Standing Committee on Public Accounts (PACP) - June 8, 2021

On this page

• Notice of meeting
• Opening Remarks
• Supporting Documentation
  • OAG Spring 2021 Report – Report 7
  • OAG Opening Statement to the News Conference (March 25, 2021)
  • Overview: Impact on CRA (from AERB)
  • News Release: ‘Statement by the Minister of National Revenue OAG performance audit of the CEWS’ (March 25, 2021)
  • Action Plan (to be shared with PACP)
  • CEWS Claims to Date
• Issue Notes
  • How is the CRA implementing the OAG recommendations?
  • What pre-payment controls were used for CEWS?
  • How does CRA use business intelligence to detect fraud?
  • CEWS and small businesses reviews and audits
  • What measures are in place to prevent CEWS misuse?
  • What are the timelines on compliance activities for the CEWS?
  • How is CRA working with employers to ensure CEWS continues to provide support, while balancing compliance efforts?
  • How is CRA working to improve the administration of future emergency benefit programs?
  • How are CRA call centres managing call volumes around emergency benefits?
  • How does the publicly accessible CEWS registry work?
  • How much has the CRA spent on the CEWS (and stats)?
  • How is the CRA ensuring that firms don’t get CEWS in respect of employees that claimed CERB?
• PACP Committee Information
  • Member Profiles
  • Relevant Committee Meeting Recap – April 22, 2021
  • Relevant Committee Meeting Recap – April 27, 2021
  • CRA Follow-Up to April 22, 2021 Meeting

Notice of meeting

Standing Committee on Public Accounts (PACP)
43^rd Parliament, 2^nd Session

Meeting 37
Tuesday, June 8, 2021, 11:00 a.m. to 1:00 p.m.
Room 410, Wellington Building, 197 Sparks Street
Televised

Report 7, Canada Emergency Wage Subsidy, of the 2021 Spring Reports of the Auditor General of Canada

Witnesses

Office of the Auditor General

• Andrew Hayes, Deputy Auditor General
• Philippe Le Goff, Principal

Canada Revenue Agency

• Bob Hamilton, Commissioner of Revenue and Chief Executive Officer
• Ted Gallivan, Assistant Commissioner, Compliance Programs Branch
• Maxime Guénette, Assistant Commissioner and Chief Privacy Officer, Public Affairs Branch

Department of Finance

• Michael J. Sabia, Deputy Minister
• Andrew Marsland, Senior Assistant Deputy Minister, Tax Policy Branch
• Isabelle Jacques, Assistant Deputy Minister, Law Branch
• Maude Lavoie, Director General, Business Income Tax Division, Tax Policy Branch

Opening Remarks

Speaking notes for Mr. Bob Hamilton, Commissioner of the Canada Revenue Agency

Standing Committee on Public Accounts (PACP)
Report 7— Canada Emergency Wage Subsidy

Ottawa, Ontario
June 8, 2021

Check against delivery.

Good morning Madam Chair,

I am pleased to be with you once again to discuss Report 7 – Canada Emergency Wage Subsidy (CEWS), released in Spring 2021 by the Office of the Auditor General of Canada.

With me today are Mr. Ted Gallivan, Assistant Commissioner of the Compliance Programs Branch, and Mr. Maxime Guénette, Assistant Commissioner of the Public Affairs Branch and Chief Privacy Officer for the CRA.

My focus today is on the CRA’s response to the motion adopted during Meeting 27 of the Standing Committee on Public Accounts (PACP) related to its study of Report 7.

The motion requested that both the Department of Finance and the CRA provide the Committee with “… all studies, data and analysis used for the implementation of the Canada Emergency Wage Subsidy, that these documents be provided to the Committee with redactions for Cabinet confidence and personal information, and that these documents be provided to the committee no later than May 27, 2021.”

Upon adoption of this motion, the CRA immediately set to work to meet the Committee’s expectations. I would like to acknowledge the efforts of numerous employees across the Agency, representing both a significant — and necessary — time investment to perform this work within the stipulated deadline.

Their effort underscores the seriousness with which the CRA takes its duty to be both transparent and accountable to Parliament and to Canadians.

Thank you again Madam Chair. We welcome any questions you may have today.

Supporting Documentation

OAG Spring 2021 Report – Report 7

2021 Reports of the Auditor General of Canada to the Parliament of Canada

Report 7—Canada Emergency Wage Subsidy

Auditor General of Canada’s Opening Statement to the News Conference (March 25, 2021)

Good afternoon. I am pleased to be here to discuss the first of many audits on the government’s response to the COVID 19 pandemic that my office will conduct. Today, I also provided Parliament with our report on the Investing in Canada Plan.

There is no doubt that the COVID 19 pandemic was an all-hands-on-deck emergency the world over. Governments had to mobilize quickly to respond to the public health, social, and economic effects of this pandemic. Canada was no exception.

While we found that the government was not as ready as it could have been for a pandemic of this magnitude, the public service mobilized, prioritized the needs of Canadians and quickly delivered support and services.

We did not observe the same service mindset and inter-departmental coordination in our audit of the Investing in Canada Plan, which I will turn to first. The Investing in Canada Plan is important because the government is investing $188 billion to generate long-term economic growth, improve communities’ resiliency, support the transition to a green economy, and improve social inclusion and socio-economic outcomes for all Canadians.

Infrastructure Canada is unable to present a full picture of results achieved and progress made under the Investing in Canada Plan. We found that the Department’s reporting excluded almost half of the government’s investment because it did not capture more than $92 billion of funding that was committed before the Plan’s creation in 2016. In addition, Infrastructure Canada’s reporting captured only some programs each year, making it impossible to compare results year-over-year. The clarity of reporting was also impacted by inconsistent information received from federal partners in the Plan. The absence of clear and complete reporting on the Investing in Canada Plan makes it difficult for parliamentarians and Canadians to know whether progress is being made against the intended objectives.

The issues affecting the Investing in Canada Plan are not new. We have seen similar problems in many past audits in areas that require cross-departmental or cross-jurisdictional collaboration, such as Indigenous issues and climate change. This audit is yet another example of the need for the government to act on known issues, in this case the need for broad collaboration and clear reporting on results for this large initiative.

In contrast, we observed nimbleness during our audits of the government’s COVID 19 response. I am going to turn first to the Canada Emergency Response Benefit. With this benefit, the government wanted to quickly deliver financial support to eligible individuals.

We found that the Department of Finance Canada, Employment and Social Development Canada, and the Canada Revenue Agency rose to the challenge and quickly analyzed, designed and delivered the Canada Emergency Response Benefit.

To simplify the process and get support to people quickly, Employment and Social Development Canada and the Canada Revenue Agency took the approach of relying on personal attestations and automated pre-payment controls to validate applicants’ eligibility. Once the benefit was launched, they introduced additional pre-payment controls to limit potential abuse.

With the decision to rely on personal attestations, post-payment verification becomes very important. Employment and Social Development Canada and the Canada Revenue Agency are working to start their post-payment verification efforts relating to the Canada Emergency Response Benefit later this year. Their work in this area will be the subject of a future audit.

