Ministerial Welcome Package – Book 1

From: Canada Revenue Agency

ERRATUM

"In the CRA/Unions Collective Bargaining Status update, an error was corrected regarding the classification groups represented by PSAC-UTE:

"The PSAC-UTE represents all other non-executive positions of the CRA and represents approximately 29,000 members." should read "The PSAC-UTE bargaining unit consists of two occupational groups: the Service Program group (SP) and the Management group (MG-SPS), representing approximately 29,000 members."

This error has been corrected in the HTML version."

Welcome to the CRA Presentation

The First Month

Key Decisions in the First 60 days

Important Issues

November 2019

Welcome to the Canada Revenue Agency


Purpose

Who we are

Our people

Note:

  • Employee distribution is based on physical work location.
  • The CRA also has employees working in the North.
  • Unless otherwise indicated, all statistics in this presentation are for the 2018-2019 fiscal year.
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This graphic, entitled "Our People," is a map representing Canada and the CRA's employee representation across the country, separated by region. Starting on the west coast, the CRA's Pacific region (including British Columbia and the Yukon territory) makes up 5,212 employees. Moving east, the Prairies region (including Alberta, Saskatchewan, Manitoba, and the Northwest Territories) makes up 7,485 employees. Moving further east, the Ontario region (including Ontario and Nunavut) makes up 12,307 employees. The Headquarters region makes up 11,308 employees. Second-last on the east is Quebec, which makes up 5,854 employees. On the furthest east, the Atlantic region (including New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador) makes up 4,654 employees. Above and to the right of the map, the national total of CRA employees is shown, making up 46,820 employees.

Below and to the left of the map, there are notes with context on the map. These notes, from top to bottom, are as follows:

  • Employee distribution is based on physical work location.
  • The CRA also has employees working in the North.
  • Unless otherwise indicated, all statistics in this presentation are for the 2018-2019 fiscal year.

The role of the Minister

You are supported by a variety of people …

Your input into, and approval of, appointments for the Board and the Ombudsman will be sought in the near future.

… including external experts, stakeholders, and partners

The economic and social well-being of Canadians is supported by the CRA's revenue collections…

  • The CRA collects taxes on behalf of the Government of Canada, most provinces and territories, and some First Nations.
  • We also undertake a variety of activities to collect debts on behalf of other government programs (e.g., social program overpayments, Canada Student Loan).
  • The revenues we collect are critical in supporting government programs, services, and investment priorities.
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Total administered revenues and pension contributions, over $457 billion.

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Resolved just under $68 billion in outstanding tax debt.

… and through the delivery of benefits and tax credits to millions of Canadians

  • Our overarching goal is to ensure clients know how to access the benefits and tax credits for which they are eligible.
  • We undertake significant efforts to reach people, in particular vulnerable populations, to increase benefit uptake:
    • Community Volunteer Income Tax Program (CVITP)
    • Outreach, including to Indigenous populations and seniors
    • Nudge campaigns
  • We work with provincial, territorial, and federal partners to support our efforts.
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* For the 2019 tax year, the Canada Workers Benefit will replace the Working Income Tax Benefit.

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This is a graphic depicting five examples of benefits and credits administered by the CRA. On the left side, there are three examples. From top to bottom, they are as follows:

  • The silhouette of an individual using a laptop computer; beneath the image is the text "Advance payment of the Canada Workers Benefit (CWB)". There is an asterisk with the following note: "For the 2019 tax year, the Canada Works Benefit will replace the Working Income Tax Benefit"
  • The silhouette of an infant; beneath the image is the text "Children’s special allowance (CSA)"
  • The silhouette of an individual in a wheelchair; beneath the image is the text "Eligibility for Disability tax credit (DTC)"

On the right side, there are two examples.

  • The silhouettes of two men and one woman standing in a line; beneath the image is the text "Goods and services tax/harmonized sales tax (GST/HST) credit and related provincial/territorial programs"
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  • "$34.8 billion paid to benefit recipients and administered 181 federal, provincial and territorial benefit and credit programs and services".

What we do

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This full-page graphic, entitled "What we do," depicts a process flow map diagram for CRA operations. In the top-left corner, there is an image of a cellphone, computer, letter, phone, and two human figures, with the text "CHANNELS" superimposed.

At the beginning of the process flow map diagram, there is a small graphic with four quadrants:

  • The upper-left quadrant has a silhouette of a person; beneath the image is text reading "individual"
  • The lower-left quadrant has an image of a graph; beneath the image is text reading "business"
  • The upper-right quadrant has silhouettes of a man, woman, and child; beneath the image is text reading "family"
  • The lower-right quadrant has a silhouette of a person with a dollar-sign badge on their arm; beneath the image is text reading "tax intermediary"

A teal line leads from the quadrant graphic, around an image of a lightbulb labeled "providing information, facilitating filing, and conducting outreach."

A red line follows around an image of a computer labeled "account registration & authentication."

A brown line follows around an image of a clipboard labeled "tax filing and benefit application."

A grey-green line follows around an image of a silhouette of a person labeled "CRA (re)assessment and benefit determination."

A yellow line follows around an image of silhouettes of two people shaking hands labeled "issuance of document(s) e.g., notice of assessment."

A green line follows around an image of a magnifying glass labeled "verification/audit."

An orange line follows around an image of a gavel labeled "redress (objections and appeals)."

At the end of the line is an image of a hand labeled "collections."

