayer returns; registers, establishes, and maintains taxpayer accounts; and, receives payments;

(d) Collections, compliance, and verification: Identifies and addresses non-compliance with taxpayer filing and remittance requirements;

(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 Québec), 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 2015-2016 is primarily based on actual results as at October 31, 2015 and on forecasts for the remainder of the fiscal year. Forecasts have been made for the planned results for the 2016-2017 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 2015-2016 and for 2016-2017, 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) Implementation of new collective agreements.

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

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

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 in effect for the year ending March 31, 2016 which are based on 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(b) 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) Employee 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) 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.

(iii.3) 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.

(iii.4) 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.

(iv) Allowance for doubtful accounts

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

(v) 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:

Amortization of tangible capital assets
Asset class Useful life
Machinery, equipment, and furniture 10 years
In-house developed software 5-10 years
Vehicles and other means of transportation 5 years
Information technology equipment 5 years
Purchased software 3 years

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

(vi) 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  RA 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:
Reconciliation of Parliamentary appropriations to be provided and requested Estimated results 2016
(in thousands of dollars)
Planned results 2017
(in thousands of dollars)
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 3,259,182 3,212,721
Vote 5 – Capital expenditures   128,693 79,760
Spending of revenues received through the conduct of its operation pursuant to section 60 of the Canada Revenue Agency Act   168,397 166,604
Statutory expenditures:
Contributions to employee benefit plans 428,172 432,846
Children's Special Allowance Payments9 237,000 289,000
Disbursements to provinces under the Softwood Lumber Products Export Charge Act, 20069,10 128,000
Statutory expenditures: Minister of National Revenue – Salary and motor car allowance 82 84
Sub-total 4,221,526 4,309,015
Less:
Appropriations available for future years11 – Vote 1 (180,603)
Appropriations available for future years11 – Vote 5 (42,694)
Expenditures related to Administered Activities (237,000) (417,000)
Sub-total (460,297) (417,000)
Total Parliamentary appropriations to be requested 3,761,229 3,892,015
b) Reconciliation of net cost of operations to Parliamentary appropriations requested:
Reconciliation of net cost of operations to Parliamentary appropriations requested Estimated results 2016
(in thousands of dollars)
Planned results 2017
(in thousands of dollars)
Net cost of operations 4,098,327 4,132,496
Expenses not requiring the use of current year appropriations:
Amortization of tangible capital assets (87,407) (95,613)
Loss on disposal/write-off of tangible capital assets (3,889) (3,078)
Services to be provided without charge from other government agencies and departments (note 8) (448,894) (452,471)
Severance benefits paid (4,981) (472,299)
Other (4,352) (29,206)
Sub-total  (549,523) (1,052,667)
Use of current year appropriations not affecting expenses:
Tangible capital assets acquisitions 102,461 96,841
Sub-total 102,461 96,841
Changes in future funding requirements:
Salary, vacation pay and compensatory leave  (66,680) 158,799
Employee severance benefits 12,982 395,377
Employee sick leave benefits (4,735) (5,435)
Sub-total (58,433) 548,741
Non-tax revenues available for spending 168,397 166,604
Total Parliamentary appropriations to be requested 3,761,229 3,892,015
6. Expenses by category
In the Future-oriented Statement of Operations, expenses are presented by program activity. The following presents expenses by category.
Expenses by category Estimated results 2016
(in thousands of dollars)
Planned results 2017
(in thousands of dollars)
Personnel:
Salaries 2,449,476 2,346,272
Personnel: Other allowances and benefits (including employee benefits) 934,679 981,458
Sub-total 3,384,155 3,327,730
Professional and business services 554,241 572,464
Accommodation 306,101 344,949
Transportation and communications 130,387 134,968
Amortization of tangible capital assets 87,408 95,614
Equipment rentals 33,994 35,193
Materials and supplies 19,799 20,492
Interest on average accrued benefit obligations 19,755 19,955
Other services and expenses 19,322 20,000
Equipment purchases 19,308 20,003
Advertising, information and printing services 8,159 8,444
Loss on disposal/write-off of tangible capital assets 3,889 3,078
Repair and maintenance 2,611 2,703
Total expenses 4,589,129 4,605,593
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.
Non-tax revenues Estimated results 2016
(in thousands of dollars)
Planned results 2017
(in thousands of dollars)
Non-tax revenues credited to Vote 1
Fees for administering the Employment Insurance Act 179,196 175,771
Fees for administering the Canada Pension Plan 143,209 130,722
Sub-total 322,405 306,493
Non-tax revenues available for spending
Administration fees – provinces and territories 110,605 109,427
Services fees 55,280 54,692
Miscellaneous respendable revenues 2,512 2,485
Sub-total 168,397 166,604
Non-tax revenues not available for spending
Recovery of employee benefit costs relating to non-tax revenue credited to Vote 1 and revenues available for spending 66,111 63,263
Miscellaneous non-tax revenues 447 447
Sub-total 66,558 63,710
Total non-tax revenues before revenues earned on behalf of Government 557,360 536,807
Revenues earned on behalf of Government (66,558) (63,710)
Total non-tax revenues 490,802 473,097
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 include:
Related party transactions Estimated results 2016
(in thousands of dollars)
Planned results 2017
(in thousands of dollars)
Employer's contribution to the health and dental insurance plans – Treasury Board Secretariat 229,889 234,039
Information technology services– Shared Services Canada 179,474 179,474
Legal services – Justice Canada 31,364 31,010
Payroll services – Public Works and Government Services Canada 4,286 4,131
Audit services – Office of the Auditor General of Canada 2,594 2,594
Workers' compensation benefits – Employment and Social Development Canada 1,287 1,223
Total 448,894 452,471