Turning now to the Canada Emergency Wage Subsidy, we observed a similar focus on getting help out quickly, in this case to businesses. Once again, the Department of Finance Canada and the Canada Revenue Agency worked together within short timeframes to support the development and implementation of the Canada Emergency Wage Subsidy.

The design and rollout of the subsidy highlighted pre-existing weaknesses in the Agency’s systems, approaches and data. These weaknesses will need to be addressed to improve the robustness of Canada’s tax system. To prioritize issuing payments, the Canada Revenue Agency chose to forego certain controls that it could have used to validate the reasonableness of subsidy applications. For example, the Agency decided that it would not ask for social insurance numbers, though this information could have helped prevent the doubling-up of applications for financial support. This decision limited the Agency’s ability to perform pre-payment validations, as did the absence of complete and up-to-date tax information that would have helped it efficiently assess applications.

I am going to now turn to our last audit, which focused on pandemic preparedness, surveillance, and border control measures.

In this audit, we found that the Public Health Agency of Canada was not as well prepared as it could have been to respond to the COVID 19 pandemic. Not all emergency and response plans were up to date or tested, and data sharing agreements with the provinces and territories were not finalized.

The Agency relied on a risk assessment tool that was untested and not designed to consider pandemic risk. The Agency continued to assess this risk as low despite growing numbers of COVID 19 cases in Canada and worldwide. In addition, the Global Public Health Intelligence Network did not issue an alert about the virus that would become known as causing COVID 19.

I am discouraged that the Public Health Agency of Canada did not address long-standing issues, some of which were raised repeatedly for more than two decades. These issues negatively affected the sharing of surveillance data between the Agency and the provinces and territories during the pandemic. While the Agency took steps to address some of these problems during the pandemic, it has much more work to do on its data sharing agreements and its information technology infrastructure to better support national disease surveillance in the future.

We also found that the Public Health Agency of Canada and the Canada Border Services Agency implemented restrictions at the border and quarantine measures. They provided guidance and tools to inform travelers and essential workers coming into the country of public health requirements. However, the Public Health Agency of Canada had not contemplated or planned for a quarantine on a nationwide scale, from the collection of travelers’ information through to all enforcement activities, including following up on those identified to be at risk of non-compliance. As a result, the Agency doesn’t know if the majority of travelers properly quarantined.

These audits looked at programs that were rolled out in record time. Faced with a pandemic, the public service focused on the pressing outcome: helping Canadians. In its first year, this pandemic has shown that when the public service must, the public service can.

This crisis has highlighted the importance of dealing with known issues, whether it’s agreeing on which organization has the lead, who will do what when, who will report what to whom, or replacing outdated systems or processes and addressing issues in data quality. These are not problems that you want to have to deal with at the same time that you are focusing on helping people, because this is not an efficient way of working, nor is it a productive way to serve Canadians. Government organizations need to do collaboration better.

Overview: Impact on CRA (from AERB)

2021 March Reports of the Auditor General of Canada Report
Report 7 – Canada Emergency Wage Subsidy

Impact on the Canada Revenue Agency

Audit objective

The objective of this audit was to determine whether the Department of Finance Canada (FIN) provided analysis on the CEWS program, taking into account the Government’s objective of providing financial relief to employers and facilitating a return to economic activity, and whether the CRA administered the program in a way to limit abuse by establishing appropriate controls.

Audit scope

The audit focused on the analysis performed by FIN to support the development of the CEWS program and also on the controls implemented by CRA to ensure recipients received the prescribed amount and that CRA made adjustments to the controls where necessary.

The audit covered the period from March 1, 2020 to February 28, 2021.

Highlights

• On March 27, 2020, as part of the response to the coronavirus (COVID-19) pandemic, the government announced the CEWS to help employers retain employees during the pandemic and ensure that workers would have a source of income despite some sectors of the economy being shut down.
• The CEWS program is expected to cost approximately $97.6 billion by the end of the 2021-2022 fiscal year. The subsidy will be available until June 2021.
• Despite facing a historic pandemic, FIN and CRA worked within short timeframes to provide decision makers with information to assist in developing and implementing the CEWS.
• In order to pay the subsidy to employers quickly, CRA made decisions about information to be collected before payments were made and the controls that would be implemented to ensure payments were appropriate.

Positive observations about the Canada Revenue Agency

• The OAG found the following:
  • Despite extraordinary challenges, the CRA was able to effectively build an Information Technology solution that allowed for the quick delivery of CEWS.
  • To deliver the subsidy in record time, the CRA did a large amount of up front work that would have taken much longer under normal circumstances (e.g., consultations with stakeholders, development of risk registers, and creation of CRA website tools for applicants).
  • CRA had a pre-payment review coverage rate, in dollar terms, of 35% (total applications/applications manually reviewed) which positively reflects CRA’s ability to review claims quickly while still adhering to its commitment to rapidly deliver CEWS payments to employers in need.
  • For the 2019-2020 fiscal year, the employees responsible for GST/HST compliance at the agency, had a fiscal impact of $3.2 billion which represents a return of investment of more than 100 to 1. The fiscal impact includes federal tax, provincial taxes, interest, and penalties collected.

Negative observations about the Canada Revenue Agency

• The OAG found the following:
  • 28% of subsidy applicants did not file a GST/HST return for the 2019 calendar year. Therefore, CRA did not have all the information it needed to validate the reasonableness of the applications before issuing payments.
  • Employers were not required to provide employee names or social insurance numbers when applying for the CEWS. This limited CRA’s ability to conduct automated validations before payments were issued.
  • CRA did not have all the information it needed to set efficient controls. The agency would have benefited from additional information about other subsidies as well as tax and payroll data that was more frequent and up-to-date.
  • CRA missed an opportunity by not conducting targeted audits during summer and fall 2020 based on the findings from its June 2020 business intelligence exercise.

OAG recommendations and Agency response

The audit report contains four recommendations. The following three recommendations are addressed to the CRA:

1. Recommendation.The Canada Revenue Agency should strengthen its efforts towards tax compliance for GST/HST in order to ensure that it has information needed to do validations for the programs it is administering.

   Canada Revenue Agency’s response
   Agreed. As noted in the report, in early 2020, the CRA moved quickly to build programs and related infrastructure to deliver financial support to businesses affected by the COVID-19 pandemic. To alleviate pressures on businesses and to support the implementation of pandemic response programs, the CRA shut down most of its compliance programs, including the GST/HST Delinquent Filer Program.

   In light of the new COVID-19 benefit programs, the CRA agrees with this recommendation and will seek to identify opportunities within the GST/HST Delinquent Filer Program of the Collections and Verification Branch to strengthen its efforts to improve filing compliance on the part of GST/HST registrants.

   Actions in response to this recommendation will include a review of workload selection and prioritization criteria, examination of the level and allocation of program resources, identification of potential legislative changes and increased outreach to increase compliance regarding GST/HST filing. The action plan will be completed by September 2023.