For many Canadians, the main interaction with the Government is their filing experience…

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*Other statistics are available in Annex B

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This is a graphic of a rectangle with the following text written in navy font at the top: "More than 30 million individual and corporate returns". There is an asterisk with the following note: "Other statistics are available in Annex B".

Under this text are four images with statistics underneath. On the left side, there are two images. From top to bottom, they are as follows:

  • An image of a computer monitor; beneath the image is the text "Nearly 90% of individual returns filed electronically".
  • An image of silhouettes of two people; beneath the image is the text "60% of individuals & 90% of businesses, use a representative".

On the right side, there are two images. From top to bottom, they are as follows:

  • An image of an open letter with a document inside; beneath the image is the text "10% of returns filed by paper".
  • An image of a phone; beneath the image is the text "64,000 people filed using the phone (as of May 1, 2019)".
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...and we aim to make it fast, easy, secure, and accurate

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This is a graphic of a rectangle with the following text written in navy font at the top: "Some of the tools and services that support filing." Under this text are three images with statistics underneath. From left to right, they are as follows:

  • An image of a web browser with a pop-up of a checkmark and X; beneath the image is the text "Auto-Fill My Return partially completes the return".
  • An image of a hand with an extended index finger; beneath the image is the text "Secure online portals and mobile apps for individuals and small businesses, which allow you to submit documents and receive online mail".
  • An image of a headset; beneath the image is the text "Call centre agents who respond to questions related to personal income tax, business, and benefits".

To better serve Canadians, the Agency is modernizing...

  • Canadians and businesses have told us that they expect CRA to provide modern, easy-to-understand, and easy-to-use information and services.
  • The Agency is listening and modernizing to improve the client experience and to ensure we are a world-class tax and benefits administration:
    • We are designing and delivering people-centred programs and services
    • Our compliance activities are shifting to an increased focus in education, facilitation, and communication
  • To support these efforts, we are adopting new tools and technology, shifting to a culture of service, and renewing our workforce.
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...by putting people first

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This is a graphic of silhouettes of a green man, an orange man, and a  purple woman with text above, below, to the left, and to the right.

The text above is as follows: "Vision: trusted, fair and helpful by putting people first".

The text below is as follows: "Guiding principles: We are people-centric; We are supportive; We are innovative; We are one team; We are fair".

The text to the left is as follows: "Values: Integrity; Professionalism; Respect; Collaboration".

The text to the right is as follows: "Service identity: Respectful; Helpful; Doing it right".

Canadians' level of compliance is impacted by the CRA's reputation and perceived fairness

People expect their information to be protected…

...and we remain vigilant

Communications is key in achieving results...

CRA Public Affairs

Robust planning, analytics and media engagement capacity

  • Tri-annual CRA communications strategies informed by evidence-based public environment analysis
  • Robust, proactive issues management capacity
  • Proactive, responsive media relations capacity

Context

Corporate storyline:

  • Highlight the CRA's ongoing service improvement efforts
  • The CRA will never use threatening language (scams)
  • Build confidence in the CRA by raising awareness of CRA efforts to crack down on tax cheating
  • Connect Canadians with information they need to get the benefits and credits to which they are entitled

By the numbers

  • ~ 1000 media calls/year
  • ~ 18 articles/day mention the minister or CRA
  • Top three media topics: tax cheating, benefits/credits, scams
  • More than 225k social media followers*

* As of October 9, 2019

Opportunities

  • High national public interest in CRA stories
  • Increasingly successful proactive media approach
  • Opportunity to profile service transformation and collaboration with international partners

Challenges

  • Being open and transparent while also protecting the confidentiality of taxpayer information
  • Lack of public awareness of CRA mandate vs. Finance Canada mandate
  • Client service experience still not meeting client expectations
  • Ongoing perception that CRA is cracking down on the average Canadian while not pursuing wealthy Canadians and businesses

... and positioning the Minister for success

Looking ahead…

Your platform contained a number of tax and benefit proposals that have implications for the CRA:

Looking ahead – considerations

Moving towards implementation, some considerations:

Annex A: Taxpayer Bill of Rights

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A description of the sixteen rights Canadian taxpayers have under the Taxpayer Bill of Rights.

The title of the image is "Annex A: Taxpayer Bill of Rights".

On the left-hand side of the image are the words, from top to bottom, You Have The Right To. Sixteen parallel horizontal lines lead from those words to a list of the sixteen rights that Canadian taxpayers have. Those rights, on the right-hand side of the page, are listed, from top to bottom, as follows:

  • receive entitlements and to pay no more and no less than what is required by law
  • service in both official languages
  • privacy and confidentiality
  • a formal review and a subsequent appeal

★be treated professionally, courteously, and fairly

★complete, accurate, clear, and timely information

  • unless otherwise provided by law, not to pay income tax amounts in dispute before you have had an impartial review
  • have the law applied consistently
  • lodge a service complaint and to be provided with an explanation of our findings

★have the costs of compliance taken into account when administering tax legislation
★expect us to be accountable

  • relief from penalties and interest under tax legislation because of extraordinary circumstances

★expect us to publish our service standards and report annually
★expect us to warn you about questionable tax schemes in a timely manner
★be represented by a person of your choice

  • lodge a service complaint and request a formal review without fear of reprisal
★ Of the 16 rights listed, the Taxpayers' Ombudsman is responsible for upholding the eight starred service rights.

