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Committee of the Whole (House of Commons) – June 10, 2025 - Minister binder

Main Estimates for CRA

Main Estimates for CRA Suggested responses

Total funding Suggested responses

Decrease Suggested responses

Distribution of the Fuel Charge Suggested responses

Main Estimates for CRA Background

Each year, the government prepares Estimates in support of its request to Parliament for the authority to spend public funds. Parliament will be asked to approve these votes to enable the government to proceed with its spending plans. Statutory items are expenditures authorized under separate legislation. As they are already approved by the statute, they do not require further approval, nor can they be altered by Parliament. They are identified in the Estimates and are included for information purposes only.

Total funding Background

The CRA’s 2025-26 Main Estimates will display an amount of $10,375M ($4,835M in voted appropriations and $5,541M in statutory). Included in the statutory forecast is $4,162M related to the distribution of the fuel charge proceeds under the Greenhouse Gas Pollution Pricing Act and $423M for payments under the Children's Special Allowance Act. The Government of Canada has made regulations that cease the application of the federal fuel charge, effective April 1, 2025.

Decrease Background

The CRA’s 2025-26 Main Estimates reflect a net decrease of $7.2B from the previous year’s total Main Estimates. Of this amount, $7.5B is related to a decrease in the estimate of fuel charge proceeds to be returned to the province or territory of origin. The balance of $255M represents an increase of 4.3% from the 2024-25 Main Estimates, including the following:

The above-mentioned increases are partially offset by the decreases totalling $154M due to:

Distribution of the Fuel Charge Background

The Government of Canada does not keep any direct proceeds from pollution pricing. All direct proceeds from the federal fuel charge are returned to the province or territory of origin. For those jurisdictions that have voluntarily adopted the federal system, direct proceeds are returned to the governments of those jurisdictions. For those provinces that do not meet the federal stringency requirements, 90% of direct proceeds are returned to residents of those provinces through the Canada Carbon Rebate (CCR). The other 10% are used to support small businesses and Indigenous groups. Proceeds relating specifically to the use of natural gas and propane by farmers are returned directly to farmers via a refundable tax credit.

The Government of Canada has made regulations that cease the application of the federal fuel charge, effective April 1, 2025. The $4.2 billion included in the 2025-26 Main Estimates reflects the winding down of the proceeds return mechanisms.

2025 Tax Season

2025 Tax Season Suggested responses

Contact centre agent training Suggested responses

Automatic Tax Filing Suggested responses

Processing Issues Suggested responses

Hard-to-Reach Populations Suggested responses

2025 Tax Season Background

Contact centre agent training Background

The 2017 audit of CRA’s (Assessment, Benefit, and Services Branch) contact centres by the Office of the Auditor General (OAG) resulted in a recommendation (noted below) relating to quality.

OAG Recommendation 2.66 The Canada Revenue Agency should ensure that its quality assurance practices generate more effective results in order to improve accuracy, identify opportunities for continuous improvement, and identify and monitor training needs.

In response to the 2017 OAG report, the CRA launched a new telephone system - Hosted Contact Centre Solution (HCCS). The CRA also established a national quality team to supplement existing local quality practices and improve accuracy. This team, established in 2018, aims to improve consistency across our national network. Continuous improvements are made by identifying training needs leveraging the quality improvement features available with the new HCCS technology.

The CRA also introduced new quality assurance procedures including call recording in order to identify opportunities for continuous improvement, improve accuracy, and identify and monitor training needs. As a result, contact centre quality and accuracy results have significantly improved since the 2017 OAG report.

Automatic Tax Filing Background

The announcements in Budget 2023 and Budget 2024 further committed to the following:

To meet these goals, the CRA increased the number of SimpleFile by Phone invitations in February 2024 to more than 1.5 million lower-income Canadians with a recent filing history.

Processing Issues Background

During the current 2025 tax filing season, there were several media reports about challenges being faced by taxpayers as information was not available on MyAccount. My Account is CRA online portal where taxpayers can view and manage their tax information via the CRA website. The CRA receives tax slips, such as T4 and T5 slips, from issuers (for example, employers and financial institutions). The CRA then publishes these slips on taxpayers’ My Account.

Each year, some tax slips undergo validations before appearing in My Account, and while the CRA experienced delays earlier this filing season, it has made considerable progress in normalizing processing. The new upfront validation process and unforeseen system issues may have prevented filers from filing their information returns on the first try. Given the challenges faced by filers, the CRA announced relief in respect of late-filing penalties for information returns filed on or before March 7, 2025, for those information returns due on February 28, 2025.

While a tax slip may be missing from the Auto-fill my return service, the taxpayer can still file their tax return using the tax slip received directly from the issuer by manually entering information from the slip into their chosen tax filing software. It remains the taxpayer's responsibility to report their income accurately before a tax return is submitted to the CRA.

Hard-to-Reach Populations Background

The Canada Revenue Agency (CRA) is committed to ensuring that vulnerable Canadians, including Indigenous peoples, newcomers, youth, adults 65+, housing insecure, modest-income Canadians, and persons with disabilities have access to information on the benefits and credits to which they are entitled.