2. Recommendation. In order to improve the integrity and validation efficiency of any future emergency programs, the Canada Revenue Agency should use automated validations with a unique identifier across programs.

   Canada Revenue Agency’s response
   Agreed. The CRA is working in partnership with TBS on their Sign-in Canada platform under the Pan-Canadian Trust Framework. Sign-in Canada will give Canadians one ‘door’, through which they can access any secure government service that requires robust identity proofing and authentication. In the meantime, we continue to enhance our own authentication and credential management systems through the addition of services like Multi-Factor Authentication. Sign-in Canada, while contingent upon many factors, is expected to become available in the next 24 to 36 months. CRA will begin to onboard once the platform is proven in production with smaller departments as early onboarders. The CRA’s Multi-Factor Authentication is currently being rolled out to all users of CRA’s portal services. Full roll-out is expected to be completed in June of 2021.

3. Recommendation.
   The Canada Revenue Agency should strengthen the integrity of the program by using business intelligence information as soon as it is available in order to conduct targeted audits.

   Canada Revenue Agency’s response
   Agreed. The CRA agrees that the timeliness of compliance actions is important; the CRA made timeliness one of its key strategic objectives for compliance programs. In relation to the Canada Emergency Wage Subsidy (CEWS), the CRA initiated post payment audits (phase 1) in August of 2020, in relation to a new emergency program launched in April 2020. These audits were selected based on the results of pre-payment reviews conducted by technical officers, and a random sample from the remaining CEWS population. Starting CEWS audits before the end of the taxation year is an innovative approach that provides taxpayers with earlier certainty and allows for better stewardship.

   In relation to further applying business intelligence, the CRA will use phase 1 audit results to inform and enhance the risk assessment process for targeted phase 2 post payment audits starting in 2021. The CRA is continuously investing to improve its risk assessment systems and business intelligence to better focus its resources on the highest risk cases of non-compliance at a national level in a timely manner. This action plan will be completed by April 1, 2021.

News Release: ‘Statement by the Minister of National Revenue OAG performance audit of the CEWS’ (March 25, 2021)

Statement by the Minister of National Revenue the Honourable Diane Lebouthillier, on the Auditor General of Canada (OAG)’s performance audit of the Canada Emergency Wage Subsidy (CEWS)

Action Plan (to be shared with PACP)

Canada Revenue Agency detailed action plan

CEWS Claims to Date

Claims to date - Canada emergency wage subsidy (CEWS)

Issue Notes

How is the CRA implementing the OAG recommendations?

Key messages:

• The CRA welcomes the report, and is committed to addressing all three recommendations made by the OAG for the CRA.
• The CRA has developed an action plan to address all three of the CRA-related recommendations, as provided to the Committee.
• With regard to the 1st recommendation, the Agency will identify opportunities within the GST/HST Delinquent Filer Program to improve filing compliance on the part of GST/HST registrants – with an expected completion date of September 2023.
• With regard to the 2nd recommendation, in collaboration with Employment and Social Development Canada, we are working in partnership with the Treasury Board Secretariat on its Sign-In Canada platform. Sign-In Canada will facilitate access to Government online services through a secure digital ID that is mapped to departmental programs. At the same time, the Agency also continues to enhance its authentication and credential management systems through multi-factor authentication – with an expected completion date of June 2021.
• With regard to the 3rd recommendation, the Agency agrees that the timeliness of compliance actions is important. To this end, the Agency is continuously investing to improve its risk assessment systems and business intelligence, to better focus its resources, in a timely manner, on the highest risk cases of non-compliance at a national level  – with an expected completion date of December 2021.

What pre-payment controls were used for CEWS?

Key messages:

• The CRA designed the CEWS to include up-front verification to help ensure the subsidy was provided to eligible applicants. The CRA also developed comprehensive web content, held regular information sessions with stakeholders and introduced tools including an online CEWS calculator to help businesses comply from the outset.
• Prior to payment, the CRA reviews a significant portion of CEWS claims to verify the information that employers submit to ensure that those receiving the subsidy are eligible.
• To do so, the CRA validates information in an application against existing data holdings, and may also follow-up by phone to verify certain elements of claims upon pre-payment review.
• Before payments are made, low risk accounts are reviewed via system checks to validate employer eligibility and reasonableness of amounts claimed, and high risk accounts are referred to officers for manual validations (which may include employer contact) to verify information included in the application.
• After payments are made, comprehensive post-payment audits are completed on selected files (identified through risk-assessment tools, analytics, leads, and third-party data) to verify eligibility of both the applicant and the amounts received. 
• Through a combination of robust pre-payment validations, an improved service capacity on the telephones, and significant self help tools online and embedded in the application process, the CRA sought to realize a high level of accuracy of claims on the part of employers, while showing due diligence to identify and correct cases where the applicant is not eligible for the subsidy.
• When a more detailed review is needed for a CEWS claim, our focus remains on doing so as quickly as practical before the payment.

Key messages – Use of SIN Numbers:

• The CRA explored the option of having employers identify the SIN of employees whose salaries were included in each CEWS claim. However, we determined that it would not have been feasible for employers to provide this information because this requirement would have significantly slowed down the application process and delayed payments of these emergency measures to businesses.
• Additionally, a system to cross-match information would have been time-consuming and significantly more complicated to establish, which would have meant the CRA would have had to delay urgently needed payments to businesses.
• Instead of utilizing the SIN as a verification measure, the CRA determined that it would be feasible for employers to provide this information on their employees’ T4 slips for post-payment verification control purposes for the CERB, and the T4 slip was modified accordingly.

How does CRA use business intelligence to detect fraud?

Key messages:

• The CRA has a strong track record of detecting and addressing non-compliance using business intelligence, which refers to the use of data and data analysis in making business decisions.
• When the CRA processes CEWS applications, it uses an automated validation process, and manually verifies certain elements of the claims when necessary. Manual verification can include contacting applicants directly.
• The CRA has also put procedures in place to identify fraudulent wage subsidy claims before it issues a payment.
• Tax evasion or aggressive tax avoidance is a factor in selecting claims for closer scrutiny, however, per the legislation established for the administration of this emergency program, the CRA cannot deny claims based on tax evasion or tax avoidance unrelated to the CEWS eligibility criteria, as the CEWS aims to provide aid to employees.
• To further evaluate the level of compliance, the CRA began  phase 1 of its Post-Payment Audit Program in August of 2020. These post-payment audits were selected based on the results of pre-payment reviews conducted by technical officers, the CEWS business intelligence tool, and a random sample from the remaining CEWS population.
• The CEWS business intelligence tool consists of algorithms, for example “if the amount in field X is greater than Y, then add the business number to this list.”) and key risk indicators.
• The CEWS business intelligence tool also uses key risk indicators which allow files with specific characteristics, such as the presence of affiliated entities in low or no tax jurisdictions (which is often correlated with aggressive tax planning) to be flagged for audit. 
• The CRA’s business intelligence tools are continually being enhanced and improved.
• Starting CEWS audits before the end of the taxation year is an innovative approach that provides taxpayers with earlier certainty and allows for better stewardship.
• In relation to further applying business intelligence, the CRA will use phase 1 audit results to inform and enhance the risk assessment process for targeted phase 2 post payment audits starting in 2021.