Annex B: CRA by the numbers (2018-19)

The First Month
Week 1 Suggested Activities

Swearing-in ceremony for new Ministers / Meet the Commissioner at Rideau Hall

  • Receive mini-book at Rideau Hall
  • Office orientation and administrative decisions, including establishing staff and other logistics
  • Email to all CRA staff from Minister
  • Approval of biography and photograph
  • Approval of signature and letter templates

Welcome to the Agency

  • Meeting with the Commissioner and Deputy Commissioner
  • Minister is provided with briefing Book 1 & 2
  • Discuss priorities
  • Discuss Briefing Plan – overview of proposed plan for the coming week/month

Briefing, Introduction to the CRA – presentation of overview deck and discussion with the Commissioner and Deputy Commissioner

Priority Briefings

  • S.241 – protection of taxpayer information
  • Security Briefing
  • Briefing on the Disability Advisory Committee (scheduled to meet November 25-26, 2019).
  • Briefing on the issue of Income Tax Measures to Support Journalism (see key decisions document and associated important issue note)

Administrative Briefing

  • Question Period preparation
  • Spokesperson training

The following are anticipated to begin in week 1, but extend into remainder of the first month

Thematic Briefings

Topics to include: benefits administration, people first, filing experience, compliance, privacy and security.

Important Issue Briefings – Briefing on urgent topics that are likely to require early decisions or attract media attention following the election.

Corporate Briefings –

  • Ministerial Authorities and Delegations
  • Technical Briefing on the Departmental Results Report
  • Technical Briefing on the Expenditure Management Cycle and CRA Budget
The First Month
Week 2 Activity
  • Corporate and thematic briefings continue, including branch overviews
  • Chair of the Board of Management (briefing/arranged call)
  • Taxpayers' Ombudsman (briefing/arranged call).
  • Briefings on Important Issues start
  • Finalizing office logistics
  • Other demands on Minister's time (e.g., cabinet business, parliamentary affairs, and constituency office)
  • Briefings on program/topical issues
  • Briefing on the Litigation Forecast
The First Month
Week 3 Activity
  • Agency Briefing on the four current Ministerial advisory Bodies
  1. Underground Economy
  2. Disability
  3. Offshore Compliance
  4. Charitable Sector
  • Briefings on Important Issues continue
  • Briefings on program/topical issues

Important Business for First Month

  • Review and approve:
    • Departmental Results Report

Key Decisions – First 60 Days

Key Decisions
Subject
Decision Required Timing of decision
Disability Advisory Committee (DAC) meeting Whether the Minister will attend part of the quarterly DAC meeting scheduled for November 25-26 in Ottawa. November 21-22
Departmental Results Report
Approval of the annual Departmental Results Report. November 29
Journalism Tax Measures
Approval of the designation process for Qualified Canadian Journalism Organizations. Early December 2019
Board of Management nominations
Approval and recommendation to the Governor in Council for two vacant director positions. Early December 2019
New members of Disability Advisory Committee
Nomination of two members. Early December 2019
Advisory Committee on the Charitable Sector meeting
Input into the agenda for the first in-person meeting of the Advisory Committee on the Charitable Sector (ACCS). Early December 2019
Selection Process for the Taxpayers' Ombudsman
Approval of a selection process to choose a new Ombudsman. Late January 2020

Aggressive Non-Compliance Including Tax Evasion

Issue

The Canada Revenue Agency (CRA) has increased its focus on aggressive non-compliance through increased audit coverage, better data, and new approaches to identifying and targeting compliance efforts.

These efforts have started to bear fruit; audit results have improved, voluntary tax payments have increased and there is a growing body of litigation before the courts that will help define the limits of acceptable tax planning.

Critics of Canada's tax regime continue to identify some issues, including a concern that regular taxpayers are subject to aggressive enforcement by the CRA, while sophisticated taxpayers use legal and accounting maneuvers to avoid or evade taxes.  While such criticisms have lessened, and are increasingly focused on legislation, work remains to effectively communicate the CRA's approach to compliance.

Considerations

The vast majority of Canadian taxpayers are compliant and pay their fair share of taxes, and expect others to do the same. A minority of taxpayers make small, unintentional errors in their tax returns, which the CRA seeks to addresses through education, communication and reminders. Finally, a small segment of the population knowingly tests the limits of the Canadian tax law or ignores the law completely.

The Office of the Auditor General's 2018 audit of the CRA's compliance programs found that audit yield had increased by 60% over recent years, a total of $14.3B in gross audit assessments were made in fiscal 2018-19. The vast majority of these audit assessments were issued to large corporations and high net worth taxpayers ($8.5B), and overall the average dollars involved in a CRA audit doubled over the past 5 years to an average of $145K. 

Better data and modern analytics have helped drive this progress. Reporting of international transfers over $10K, Country-by-Country reports from multinationals and world-wide exchange of banking data have all provided the CRA with valuable information that we use to compare to tax filings.

The CRA has increased collaboration with international partners and now leads a number of initiatives of the Organization for Economic Co-operation and Development (OECD) Forum on Tax Administration (FTA), including the CRA's Commissioner's role as the vice chair of the FTA and sponsorship of the Large Business and International Program. 

The CRA has also increased its communications and transparency in relation to aggressive non-compliance, notably the publication of reports on tax gaps, more detailed responses to media enquiries, more interviews, and pre-judgment releases of information related to criminal tax evasion cases.

Building on this momentum, there are a number of key areas of focus in relation to aggressive non-compliance:

In addressing the above issues, we need to be clear that many of these instances of aggressive non-compliance are complex and can take considerable time and resources to resolve.

Next Steps

There are well established stakeholders groups representing both sophisticated taxpayers and groups concerned with tax fairness. The CRA will continue to engage these groups in open two-way communication. This will provide additional opportunities to understand stakeholder views and to communicate what the CRA is doing and plans to do.