The CRA has an effective national outreach program that focuses on providing benefit information to vulnerable populations. The outreach program maximizes accessibility through a combination of virtual presentations, in-person visits (for newcomer and Indigenous communities), and the distribution of information through various communication products. The CRA has created outreach and communication products including online training courses, tax tips, letters, posters, factsheets, promocards, webinars, videos and presentations (some translated into Indigenous and third languages) which promote or reference benefit and credit programs and highlight the importance of filing a tax return in order for them to receive or continue to receive their benefit payments. These communication products also promote the free tax filing services offered through the Community Volunteer Income Tax Program (CVITP) to eligible taxpayers.

Uncollectable Debt (Write-offs)

Uncollectable Debt (Write-offs) Suggested responses

Supplementary response

Uncollectable Debt (Write-offs) Background

In the past, write-off submissions for taxes owed have garnered significant media attention. As a result of the increase in write-offs for 2024-2025, media coverage could be generated, and may be raised in the House of Commons during Question Period.

The Agency had provided responses to earlier OPQs on related matters, these were worded in a different manner, and to which the Agency was able to refer to some amounts relating to “largest write-offs”. (Redacted).

In most cases, administratively writing off a debt does not release the taxpayer from their obligation to pay off the debt. This means that actions available to the Minister of National Revenue to collect the debt will not be undertaken until the taxpayer’s financial situation improves.

The debt will remain on the taxpayer’s account and, should credits or other income become available, they may be applied to the outstanding debt, and active collections may be reinitiated. Additionally, since a person may have multiple accounts (for example a corporation may have a corporate account, a GST/HST account, and a payroll account, plus others, potentially), a credit on one account may be applied to a debt on another related account.

Write-offs of this nature are a normal part of business accounting. Unpaid tax debts represent a small portion of the total receivables, and the vast majority of accounts receivable will be collected over time.

Write-offs: The Minister of National Revenue, or an officer authorized by the Minister, may write-off debts under two different acts: the Financial Administration Act (FAA) and the Bankruptcy and Insolvency Act (BIA). Pursuant to subsection 25(3) of the FAA, the write-off does not affect any right of the Agency to collect the debt. For instance, should the person’s financial situation change, or they become entitled to a credit owed by the Agency, it can be applied against their written-off debt. Pursuant to subsection 178(2) of the BIA, if an individual or corporation is bankrupt and their debts are uncollectible, the Agency cannot recover debts written off under the BIA. Information relating to debts, obligations and claims written off or forgiven are itemized under each relevant federal act, and are available online under the Public Accounts of Canada, Volume III, Section 2 for each fiscal year.

Cancel/forgive or waive penalties and interest: The Agency administers legislation, commonly called the taxpayer relief provisions, that gives the Agency discretion to cancel/forgive or waive penalties and interest when taxpayers cannot meet their tax obligations due to circumstances beyond their control. These can include financial hardship, actions of the Agency such as delays, extraordinary circumstances such as illness, and other circumstances outside the taxpayer’s control.

The terms cancel/forgive and waive have two distinct meanings and are defined as follows:

It should be noted that the taxpayer relief provisions only apply to penalties and interest, not the tax portion of a taxpayer’s debt. Additional information about the AGENCY’s discretion to provide relief from penalties and interest amounts can be found at Canada.ca/penalty-interest-relief. Information related to the amounts cancelled or waived under the taxpayer relief provisions is available online under the Public Accounts of Canada.

Compliance

Compliance Suggested responses

Money Laundering Suggested responses

Tax Evasion and Avoidance Suggested responses

Compliance Background

Money Laundering Background

Canada has a comprehensive Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime that provides a coordinated approach to mitigating money laundering and terrorist financing risks identified and in combating financial crime more broadly. The Regime, comprised of 13 federal partners, also complements the work of law enforcement and intelligence agencies engaged in fighting domestic and transnational organized crime and terrorism.

Canada’s primary piece of legislation that establishes its AML/ATF framework is the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), which is reviewed every 5 years by a parliamentary committee (pursuant to subsection 72(1) of the PCMLTFA).

The AML/ATF Regime operates on three interdependent pillars: (i) policy and coordination; (ii) prevention and detection; and (iii) investigation, prosecution, and disruption.

The CRA takes appropriate action to address cases of wilful non-compliance of tax laws. It prevents and detects terrorist financing by applying targeted administrative oversight and monitoring of registered charities. It also disrupts money laundering by investigating suspected cases of tax evasion (which since 2010 has been recognized as a predicate offence for money laundering) and other serious violations of tax laws.

With the latter, the CRA enforces tax laws through its Criminal Investigations Program, with a view to refer cases to the Public Prosecution Service of Canada. The CRA also utilizes a specialized civil audit program, the Illicit Income Audit Program, to audit individuals and businesses who are known to or suspected of deriving income from illicit activities and works with partners to coordinate actions such as garnishments, asset liens, and cash seizures to recover amounts owing.