CEWS and small businesses reviews and audits

Key messages:

• The CRA reviews CEWS claims to verify the information that employers submit to ensure that those receiving the subsidy are eligible.
• That said, we target our compliance measures towards those who are intentionally non-compliant. To do so, we use a combination of risk-assessment tools, analytics, leads, and third-party data to detect and address non-compliance.
• The CRA recognizes the economic challenges that have resulted from the COVID-19 pandemic and the impact that the audit process can have on businesses. For this reason, we have proceeded carefully in order to protect businesses and the broader economy which remains vulnerable due to the pandemic.

Key messages – consultations with small businesses:

• Over the past year, the CRA has consulted with stakeholders to solicit their important insights on the CEWS.  We will continue to work closely with businesses and their representative organizations as we refine how we deliver this important program.
• For instance, the CEWS updated webpage and calculator have benefited from input from key stakeholders during user experience testing, including the Canadian Federation of Independent Business, Chartered Professional Accountants of Canada, Association of Fiscal and Financial Planning, economic development groups, financial institutions and bookkeepers.
• Following the launch of the CEWS calculator, we conducted a series of Q&A sessions over several weeks to provide a forum for eligible employers and stakeholder organizations to share their views and have their questions answered.
• Quotes:
  

  Dan Kelly, President, Canadian Federation of Independent Business: “The Canada Emergency Wage Subsidy will help many small business owners keep their employees during the COVID-19 pandemic. This will remove the stress of losing a job for workers and allow employers to bring their teams back together quickly as soon as the emergency phase is over. CFIB appreciates the work of the Canada Revenue Agency in operationalizing this key benefit. We were pleased to provide feedback to the CRA on its calculator designed to make it easier for firms to access the wage subsidy.”

  Dan Kelly, President, Canadian Federation of Independent Business: “I’m pleased to say that my organization has been working closely with the Canada Revenue Agency behind the scenes to ensure that the templates they put in place and the calculators are as easy as is possible.”

  Bruce Ball, Vice-President, Tax, Chartered Professional Accountants of Canada: “In this time of unprecedented uncertainty, Chartered Professional Accountants of Canada is working with organizations such as the Canadian Tax Foundation in providing constant input to the Canada Revenue Agency on important issues relating to the Canada Emergency Wage Subsidy program. It is encouraging to see the CRA putting a new tool in place aimed at helping employers determine required calculations well in advance of the application process being initiated.”

What measures are in place to prevent CEWS misuse?

Key messages:

• When the CEWS was introduced, the CRA’s priority was to alleviate pressures on businesses effected by COVID-19 and help get Canadians back on their payroll.  The CRA implemented the program based on timelines established by Parliament to meet urgent financial and economic needs.
• As the OAG points out, despite extraordinary challenging circumstances, the CRA was able to effectively build an IT infrastructure to quickly deliver the CEWS during a time of great need. The Agency was able to accomplish this while also delivering other emergency benefits.
• Since the Spring of 2020, the CEWS has helped employers impacted by the COVID-19 pandemic to keep workers on their payroll or bring back previously laid-off employees.
• While the vast majority of businesses and employers are applying correctly and are making efforts to comply, in any major government support program, there will also be a small minority attempting fraud and/or aggressive non-compliance.
• There will also be some who believe they should qualify, but are not eligible for the program. The CRA is committed to protecting the integrity of programs that provide financial support for businesses and communities using Canadian tax dollars.
• The CRA designed the CEWS to include up-front verification. When the CRA processes CEWS applications, it uses an automated validation process and manually verifies certain elements of the claims when necessary to help ensure the subsidy is provided to eligible applicants.
• After payment, more comprehensive post-payment audits are conducted to further evaluate the level of compliance.
• It is also important to acknowledge that the CEWS program rules are indeed complex and attempt to accommodate many different sizes and types of employers.
• As such, some errors were honest mistakes, potentially related to not fully understanding CEWS legislation. Such examples include:
  • using the wrong payroll information due to the concept of paid vs earned,
  • not considering calculations on an employee-by-employee basis;
  • ineligible employees being included in the CEWS claims;
  • ineligible payroll amounts (e.g. bonuses related to prior year performance) included in the payroll amounts in the CEWS claims
• CRA has provided a popular calculator and has comprehensive guidance on the Canada.ca website: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-calculate-subsidy-amount.html
• As of as of April 11, 2021, the CEWS has provided $74.25B in supplementary income to help Canadians stay on the job during a time of fiscal uncertainty. Statistics on the CEWS can be found online: https://www.canada.ca/en/revenue-agency/services/subsidy/emergency-wage-subsidy/cews-statistics.html.

What are the timelines on compliance activities for the CEWS?

Key messages:

• Audit and compliance activities are ongoing and will take place over the next several years.
  • The CEWS, launched with prepayment validation in spring 2020.
  • The CRA began Phase 1 of the Post-Payment Audit program in the summer of 2020.
  • It is expected that Phase 2 of the Post-Payment Audit program will start later this spring.
  • The results of the audits performed in Phase 1 and 2 will inform future work in this space.
  • CEWS audits will likely continue on a stand-alone basis or as part of the CRA’s overall tax compliance programs for two to three years.

How is CRA working with employers to ensure CEWS continues to provide support, while balancing compliance efforts?

Key messages:

• The CRA is conscious of the economic situation and will continue to proceed carefully to protect the fiscal base while respecting the fragility of businesses and the economy.
• Over the past year, the CRA has consulted with stakeholders to solicit their important insights on the CEWS, including the application process, the parameters and eligibility criteria of the program and its tools and resources including our CEWS website and calculator.
• The CEWS program has greatly benefited from input from key stakeholders during information sessions and user experience testing.
• We will continue to work closely with businesses and their representative organizations as we refine how we deliver this important program.

How is CRA working to improve the administration of future emergency benefit programs?

Key messages:

• To improve the integrity and validation efficiency of all CRA programs (including future emergency programs) the CRA will assess and determine how best to use automated validations with a common identifier across programs.
• We continue to make improvements to our security systems, including the introduction of Multi-Factor Authentications (MFA) which will soon be available for all CRA account owners.
• The Government of Canada is working on the implementation of Sign-In Canada which will offer Canadians (individuals, businesses and their authorized representatives) secure and private online access to multiple government (including provincial & territorial websites) online services, and will include a strengthened digital identity program that will support departments with digital platform services like the CRA.
  • The CRA will continue to partner with Employment and Social Development Canada (ESDC), Treasury Board Secretariat (TBS) and other stakeholders to develop this service.
• We will continue to work closely with businesses and their representative organizations as we refine how we deliver this important program and future emergency programs.

How are CRA call centres managing call volumes around emergency benefits?