Background

The following are illustrative of some of the key work that has been undertaken by the CRA in recent years to address aggressive non-compliance.

Key Messages

An Act Respecting Indigenous Languages

Issue

An Act respecting Indigenous languages (the Act) received Royal Assent on June 21, 2019. Among other features, the Act promotes the provision of federal government services in Indigenous languages.

Considerations

The Act speaks broadly about providing services in Indigenous languages, leaving a number of design parameters to be further defined. It is expected that federal entities will engage with Indigenous entities to reach agreements on what services to provide, where and how. The Act notes that decisions are to be guided by a "distinctions-based approach", considering the vitality and unique circumstances of each Indigenous group or language.

The Canada Revenue Agency (CRA) currently offers a suite of materials in a number of Indigenous languages, potentially making the implementation of the Act an extension of ongoing activities, rather than an entirely new initiative. However, engaging with Indigenous organizations on service expectations, either directly or via Canadian Heritage will be required.

At this time, most of the CRA's Indigenous-language resources are targeted at increasing Indigenous benefit uptake. Indigenous peoples' tax-filing rates remain lower than those of the non-Indigenous population in Canada, excluding Indigenous peoples from the socio-economic benefits for which they may be eligible. This is expected to be a continued focus.

The CRA is committed to a client-centric approach to service delivery. While we have a clear obligation to provide the full range of our services in both official languages, the legislation presents the CRA with a possible challenge and opportunity to effect important change in the way we provide services to Indigenous Canadians. The distinctions-based approach allows for flexibility to target services, languages, and regions wherein language constitutes a distinctive barrier to service and benefit access.

Next Steps

Canadian Heritage is currently focusing efforts on implementing broader elements of the legislation, including the appointment of a Commissioner of Indigenous Languages.

The CRA is in the process of reviewing its services and products in Indigenous languages and its internal capacity to offer services in Indigenous languages in advance of regulatory discussions. 

We understand that Canadian Heritage is planning to continue consultations with National Indigenous Organizations to bring greater clarity to language of service expectations. Departmental-specific consultations may also be required.

Background

An Act respecting Indigenous languages (the Act), received Royal Assent on June 21, 2019. Led by the Department of Canadian Heritage, this legislation supports the efforts of Indigenous peoples to reclaim, revitalize, and strengthen Indigenous languages, promotes greater public awareness of these languages' richness and diversity, and establishes an Office of the Commissioner of Indigenous Languages.

The Act also includes a high-level process for federal institutions to provide services in Indigenous languages where capacity and demand exist. However, the Act does not clearly define capacity or demand; the development of regulations and consultations with Indigenous organizations are expected to bring greater clarity to these terms.

Key Messages

Cannabis Taxation

Issue

Three new classes of cannabis products were legalized on October 17, 2019 – edibles, extracts, and topicals. The Canada Revenue Agency (CRA) administers the excise duty for cannabis products, including these new product classes. The CRA is fully prepared to expand administrative functions to these new classes.

Considerations

The legalization, regulation, and restriction of access to cannabis has created two primary regulatory roles for the CRA:

  1. Administering the excise duty framework, which involves regulating the production, movement, and sale of cannabis products until they enter the duty-paid market.
  2. Collecting excise duties for the federal government and the provinces/territories (P/Ts) that have signed Coordinated Cannabis Taxation Agreements (CCTAs). All P/Ts, with the exception of Manitoba, have signed CCTAs and therefore, only the federal portion of the excise duty will be collected on sales in Manitoba.

The CRA has advised the industry on how the excise duty framework will apply to the new classes of cannabis products through the publication of a technical note and updates to CRA web content. 

In addition, the CRA plans to offer one-on-one industry outreach sessions in the fall of 2019, for existing cannabis licensees, producing the new cannabis product classes. The CRA also anticipates providing new licensees with outreach specific to their activities at the time of licensing.

Next Steps

The CRA plans to continue working in collaboration with Health Canada on the regulation of cannabis products.

Given Health Canada notice period requirements, the earliest date that new cannabis products will be available for retail sale is December 16, 2019.

Background

On October 17, 2018, the Government of Canada implemented a framework on cannabis legalization. Under the framework, the federal government is responsible for regulating the production of cannabis while the P/Ts are responsible for regulating the distribution and retail sale.

At the federal level, the CRA and Health Canada share the responsibility for regulating licensed producers of cannabis products. Currently, the CRA regulates the cannabis producers from a taxation perspective while Health Canada regulates under a health and safety lens.

On June 21, 2019, amendments to the Excise Act, 2001 with respect to the taxation of the new classes of cannabis products received Royal Assent.

Key Messages

Climate Action Incentive – Fuel Charge

Issue

Under the Greenhouse Gas Pollution Pricing Act, the Canada Revenue Agency (CRA) is responsible for distributing the direct proceeds of the federal fuel charge through Climate Action Incentive (CAI) payments to eligible individuals who are residents of Saskatchewan, Manitoba, Ontario, and New Brunswick as part of their respective income tax and benefit returns for 2018 and subsequent taxation years.

The CRA is expected to provide the CAI payment for 2019 and subsequent years to eligible individuals who are residents of Alberta when filing their income tax and benefit returns for those years.

Considerations

Last year, the CRA sent targeted communications to stakeholders to ensure readiness for the implementation of the CAI. Moving forward, CAI payment promotion will be integrated into tax filing season communications.