Tax Evasion and Avoidance Background

The majority of Canadian taxpayers are compliant with tax legislation and make reasonable efforts to pay their taxes. However, there are those that knowingly test the limits of Canada’s self-assessment tax system by using their wealth to create complex tax arrangements and initiate legal proceedings to avoid providing documents and information to the Canada Revenue Agency (CRA) during the course of an examination, audit, or investigation. The CRA uses all resources available to challenge them and address potential non-compliance.

Those who do not fully comply with their tax obligations place an unfair burden on law-abiding taxpayers and businesses. To level the playing field, and ensure the tax system is fair for all Canadians, the CRA ensures that a high level of audit and investigative focus is directed towards those who try to evade or avoid paying their taxes.

Tax evasion - When an individual or business falsifies records and claims, hides income or inflates expenses in order to intentionally avoid complying with Canada’s tax laws, it is considered tax evasion. Tax evasion, unlike tax avoidance, has criminal consequences.

Tax avoidance - When tax planning reduces taxes in a way that is inconsistent with the overall spirit of the law, the arrangements are referred to as tax avoidance. The CRA's interpretation of the term "tax avoidance" includes all unacceptable and abusive tax planning.

The CRA has increased its collaboration with its international partners. The CRA maintains a leadership role in a number of tax forums, such as the Forum on Tax Administration (FTA) of the Organization for Economic Co-operation and Development’s (OECD). Notably, the Commissioner of Revenue is currently the Chair of the FTA. Over 50 tax administrations work together to share best practices and emerging trends, deal with international risks, and improve compliance and the overall delivery of tax administration.

A key part of the CRA’s compliance strategy is to target promoters of tax schemes. Tax schemes are arrangements that attempt to deceive taxpayers by promising to reduce the taxes owed, often through large deductions or promises of tax-free income. These promoters deliberately make false statements to assist their clients in tax cheating. As a result, these promoters obtain a financial benefit from the remuneration they receive from their clients.

The CRA has been investing in business intelligence, advanced analytics, and related technologies and infrastructure to assist in detecting and deterring the most serious instances of tax non-compliance. Through past investments, the CRA’s audit programs have identified over $15.3 billion in fiscal impact for the 2023-2024 fiscal year as the CRA was able to better focus and increase its audit activities to identify and target offshore non-compliance and aggressive tax planning. Other budget measures have allowed the CRA to strengthen tax enforcement which will prevent wealthy Canadians and businesses from sheltering their money overseas.

Charities

Charities Suggested responses

Advancement of Religion Abroad

Charities Background

The Canada Revenue Agency (CRA) is responsible for promoting and enforcing compliance within Canada’s charitable sector, which is comprised of approximately 86,000 registered charities and approximately 4,500 other qualified donees.

Through its understanding of the charitable sector population, the CRA has developed and implemented a risk-based and multi-streamed approach involving audits and various non-audit interventions. The risk-based and multi-streamed approach is designed to provide the appropriate balance of compliance treatments, which include an array of activities ranging from reminder and nudge letters, to conducting audits, which can result in outcomes ranging from education letters, to sanctions, and revocations. This approach is based on the understanding of how risk is dispersed through the charitable sector population.

A priority of the CRA, through its risk-based approach, is to address high‑risk non‑compliance, which has a severe negative impact on the charitable sector. These repercussions can also ultimately impact charitable donors, beneficiaries, and Canada’s tax base. The CRA focuses on enforcement in these instances and employs its audit resources to identify and to address the full extent of suspected intentional, repeated, and/or aggravated non-compliance.

However, the CRA also focuses on promoting voluntary compliance across the majority of the charitable sector that is not engaged in high-risk non-compliance. In order to address non‑compliance with this segment of the charitable sector, it employs a variety of non-audit interventions in order to provide registered charities the chance to voluntarily self-correct any non-compliance. 

Registering a charity is a comprehensive process, which includes in-depth research and analysis of an applicant organization’s structure and mode of operation.

In order to be registered as a charity, an organization must be constituted exclusively for charitable purposes and devote all of its resources to activities that further those purposes. Charitable purposes fall into one or more of the following categories: the relief of poverty, the advancement of education, the advancement of religion, and other purposes beneficial to the community.

The term charitable is not defined in the Income Tax Act, so the CRA relies on common law (court decisions) to determine what is charitable.

A registered charity’s purposes must also provide a tangible benefit to the public as a whole, or a significant section of it. In addition, purposes and activities that are illegal in Canada or contrary to Canadian public policy are prohibited.

The CRA applies the same standard whether the applicant organization intends to operate a religious organization, or carry on any other type of charitable activity.

The Pre-Budget Consultations in Advance of the 2025 Budget Report included numerous recommendations, noting specifically the recommendation #430, “Amend the Income Tax Act to provide a definition of charity which would remove the privileged status of “advancement of religion” as a charitable purpose.

The CRA is responsible for administering the tax system and applying the current tax legislation, while the Department of Finance is responsible for developing and changing federal tax policy and legislation.

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2025-10-07