Key messages:

• At the onset of the COVID-19 pandemic, the Government of Canada called upon the CRA call centres to help administer emergency relief benefits to Canadians in need, and call volumes increased significantly as a result.
• In order to manage call demand to the CRA’s general enquiries call centres, and to help maintain service to taxpayers and those in need, the CRA set up a new telephone platform to answer general (non-account specific) questions related to the emergency benefits.
• CRA employees from across the Agency whose workloads were deemed non-essential were called upon to answer general questions on the new telephone line.
• To prioritize incoming calls relating to the emergency benefits, the CRA created new Interactive Voice Response (IVR) routing paths. The CRA established an IVR phone line to help Canadians easily and securely apply for CERB and CESB, without requiring the assistance of an agent. 
• To help Canadian businesses receive the help and information they needed regarding the CEWS, the CRA prioritized and fast tracked calls on this topic to reach agents who were skilled to answer them. 
• The CRA worked collaboratively with Shared Services Canada (SSC) to increase their telephone infrastructure capacity, allowing the Agency to handle a larger number of calls at a time.
• CRA call centre agents were trained to respond to enquiries with the highest demand, ensuring Canadians were helped as efficiently as possible.
• To increase agent capacity, the CRA reallocated resources from other areas, to assist on the Individual tax and Business enquiries lines.
• In order to respond to the continued call demand, the CRA procured the services of a third party telephone service provider, when CRA employees, who were acting as temporary call centre agents, returned to their regular workloads.
• The CRA continues to hire additional agents to help manage increased call demand as a result of the ongoing COVID-19 pandemic and the emergency benefits.
• The CRA call centres have extended their hours of service on the Individual Tax and Business enquiries lines.
• Earlier this year the CRA implemented a new service enhancement, the automated callback feature, on our Individual tax, Benefits, and Business enquiries lines.
  • To date, we have completed nearly 535,000 callback requests.
  • Callbacks are offered during peak periods, and are dependant on criteria such as wait time, number of calls waiting, and number of agents available. When all criteria are met, callers will be presented with a callback offer after opting to speak with an agent.

How does the publicly accessible CEWS registry work?

Key messages:

• As part of the government's ongoing commitment to transparency, the CRA launched the CEWS Registry in December 2020.
• This public web page allows any Canadian to search for employers who have received or will soon receive the CEWS and can be searched by legal business name, business number or operating name.
• The authority for the CEWS Registry is provided by the implementing legislation (Bill C-14) initially enacted by Parliament in April 2020 – which specifically states that the Minister of National Revenue may communicate or otherwise make available to the public the names of recipients, in any manner that the Minister considers appropriate.
• Currently, in order to protect the privacy of individuals while still providing transparency, the CEWS Registry displays incorporated entities only – a requirement originally put in place after consultation with the Officer of the Privacy Commissioner.
• The initial release of the CEWS Registry contained a view all functionality, which presented users with a complete list view of all corporate CEWS recipients, displaying 1000 entries per page. The demand to access “View full list of employers” was higher than expected and on December 24, 2020, the functionality was suspended due to unexpected IT issues.
• The CRA will continue to make updates to the webpage daily and will continue to improve the search function on an ongoing basis. It is important to note that a name that appears on a given day may not appear on a subsequent day if the status of the application changes.
• The CRA is working towards restoring the public facing portion of the view all functionality, however no specific date has yet been identified.

Background:

• The CEWS Registry was launched in December 2020. Bill C-14 included an amendment to the taxpayer confidentiality provisions in the Income Tax Act (ITA) that authorized the Government of Canada to publish the name of any employer who makes an application for the CEWS.
• Applicants for the CEWS attested, through the application process, of their knowledge that their names may be published.

How much has the CRA spent on the CEWS (and stats)?

Key messages:

• The government introduced the CEWS program to complement its 10% Temporary Wage Subsidy for Employers by subsidizing up to 75% of qualifying wages. 
• The program which was originally for 12 weeks up to June 6, 2020 was extended until June 30, 2021. 

Facts:

• The CRA is responsible for the administration of the CEWS program, which includes the service delivery, compliance, and collection activities.
• The CRA reported expenditures of $120.1 million (including employee benefit plans) for the administration of the CEWS program in 2020-2021, as at the end of February 2021. The administration costs of $120.1 million reported to the Treasury Board Secretariat through the monthly COVID 19 tracker are publically available.
• Expenditures for the administration of the CEWS include:
  • Development of business requirements for IT solutions
  • IT system changes (implementation, post-launch system upgrades to support pre and post payment validations and verifications)
  • Outreach and information sessions, development of application guides, Canada.ca website and upgrades to Chatbot
  • Costs associated with processing of applications
  • Issuing cheques including postage
  • Costs associated with development of business intelligence/reporting,

How is the CRA ensuring that firms don’t get CEWS in respect of employees that claimed CERB?

Key messages:

• The CRA implemented the CEWS program with the utmost urgency, to ensure employers received necessary funds to keep businesses open during an unprecedented health crisis.
• The CRA is committed to ensuring that Canadians receive only the COVID-19 benefits that they are entitled to. This includes ensuring that employees whose wages were subsidized by CEWS payments do not also receive CERB payments for which they are not entitled.
• The CEWS was intended to support employers in re-hiring or hiring staff - such as those who might have been on CERB.  
• At the beginning of the pandemic, individuals may have applied for CERB proactively in anticipation of reduced working hours and employment income. If during a specific CERB period they subsequently received more employment income than the maximum allowed under CERB, recipients were informed that they would have to repay the CERB.
• To prevent double payments and in considering the objective of the CEWS program to support the relationship between employers and employees, the CRA chose to base its controls on post-payments of CERB payments using information from all employers on the T4 for 2020.
  • We determined that it would be feasible for all employers to provide this information on employees' T4 slips (after emergency payments were received) for post-payment verification control purposes, and the T4 slip was modified accordingly.
• As with other benefits administered by the CRA, we will take steps at a later time to verify that claimants were eligible to receive payments for any of the new COVID-related economic measures.
  • The CRA has records of those who received the CERB and for what period. These will be used, along with tax slips received from all employers and other relevant information available to the CRA, to validate eligibility.
  • In cases where claimants are found to be ineligible, they will be contacted to make arrangements to repay any applicable amounts.
• Specifically for CERB new T4 reporting requirements introduced for the 2020 tax year require employers to identify employment income paid within defined periods. This information will be used to identify individuals who may have exceeded the $1,000 income threshold while in receipt of CERB.
• We explored the option of having employers identify the employees whose salaries were included in each CEWS claim while we were developing the application process.
• However, we determined that it would not have been feasible for employers to provide this information at the time of application because this would have significantly slowed down the application process and delayed payments of these emergency measures to businesses.

PACP Committee Information

Member Profiles

Chairperson

Kelly Block (CPC)

Key Issues raised in the House of Commons:

• Goods and services tax.
• Harmonized Sales Tax.