Alberta recently revoked their own carbon pricing regime and the federal backstop will therefore apply in that province. As a result, the CAI payment will also be available for eligible individuals of Alberta when they file their income tax and benefit returns for 2019 and subsequent years.

The CRA has already posted details on its website to inform Alberta stakeholders of their obligations under the fuel charge and is working with stakeholders to assist them in getting ready for implementation.

Saskatchewan and Ontario have both challenged the federal fuel charge in court. The challenges are based on an assertion that the charge is an illegal tax that violates an area of provincial jurisdiction. Both respective Courts of Appeal ruled the fuel charge was constitutional. Saskatchewan and Ontario have taken their challenge to the Supreme Court.

Next Steps

For the 2019 tax and benefit return filing season, the CRA is preparing to take the following actions:

Background

In 2018, the Government put in place the federal pollution pricing system announced as part of the Pan-Canadian Framework on Clean Growth and Climate Change. The framework allows provinces and territories the flexibility to implement their own pollution pricing system, provided that they meet the federal standards. Provinces and territories had until September 1, 2018, to outline their plans or the federal carbon pollution pricing system would be implemented in their jurisdiction. The CRA has been mandated with collecting the federal fuel charge.

A number of provinces and territories have implemented programs administered by the CRA to offset the cost of carbon pricing, including:

Saskatchewan, Manitoba, Ontario and New Brunswick did not commit to their own carbon pricing system. For these provinces, the federal government returns the bulk of direct proceeds directly to eligible individuals via CAI payments in the province in which the revenues were raised, which varies according to province of residence.

Most households receive more in Climate Action Incentive payments than they incur from carbon pricing. This helps offset the cost of the fuel charge. CAI payment amounts will be increased annually to reflect increases in the price on pollution under the federal backstop system, until at least 2022. This also includes a supplement for residents of rural areas (i.e., individuals who reside outside of a Census Metropolitan Area as defined by Statistics Canada) in recognition of their specific needs.

Key Messages

CRA/Unions Collective Bargaining Status Update

Issue

The Canada Revenue Agency (CRA) and the Public Service Alliance of Canada – Union of Taxation Employees (PSAC-UTE) have been negotiating a new collective agreement since June 2018. The employees in this bargaining unit have been without a contract since October 31, 2016.

Considerations

In May 2019, after months of negotiations, the PSAC-UTE declared a bargaining impasse and requested the establishment of a Public Interest Commission (PIC).

The CRA and the PSAC-UTE's PIC hearing dates have been scheduled for January 2020. The purpose of the PIC hearing is to allow both parties the opportunity to present their positions on outstanding issues. The PIC then provides the parties with a report containing non-binding recommendations that may assist the parties in reaching a settlement and avoid possible labour disruption. The report is expected to be issued within 30 days of the hearings.

Next Steps

The CRA is preparing for the PIC hearing and is confident that this process will assist the parties in reaching a settlement.  

Background

CRA employees are represented by two unions, the PSAC-UTE and the Professional Institute of the Public Service of Canada – Audit, Financial and Scientific Group (PIPSC-AFS). The PIPSC-AFS represents the areas of audit, financial management and information technology services. The CRA and PIPSC-AFS have recently signed a new four-year collective agreement for approximately 12,000 employees.

The PSAC-UTE bargaining unit consists of two occupational groups: the Service Program group (SP) and the Management group (MG-SPS), representing approximately 29,000 members. Between June 2018 and May 2019, the CRA and PSAC-UTE met for 6 negotiation sessions and 2 mediation sessions, for a total of 28 bargaining days.

The PSAC-UTE union initially declared a bargaining impasse on January 24, 2019, at which point, the parties agreed to participate in mediation. The union declared an impasse once again after two mediation sessions. The PSAC, to which the union is affiliated, has also called a bargaining impasse with a number of other separate agencies, including the Treasury Board of Canada Secretariat (TBS). The CRA continues to work closely with TBS.

Key Messages

Disability Tax Credit – Response to Disability Advisory Committee

Issue

In May 2019, the Disability Advisory Committee (the Committee) presented its report on Enabling Access to Disability Tax Measures. The report makes 42 recommendations; the Canada Revenue Agency (CRA) has committed to addressing those which are administrative in nature, and to working with the Department of Finance Canada to address changes with legislative implications.

Considerations

In May 2019, the CRA acknowledged the Committee's recommendations via a news release from the Minister's Office on Canada.ca, and is currently working towards addressing them. The recommendations are helping guide the CRA in its efforts to better support Canadians living with disabilities, including how to make the Disability Tax Credit (DTC) easier to access.

Several recommendations from the Committee have already been implemented by the Government of Canada, such as allowing Canadians to keep their Canada Disability Savings Grants and Canada Disability Savings Bonds for all periods in which they qualify for the DTC.

The CRA has also taken steps to make the DTC easier for Canadians to access, including launching an enhanced telephone service to allow Canadians to connect with call centre agents to address complex DTC-related questions in one phone call. In addition, Canadians can now submit their DTC applications electronically online through the CRA's My Account or Represent a Client web portals.

The Committee acknowledged that some recommendations, especially those that touch on legislative issues, will require more analysis and time to implement. Additionally, given the sensitive nature of the DTC, changes to the program can quickly become high-profile, necessitating a careful approach to any changes.

During its June 2019 meeting in Ottawa, the Committee focused on forward-planning for the second year of its mandate. The members committed to further engagement and study to help implement longer-term recommendations involving legislative changes.