Table Notes

1 Other Transfer payments are based on legislation or an arrangement that normally includes a formula or schedule as one element used to determine the expenditure amount.

2 Disbursements related to export charges collected in 2015-16 will be paid in June 2016 to ensure all costs are appropriately reflected before final amounts are disbursed to the Provinces.

3 The results of the CRA's audits are posted on our Web site to promote public accountability and transparency. The planned engagements and dates are subject to change based on the 2016-2019 annual planning exercise.

4 The results of the CRA's evaluations are posted on our Web site to promote public accountability and transparency. The planned engagements and dates are subject to change based on the 2016-2019 annual planning exercise.

5 The reduction in Forecast and Planned Spending over the planning period (from $4.222 billion in 2015-16 to $3.922 billion in 2018-19) is primarily attributable to:

  • certain technical adjustments that are reflected only in 2015-16 including: a carry-forward of funds from 2014-15 and funding for maternity and severance benefits;
  • the sunset of funding received for special projects and the conclusion of the Softwood Lumber Agreement, as well as adjustments for accommodation and real property services, the Canada School of Public Service, and funding for the Government advertising program; and
  • the implementation of initiatives to improve efficiency.

6 Comprised mainly of a basic fee charged to the provinces for recoveries provided under tax collection agreements and other provincial cost recovery initiatives (for example refund set-off and benefit programs).

7 Comprised mainly of information technology services provided to the Canada Border Services Agency.

8 This table reflects the approach taken in the Audited Financial Statements of the Agency where a clear distinction is made between Agency Activities and Administered Activities. Interest and penalties collected for personal, corporate and other taxes, which are part of the Agency’s Administered Activities rather than Agency’s Activities, are excluded.

9 In accordance with the division of activities for financial reporting purposes outlined in note 4, the payments under the Children's Special Allowances Act and the Softwood Lumber Products Export Charge Act, 2006 are reported as federal administered expenses on the Statement of Administered Expenses and Recoveries of the CRA's Financial Statements – Administered Activities.

10 The Department of Finance has estimated an amount of $128 million for the Softwood Lumber disbursement to the provinces for 2016-17. This is due to the market price of softwood lumber declining to as low as $315 US per thousand board feet, which is below the reference price of $355 US per thousand board feet, in the first part of 2015-16 and continuing at those levels until the end of the agreement in October 2015. As a result of the timing of the final audits, these payments will be disbursed in 2016-17.

11 Pursuant to section 60(1) of the Canada Revenue Agency Act, the CRA has a two-year period to utilize parliamentary appropriations.


Footnotes

1 Responsibility for Children's Special Allowance Payment was transferred from Employment and Social Development Canada, effective August 28, 1995 (P.C. Order 1995-342).

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