Written Questions:

Q-522² — March 10, 2021 — Mrs. Block (Carlton Trail-Eagle Creek) — With regard to government contribution agreements: (a) how many contribution agreements ended or were not renewed since January 1, 2016; (b) what is the total value of the agreements in (a); and (c) what are the details of each agreement in (a), including the (i) summary of agreement, including list of parties, (ii) amount of federal contribution prior to the agreement ending, (iii) last day the agreement was in force, (iv) reason for ending the agreement?

Response prepared by FAB.

Correspondence:

N/A

Vice-Chairs

Lloyd Longfield (Lib.)

Key Issues raised in the House of Commons:

• Nil for the CRA

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Maxime Blanchette-Joncas (BQ)

Key Issues raised in the House of Commons:

• Nil for the CRA.

Written Questions:

Q-404² — February 16, 2021 — Mr. Blanchette-Joncas (Rimouski- Neigette—Témiscouata—Les Basques) — With regard to government spending in the ridings of Rimouski-Neigette—Témiscouata—Les Basques, Avignon—La Mitis—Matane–Matapédia, Manicouagan, Montmagny—L’Islet—Kamouraska—Rivière-du-Loup, Gaspésie—Les Îles-de-la-Madeleine, Papineau, Honoré-Mercier, Ahuntsic-Cartierville and Québec, since 2015 and broken down by constituency: (a) what is the total annual amount, broken down by year; (b) what is the detailed annual amount, broken down by department, Crown corporation, agency or body; and (c) what grants and contributions have been made, broken down by year according to the source of the funding?

Response prepared by FAB and SIIB.

Correspondence:

N/A.

Members

Luc Berthold (CPC)

Key Issues raised in the House of Commons:

• Nil for the CRA.

Written Questions:

Q-287² — December 2, 2020 — Mr. Berthold (Mégantic-L'Érable) — With regard to contracts issued by ministers' offices for the purpose of media training, since December 1, 2019: what are the details of all such contracts, including the (i) vendors, (ii) dates of contract, (iii) dates of training, (iv) individuals for whom the training was for, (v) amounts?

Reply was tabled on January 25, 2021.

Q-288² — December 2, 2020 — Mr. Berthold (Mégantic-L'Érable) — With regard to polling by the government since December 1, 2019: (a) what is the list of all poll questions and subjects that have been commissioned since December 1, 2019; (b) for each poll in (a), what was the (i) start and end date each poll was in the field, (ii) sample size of each poll, (iii) manner in which the poll was conducted (in person, virtually, etc.); and (c) what are the details of all polling contracts signed since December 1, 2019, including the (i) vendor, (ii) date and duration, (iii) amount, (iv) summary of the contract, including the number of polls conducted?

Reply was tabled on January 25, 2021.

Correspondence:

N/A

Kody Blois (Lib.)

Key Issues raised in the House of Commons:

• Canada Emergency Response Benefit.
• Canada Emergency Wage Subsidy.

Written Questions:

• Nil for the CRA.

Correspondence:

N/A.

Greg Fergus (Lib) (Parliamentary Secretary to the Prime Minister, to the President of the Treasury Board and to the Minister of Digital Government)

Key Issues raised in the House of Commons:

• Canada Student Service Grant.
• Charitable organizations.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Matthew Green (NDP) (National Revenue Critic)

Key Issues raised in the House of Commons:

• Tax credits.
• Persons with disabilities.

Written Questions:

Q-71² — September 28, 2020 — Mr. Green (Hamilton Centre) — With respect to the tax fairness motion that the House adopted on March 8, 2017: what steps has the government taken since then to (i) cap the stock option loophole, (ii) tighten the rules for shell corporations, (iii) renegotiate tax treaties that allow corporations to repatriate profits from tax havens back to Canada without paying tax, (iv) end forgiveness agreements without penalty for individuals suspected of tax evasion?

Reply was tabled on November 16, 2020.

Q-314² — December 7, 2020 — Mr. Green (Hamilton Centre) — With regard to government business finance programs and government contracts, broken down by funding program, contracts and fiscal year, since 2011: (a) what is the total funding for (i) Facebook, (ii) Google, (iii) Amazon, (iv) Apple, (v) Netflix?

Reply was tabled on January 25, 2021.

Q-541² — March 10, 2021 — Mr. Green (Hamilton Centre) — With regard to the CRA's decision to temporarily suspend, as of March 2020, the programs and services of "high-risk audits", "international large business", "high net worth compliance", "GST/HST audit of large businesses", "audit of complex transactions", "audit of flow-through shares" and "foreign tax whistleblower program", broken down by each of the programs and services mentioned, by month, since March 2020 to the re-establishment of the service of audits, and by risk level of non-compliance: (a) how many audits were suspended as a proportion of total audits; (b) of the audits in (a), how many are still suspended as a proportion of total resumed audits; (c) what duties were performed by the auditors during the suspension period; (d) how many files were closed; (e) of the files closed in (d), what was the average amount of time spent processing each file before a decision was made to close it; (f) of the files closed in (d), (i) how many have been assessed (ii) how many have been transferred to the criminal investigation program; and (g) what was the change in the number of auditors, in terms of full-time equivalent?

Response prepared CPB.

Q-542² — March 10, 2021 — Mr. Green (Hamilton Centre) — With regard to Canada Revenue Agency (CRA) high net worth compliance program, broken down by year, from November 2015 to date : (a) how many audits were completed; (b) what is the number of auditors; (c) how many new files were opened; (d) how many files were closed; (e) of the files in (d), what was the average time taken to process the file before it was closed; (f) of the files in (d), what was the risk level of non-compliance of each file; (g) how much was spent on contractors and subcontractors; (h) of the contractors and subcontractors in (g), what is the initial and final value of each contract; (i) among the contractors and subcontractors in (g), what is the description of each service contract; (j) how many reassessments were issued; (k) what is the total amount recovered; (l) how many taxpayer files were referred to the CRA's Criminal Investigations Program; (m) of the investigations in (l), how many were referred to the Public Prosecution Service of Canada; and (n) of the investigations in (m), how many resulted in convictions?

Response prepared by CPB, FAB, ABSB and CVB.

Correspondence:

• N/A

Philip Lawrence (CPC) (National Revenue Critic)

Key Issues raised in the House of Commons:

• Canada Revenue Agency.
• Tax exemption.
• Canada Emergency Response Benefit.
• Canada Recovery Benefit.
• Goods and services tax.

Written Questions:

Q-32² — September 23, 2020 — Mr. Lawrence (Northumberland-Peterborough South) — With regard to the Canada Revenue Agency’s approach to workspace-in-the-home expense deductions in relation to the COVID-19 pandemic’s stay-at-home guidelines: are individuals who had to use areas of their homes not normally used for work, such as dining or living rooms, as a temporary office during the pandemic entitled to the deductions, and, if so, how should individuals calculate which portions of their mortgage, rent, or other expenses are deductible?

Reply was tabled on November 16, 2020.