There are currently two vacancies on the Committee, with an additional three members whose terms are set to expire in January 2020. New members are appointed by the Minister of National Revenue for a period of 48 months. The private sector co-chair's term will also expire in January 2020, with an option to extend the appointment. Since the passing of its sole Indigenous member in 2018, the Committee has requested new Indigenous representation.

Next Steps

The Committee will be meeting November 25-26, 2019. This represents an early opportunity for you as the Minister to be informed on the work of the Committee and to meet its members. A detailed briefing on the Committee will be prepared for you prior to the meeting date in case you decide to attend.

Five members will need to be appointed to the Disability Advisory Committee in early 2020 to fill vacancies.

The CRA plans to work with the Committee to refine, analyze, and develop an approach to address complex recommendations over the longer term. The Government of Canada will continue to engage with the broader disability community to identify ways to improve the financial security of persons with disabilities.

Background

In November 2017, the Committee, originally formed in 2004 and disbanded in 2006, was reinstated to provide the CRA with a formalized means of collaborating with various stakeholders. Enhancing the accessibility of the CRA's services to persons with disabilities is an ongoing effort, which is currently greatly assisted by the Committee's work. Since its reinstatement, the Committee has met in person four times and heard from more than 1,200 individuals and organizations through meetings, submissions and surveys.

The role of the Disability Advisory Committee is to advise the Minister of National Revenue and the Commissioner of the CRA on:

The Disability Advisory Committee is co-chaired by Dr. Karen R. Cohen, Chief Executive Officer of the Canadian Psychological Association and Frank Vermaeten, CRA Assistant Commissioner. The Committee consists of 11 voluntary members, including people with disabilities, qualified health practitioners, advocates from the disability community, and professionals from a variety of fields, such as tax professionals and lawyers.

Key Messages

ePayroll

Issue

The Government's electoral platform committed $150M over 2 years to implement a voluntary, real-time ePayroll system to automate records of employment so that small businesses no longer have to submit detailed records to Service Canada for the administration of the Employment Insurance (EI) program.

Next Steps

The CRA will continue to engage ESDC as that department explores options. Additional briefings will be provided as required.

Background

The platform commitment aligns with a Budget 2018 commitment to minimize the administrative burden on employers, and it supports previous efforts by ESDC to develop ways to streamline employer-reporting obligations under the EI program.

Key Messages

Fraud and Scams

Issue

Scams involving the use of the Canada Revenue Agency's (CRA) name have grown significantly in recent years, and often target seniors and newcomers to Canada. Not only do such scams threaten the financial security of Canadians, they also make it difficult for the CRA to carry out its mandate as many Canadians hang up on actual calls from the CRA suspecting them to be scammers.

Considerations

Scammers posing as CRA employees continue to contact Canadians, misleading them into paying false debt. They continue to use traditional techniques by telephone, email, and text. For most telephone scams, victims receive a phone call from a person claiming to work for the CRA and saying that taxes are owed. The caller indicates that taxes are owed and requests immediate payment by Interac e-transfer, Bitcoin, prepaid credit cards, or a gift card and threatens the taxpayer with arrest or deportation, often using threatening or aggressive language.

Scammers have created fear among the population, which increasingly assumes that any communication from someone representing the CRA is not genuine. With this in mind, the CRA now provides comprehensive information to help Canadians identify legitimate communications from the CRA to protect themselves from being scammed. This includes what to do if they think they may be the victim of fraud.

Despite the CRA's efforts, new scams are invented almost daily. Scammers continue to develop elaborate stories to make Canadians believe they are legitimate and trick potential victims into providing personal information and/or money. The CRA has no way to block or stop the scammers, who often operate internationally and quickly remove any trace of their activity.

Education and awareness

The CRA maintains a "Slam the scam" fraud prevention page on Canada.ca. The webpage is regularly updated with the newest examples of fraudulent communications and includes awareness tools such as videos, printable posters and handouts. It also posts regular messages about fraud and scams on various social media platforms (e.g., Facebook, Twitter) to help Canadians recognize scams and encourage them to report scams to the Canadian Anti-Fraud Centre (CAFC). The CRA raises awareness among Canadians on this topic by working with media partners and by regularly participating in interviews and press conferences.

Through partnerships with organizations such as the Royal Canadian Mounted Police (RCMP), the CAFC, and the Competition Bureau, the CRA has been able to reach a wider and more diverse audience of Canadians through a variety of mediums. Each year in March, the CRA promotes Fraud Prevention Month, an annual government-wide campaign that seeks to help Canadians and public servants recognize, report and prevent fraud.

In addition, the CRA's regions partner with local police forces and associations to ensure the broad distribution of scam warnings and participates in local events with community associations, such as seniors' groups, to reach a wider and more diverse audience.

An MP Kit is provided annually for MPs to use in collaboration with their local community associations to help raise awareness and protect their citizens from falling victim to tax scams.

Tips for Canadians on how to protect themselves

The CRA published a Tax Tip (a brief guidance document) that explains to Canadians what the CRA will and will not do. It also explains what to do to validate the call (e.g., confirm the status of their tax accounts and verify whether the communication is real by calling the CRA or by checking My Account) and how to report the scam. As a result of recent privacy breaches in the external environment, the CRA issued another Tax Tip on the steps individuals can take to safeguard their personal information and avoid becoming victims of identity theft.

Flagging incidents to law enforcement

The CAFC is the central agency in Canada that collects information and criminal intelligence on fraud and offers support to fraud victims. The CRA encourages the victims of fraud to contact local police authorities and to report all potential incidents of fraud or scams to the CAFC. The CRA also reports incidents of fraud and scams to the CAFC, where appropriate.

Next Steps

The CRA will continue proactive communications to raise awareness about fraud and scams. It will strengthen and formalize partnerships with stakeholder associations that represent vulnerable populations (e.g. seniors, new Canadians, youth), and increase the frequency and scope of outreach across the country by leveraging media, social media, and stakeholder associations to promote videos and tax tips.

Background

Fraud is a crime that affects every Canadian, regardless of their education, age or income. Recently, scammers have started using social media platforms to target younger individuals.

Scammers pretending to be CRA agents are just one form of fraud in Canada. There are many others including scammers pretending to represent banks, private corporations or other federal departments to obtain the personal information of Canadians.

During tax filing season, there tends to be an increase in tax-related fraud activity. The annual income tax filing season communications/ad campaign is a key opportunity to raise awareness about fraud.

Key Messages

High-profile External Privacy Incidents

Issue

One of the cornerstones of Canada's self-assessment tax system is the trust Canadians place in the CRA to safeguard the privacy of their personal information. Effectively managing privacy breaches is critical in maintaining public confidence in the integrity of the tax system.

Considerations

The Canada Revenue Agency (CRA) takes the security of all taxpayer information very seriously, and keeps a close watch on internal processes to prevent unlawful attempts to obtain tax information and to make sure that taxpayers' rights and information are protected. The CRA has strong system controls and processes in place to protect taxpayer information. Indicative of our commitment to security are several projects and initiatives currently underway to ensure we can respond quickly when personal information incidents occur, including the following:

Personal Information Incident Working Group

In July 2019, the CRA formed the Personal Information Incident working group to facilitate horizontal collaboration and decision-making on emerging issues related to suspicious activities and incidents involving personal information.

Protection of Personal Information Vulnerability Review

The CRA is currently conducting a Protection of Personal Information Vulnerability Review.  

Enhancement of the CRA's Privacy Management Program

The CRA is currently implementing an enhanced privacy management program that involves, greater privacy awareness, increased capacity, enhanced reporting and increased collaboration.

Next Steps

The CRA will continue to monitor internal and external environments and will implement the enhanced privacy management program as well as recommendations stemming from the work of the personal information incident working group and the vulnerability review.

Background

Recent national and international personal information incidents have created a heightened awareness of potential privacy issues and have caused government institutions to evaluate their privacy practices. Although the recent incidents did not involve the CRA, we continue to review, monitor, and where appropriate, increase our security measures to ensure that taxpayer information held in its care is kept confidential and safe.

Examples of recent incidents (since the summer of 2019) involving personal information such as name, contact information, birthdate, social insurance number and financial information include:

Desjardins

An employee of the Desjardins Group illegally accessed and shared the personal information of approximately 4.2 million individuals and 173,000 businesses.

The Standing Committee on Public Safety and National Security convened an emergency meeting on July 15, 2019, to discuss the personal data breach at Desjardins Group and federal efforts to further protect the privacy of implicated individuals. The CRA participated in this meeting.

Bulgarian National Revenue Agency (BNRA)

A hacker stole the personal information of nearly 5 million individuals including some Canadians. Consequently, all exchanges with Bulgaria were temporarily suspended pending a review by the Global Forum on Transparency and Exchange of Information for Tax Purposes.

Capital One

A hacker stole the personal information of about 100 million American and 6 million Canadian Capital One Financial members.

Revenu Québec

A Revenu Québec employee transferred the personal information of 23,000 current and former employees outside of the organization.

Industrielle Alliance

The personal information of nearly 3,000 customers of the Industrial Alliance Financial Group was compromised when some employees were victims of phishing scams.

Key Messages

Income Tax Measures to Support Journalism

Issue

Budget 2019 introduced three measures to support Canadian journalism, namely:

The legislation has received Royal Assent and organizations are anxious to begin availing themselves of these measures.

Each of these measures require an organization to first be designated as a qualified Canadian journalism organization (QCJO).

Considerations

The Minister of National Revenue has the responsibility for designating organizations as QCJOs under the Income Tax Act.

The Journalism and Written Media Independent Panel of Experts (Panel) recommended the establishment of an Advisory Board and that members be appointed to act as special advisers to the Minister of National Revenue. If established, the Advisory Board would be responsible for making recommendations on whether an organization meets the qualitative requirements for QCJO status.  

Background

Organizations are eager to obtain QCJO status to allow them to claim the refundable labour tax credit that came into force on January 1, 2019.

Designation as a QCJO does not automatically entitle organizations to the various measures. Each of the new measures has its own additional criteria that have to be met by the organization. It is estimated that about 1,200 organizations could qualify for QCJO designation.

Budget 2019 also announced that the Panel would be established to:

The Panel delivered its first report to the Ministers of Finance and Canadian Heritage and Multiculturalism in June 2019.

Key Messages

I understand that work is underway at the CRA on the process for designating organizations as a qualified Canadian journalism organization, and more details will be forthcoming.

Quebec Single Tax Return

Issue

The Government of Quebec is seeking to administer a single tax return in the province of Quebec to include both Quebec and federal taxes. The dual collection of federal and provincial taxes in the province of Quebec has long been recognized as inefficient and a burden on Quebec taxpayers.

Considerations

In January 2019, the government indicated that it was not interested in a transfer of administration to Quebec, but was open to discussions on how to reduce the burden for Quebecers of having to deal with two tax administrations.

The Canada Revenue Agency (CRA) has a long history of collaborating with Revenu Québec. To date, this has focused on the sharing of information and best practices for compliance purposes. We have, however, had some recent success in aligning tax forms between the two administrations.