Q-283² — December 2, 2020 — Mr. Lawrence (Northumberland-Peterborough South) — With regard to the section on page 116 of the Fall Economic Statement 2020, which reads, "CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home": (a) how many Canadians does the government project will be eligible for the deduction; (b) what is the required amount of time working from home to be eligible for the full $400 deduction; (c) what is the required amount of time working from home to be eligible for a deduction less than $400, and what is the formula used to calculate the eligible deduction amount; and (d) what is the specific eligibility criteria to determine if someone who worked from home is eligible for this new deduction, as opposed to the traditional work from home deductions for individuals who worked from home prior to the pandemic?

Reply was tabled on January 25, 2021.

Correspondence:

• N/A

Francesco Sorbara (Lib.) (Parliamentary Secretary to the Minister of National Revenue)

Key Issues raised in the House of Commons:

• Tax evasion.
• Canada Student Service Grant.
• Charitable organizations.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Len Webber (CPC)

Key Issues raised in the House of Commons:

• Bill C-210 An Act to amend the Canada Revenue Agency Act (organ and tissue donors).
• Income tax returns.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Jean Yip (Lib.)

Key Issues raised in the House of Commons:

• Nil for the CRA.

Written Questions:

• Nil for the CRA.

Correspondence:

• N/A

Associate Member

Luc Desilets (BQ) (National Revenue Critic)

Key Issues raised in the House of Commons:

• Income tax returns.

Written Questions:

• Nil for the CRA

Correspondence:

• N/A

PACP Committee Hearing Recap (April 22, 2021)

The representatives from the CRA and other governmental organizations, along with the Office of the Auditor General, were requested to appear before PACP to discuss Report 7, Canada Emergency Wage Subsidy, of the 2021 Reports of the Auditor General of Canada.

Question and Answer Portion:

• Philip Lawrence (CPC) asked about the vetting process for CEWS applicants, raising issue with SINs not being collected as it seemed like a key step that was skipped in the verification stage; the CRA explained the delivery of the CEWS was a balancing act between its rapid delivery and conducting up-front verification, though it was always understood that CRA would use extensive back-end verification. On the issue of SINs not being collected, the CRA explained that it considered it, but felt it would slow down the delivery of CEWS benefits that were urgently needed by the businesses – instead the decision was made to focus on back-end verification, including requiring the T4s to include breakdown of pay periods for employees, which will represent an important data point for CEWS verification.
• Greg Fergus (LIB) inquired about the OAG’s finding that 42% of the CEWS applications, applicants for which the data was available had an average of 18% more GST/HST collected in 2020 than GST/HST collected in 2019, and if that suggested greater verification was needed; the OAG explained that the CRA had information coming in as the CEWS progressed – especially related to the GST/HST collection – that might have suggested an imbalance in the program, but the decision was taken to rely on back-end verification and not stop existing CEWS payments (instead of the first-hand information that might have suggested the CEWS application was not reasonable in terms of revenue). The CRA responded by saying it did use all available information as much as possible, but in reality it was not possible to restrict existing CEWS applications as it would have made the program ineffective – underlining that the post-payment verification tools were still available. It was also added that this was part of a larger balancing act to ensure the timely delivery of support, and that GST/HST collected always subject to fluctuations and not a great indicator of potential CEWS misuse. Further, it was noted that CEWS audits had already started in August and September 2020 – so not a significant delay.
• Matthew Green (NDP) asked about CEWS applicants using stock buybacks, paying dividends, and granting executive bonuses and why that was not restricted; Finance took the question.
• Philip Lawrence (CPC) wondered again why SINs were not collected and if the CRA could share analysis to support that decision – including what the cost and time would have been involved in asked for SINs, balanced between getting out CEWS support quickly; the CRA replied there was a balance between getting CEWS support out quickly and asking for the SINs, and the CRA decided that it would disturb the equilibrium if SINs asked for.
• Philip Lawrence (CPC) requested the CRA commit to provide analysis on SINs in writing; the CRA agreed to provide such in writing – but explained again it would still have the opportunity to obtain the SINs as part of the back end verification.
• Philip Lawrence (CPC) inquired what auditing expenses will now be incurred by CRA due to not collecting the SINs; CRA explained that they will do a ‘lessons learned’ exercise to see what they could have done better, but pointed again to the fact that T4s would now show what earned for what periods and this will allow better verification.
• Philip Lawrence (CPC) noted that the OAG said the CRA would not re-evaluate the use of SINs on CEWS applications and if that was still the case; CRA declared that they are not looking to re-evaluate the use of SINs, as they are comfortable with the current back end verification tools – however, it was conceded that front-end verification was generally more efficient for auditing, but this was about the practicality of getting the CEWS out quickly.
• Kody Blois (LIB) pointed out the audit found that 28% of the CEWS applicants did not file a return for the GST/HST for the 2019 calendar year and wondered if that was at the time of the application; the OAG said it was at the time of application. Kody Blois (LIB) asked if that 28% number was typical; the CRA explained that not all businesses file at the same time – some monthly, yearly, etc., but there are also issues with non-filers which is a small, but important, problem.
• Kody Blois (LIB) pointed to Exhibit 7.1 in the report that showed the CRA rejected few applications at the pre‑payment validation stage, which also showed that it was mainly that smaller dollar value claims were auto-approved and that larger dollar value claims had manual oversight; the OAG described that the automated reviews were validations for contact information, banking information, etc.
• Kody Blois (LIB) questioned if the large size of the CEWS program restricted CRA’s ability to conduct fulsome audits; CRA agreed that they were dealing with an extraordinary time and a very large program, but the CRA does have some experience – especially using risk assessment tools to determine on what applicants to focus on for up-front verification.
• Philip Lawrence (CPC) again asked why SINs were not used and what the OAG’s considerations were on that; the OAG noted it was a policy choice related to the speed of getting the CEWS support out.
• Philip Lawrence (CPC) wondered what actual delays would be caused by asking for the SINs and that there must have been specific analysis or data to support that decision; CRA explained that the issue was one of cost and time – including building new IT systems that would cause delays of more than a few days – and that the information would be available in post-payment verifications.
• Jean Yip (LIB) also asked why the CRA could not just simply ask for the SINs on the applicant form; the CRA detailed that it was not practically feasible without slowing down the approval process – again underlining that knowing the post-payment verification tools would be available factored extensively into the CRA’s thinking. The CRA added there was sufficiently existing historical data on file to conduct front-end verification when deemed necessary – which was demonstrated in the amount of CEWS applicants that had manual reviews.
• Jean Yip (LIB) wondered if CRA did not already have the SINs on file; CRA explained that employees often change frequently, so might not be relevant – but underlined again that CRA has tools and existing business intelligence to conduct a ‘smell test’ on certain applicants to see if a manual review was required.
• Jean Yip (LIB) pointed out that the CRA’s opening statement mentioned potential legislative changes to improve compliance and asked what that might reference; CRA explained that it is always looking for changes that would allow it to better conduct compliance (especially on delinquent filers) that it could recommend to the Department of Finance.
• Luc Berthold (CPC) at 12:30 p.m. moved a motion that requested CRA and the Department of Finance provide all studies, data, and analysis that were used to support the implementation of the CEWS. Debate on this motion ensued for the rest of the meeting – which was extended until 2 p.m.
• The gist of the extended debate was the CPC and NDP Members explaining the information was needed to allow the Committee to better understand the issue; the Liberal Members argued the motion was too partisan / broad and would simply serve as a time-consuming exercise for both departments – as while as potentially violating Cabinet confidence.
• Greg Fergus (LIB) moved an amendment that would defer the motion until the OAG could re-appear at PACP before on May 6, 2021 to discuss if they had sufficient information to conduct their audit.
• Debate lasted until 2 p.m. without a vote on the motion (or amendment), as the Committee had to adjourn for Question Period. The Chair announced the debate would continue at the next scheduled PACP meeting.