Background

In May 2018, the National Assembly of Quebec adopted a motion asking "the Quebec government and the federal government to implement a single tax return for Quebec taxpayers, to be filed with Revenu Québec, while preserving Quebec's fiscal autonomy."

In January 2019, newly elected Quebec Premier, François Legault, confirmed that his government supported the National Assembly's motion and reiterated the request to the Prime Minister.

Key Messages

Report of the Special Senate Committee on the Charitable Sector

Issue

A June 2019 report of the Senate Special Committee on the Charitable Sector recommended that the Government of Canada improve support for the charitable sector. Many of the recommendations are directed at the Canada Revenue Agency (CRA).

Considerations

The report identified long-standing issues facing the charitable sector and the CRA. If  the Senate adopts the report, a government response is expected within 150 calendar days.  

Committee recommendations

The report makes 42 recommendations. Of these, 20 are directed at the Minister of National Revenue, the CRA, and/or the CRA's Advisory Committee on the Charitable Sector (ACCS), which was established in March 2019. The recommendations focus on:

Public environment

The report received modest positive media and social media attention. Its release has increased expectations for change within the charitable sector. The sector may coordinate a response to the report.

Next Steps

We will be seeking your views and direction in regards to the recommendations and their possible implementation.

Background

The Senate Special Committee on the Charitable Sector released the report – Catalyst for Change: A Roadmap to a Stronger Charitable Sector – in June 2019, following extensive stakeholder consultations. It found that demographic change, financial constraints, red tape, outdated rules, and a lack of recognition have combined to stifle the sector.

In March 2019, the ACCS was announced along with its co-chairs. The ACCS is a consultative forum for engaging with the charitable sector. Its purpose is to address emerging issues related to charities and to ensure a supportive regulatory environment. The ACCS provides recommendations to the Minister of National Revenue and the Commissioner of the CRA. The CRA and two representatives from the charitable sector co-chair the ACCS. Finance Canada and the CRA's Charities Directorate also each have a representative who sits on the ACCS.

In August 2019, the Government of Canada announced full membership of this committee. An introductory conference call was held the end of August during which the Committee's terms of reference were approved and next steps were discussed including onboarding new members and topics for the Committee to address at future meetings. The ACCS is keen to start its work and is ready to have its first full, in-person meeting at the earliest available opportunity.

Key Messages

Sales Taxation of Foreign Digital Corporations

Issue

In its report tabled in Spring 2019, the Office of the Auditor General of Canada (OAG) found that the Canadian sales tax system had not kept pace with the rapidly evolving digital marketplace, and that the Canada Revenue Agency (CRA) and the Canada Border Services Agency (CBSA) had not done enough work to ensure that all sales taxes are collected and remitted to the government.

In its platform, the government committed to achieving the standard set by the Organisation for Economic Co-operation and Development (OECD) to ensuring that international digital corporations whose products are consumed in Canada collect and remit the same level of sales taxation as Canadian digital corporations.

Background

The CRA administers and enforces the Excise Tax Act, whereas Finance Canada is responsible for developing and evaluating tax policy.

Domestic suppliers and non-resident Goods and Services Tax/Harmonized Sales Tax (GST/HST) registrant suppliers collect and remit the tax to the CRA. The GST/HST regime requires that consumers who obtain goods or services pay the associated GST/HST. When the tax is not collected, consumers are expected to self-assess and remit.

Generally, non-resident suppliers are not required to either register or collect any tax unless they make a taxable supply in Canada and carry on business in Canada, but they may voluntarily register for the GST/HST.

The CRA is monitoring changes in other jurisdictions and participates in OECD discussions on e-commerce to help shape a consistent global approach to multilateral measures that promote similar rules across countries and taxpayers to limit the burden on firms and the costs passed on to consumers.

In 2017, Australia introduced legislation to extend their GST to cross-border supplies of digital products and other services imported by Australian consumers to create a level playing field for domestic suppliers with their offshore counterparts.

The issue of digital taxation was a focus of the OAG report on Taxation of E-commerce published on May 7, 2019. This audit focused on whether, according to their respective roles and responsibilities, the CRA, the CBSA and Finance Canada ensured that the sales tax system for e-commerce was neutral and that the GST/HST tax base was protected. Part of the OAG's findings concluded that the existing legislation placed Canadian businesses at a disadvantage in relation to foreign vendors.

Key Messages

Taxing Multinationals (3% revenue tax proposal)

Issue

A 3% tax on revenue for the digital sector is part of the government's platform, with a proposed effective date of April 1, 2020.

Considerations

Taxation of digital multinational companies is an increasingly global concern because of the significant revenues generated by multinational digital technology companies and the distributed nature of their operations.

The Department of Finance Canada has leadership on this issue. The Canada Revenue Agency (CRA) is a key stakeholder in ensuring that any new measures can be and are effectively administered.

Different countries are pursuing different strategies in this area, with some preferring unilateral action and others, including Canada, favouring a co-ordinated multinational approach. Large multinationals (e.g., Amazon and Google) are broadly supportive of a multilateral approach that would avoid a patchwork of rules, and associated compliance complexity for them.

Background

To respond to the concern that foreign-owned multinationals may not pay a fair amount of tax under the existing sytem, France, Austria, Australia, Belgium, Spain, Italy, Czech Republic, Poland, Slovenia and the United Kingdom have implemented or announced plans for a tax on digital services similar to the one identified as part of the government's platform commitments.

Some countries have communicated their taxes as interim measures pending a consensus on a multilateral approach.  

Key Messages

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