PACP Committee Hearing Recap (April 27, 2021)

The representatives from the CRA and the Department of Finance, along with the Office of the Auditor General, were requested to appear again before PACP to discuss Report 7, Canada Emergency Wage Subsidy, of the 2021 Reports of the Auditor General of Canada.

The session was a continuation of the April 22, 2021 meeting. That previous meeting was suspended due to the start of Question Period as PACP had yet to conclude debate on a Luc Berthold (CPC) motion that requested CRA and the Department of Finance provide all studies, data, and analysis that were used to support the implementation of the CEWS (as well as an amendment to the motion from Greg Fergus (LIB) that would defer the motion until the OAG could re-appear at PACP before on May 6, 2021 to discuss if they had sufficient information to conduct their audit).

The start of the meeting was delayed and interrupted due to two votes in the House of Commons.

Question and Answer Portion:

• The meeting started with a quick vote on the Greg Fergus (LIB) amendment, the amendment was defeated unanimously (10 nays).
• Lloyd Longfield (LIB) then moved a slight amendment to the Luc Berthold (CPC), specifically it would still request that studies, data, and analysis used to support the implementation of the CEWS be provided – but with reactions for Cabinet confidence and personal information and such be provided to PACP by May 27, 2021. Luc Berthold (CPC) generally expressed support for the motion, but asked why they May 27th date was chosen. Lloyd Longfield (LIB) noted that early discussions with the impacted departments indicated that over a hundred of pages could be included, thus the need for extra time for translation and review for cabinet confidences.
• The Lloyd Longfield (LIB) amendment was passed (9 yeahs, 1 nay – only NDP against). The Luc Berthold (CPC) motion was then passed (9 yeahs, 1 nay – only NDP against).
• Following the vote on the motion, the question and answer portion continued.
• Philip Lawrence (CPC) asked about the communications challenges between the CRA and ESDC; the OAG noted the information sharing agreements are crucial especially during an emergency situation, as it makes easier for Canadians to interact with their Government. Philip Lawrence (CPC) wondered why such communications challenges occurred; the OAG mentioned that such challenges typically occur due to privacy issues as well as the speed at which the emergency programs were and are being delivered.
• Philip Lawrence (CPC) asked if the issues that were impacting CRB applications related to communications challenges between CRA and ESDC had been resolved yet; CRA officials explained that the issues with open EI claims blocking CRB applications had been largely resolved, but some exceptions still occurring and those were being quickly resolved.
• Lloyd Longfield (LIB) inquired of the OAG what type of information should have been available on the CEWS application to ensure more through pre-payment controls; the OAG pointed to information related to T2 and GST returns, but explained some timing issues existed regarding when filings normally occur. The OAG said another point of information would have been average payroll information, which usually provided when a T4 summary filed at the end of the calendar year.
• Maxime Blanchette-Joncas (BQ) then moved a motion that the Committee hold an information session with PCO officials on why Cabinet confidence were invoked to preclude the sharing of select Department of Finance documents related to CEWS with the OAG – exact timing of the information session would be determined at a later date. The motion was passed by unanimous consent.
• Alistair MacGregor (NDP) asked about the number of CRA employees involved in GST∕HST filer compliance and the revenue generated by such employees; the CRA noted that they continually seek to ensure resources are being allocated efficiently, while also confirmed the level of such employees had remained constant compared to previous years.
• Alistair MacGregor (NDP) sought information on what level of staffing would be ideal to ensure maximum compliance; the CRA explained that they always seek to ensure that staffing resources are allocated to the right areas, while also looking at the returns an area produces – adding that the rate of return can plateau or decline if additional resources are allocated towards it. It was further mentioned that delinquent filers was one area where staffing resources were being looked at.
• Alistair MacGregor (NDP) questioned why certain elements of CRA Action Plan where it would take until 2023 to complete a review; CRA clarified that only certain elements would take until 2023 to review, with many done well before, and the pace of the review depending on numerous factors (such as systems changes that would necessarily involve a length of time).
• Philip Lawrence (CPC) asked if Budget 2021 funding for CRA IT would have prevented select issues with the CRA delivery of emergency benefits; CRA noted that further support always appreciated and Budget 2021 funding would be used to improve and maintain the current system and pressures.
• Philip Lawrence (CPC) then wondered if it would be would technically possible for CRA to extend tax filing this year; CRA explained certain issues would arise if the tax filing deadline were hypothetically extended especially as relates to CCB and GST∕HST benefit payments as they are dependant on receiving information from tax filing – meaning without timely filing such payments could be delayed. It was also explained that CRA had also taken steps to make it easier for Canadians to file during the COVID-19 pandemic and provided greater flexibility for payment plans. Philip Lawrence (CPC) pressed the issue – saying tax filing deadline was extended last year, so obviously can be done again now; the CRA stated that extension would not be possible now, but would have been technically possible if the extension had been announced sufficiently in advance.
• Francesco Sorbara (LIB) wondered how important continued work by the Government on developing systems related to a new unique identifier system and e-payroll as supported in Budget 2021 were to addressing issues in the OAG report; OAG stressed that creating a new unique identifier system – beyond the SIN – should be looked at to facilitate greater interaction between taxpayers and the government. The CRA agreed, pointing to the importance of the Government Sign-In program whose work is ongoing, as well as the Budget 2021 funding for a potential e-payroll system that could assist with important real time data to better implement and deliver government support programs.

CRA Follow-Up to April 22, 2021 Meeting

Follow-up to the appearance before the Standing Committee on Public Accounts (PACP)

April 22, 2021

What follows is the Canada Revenue Agency’s (CRA) follow up response to a question posed by a member of the Standing Committee on Public Accounts (PACP) during the April 22, 2021 meeting on ‘Report 7, Canada Emergency Wage Subsidy, of the 2021 Spring Reports of the Auditor General of Canada.’

For ease of reference, the relevant excerpts of the Evidence have been included to provide additional context.

Question 1

During the meeting, officials were asked to provide analysis on why the social insurance number (SIN) was not collected on the Canada Emergency Wage Subsidy (CEWS) application.

Mr. Philip Lawrence:
I'd like to continue my discussion with you, Mr. Hamilton. I want to get down to the details of the analysis that was done to not collect the social insurance number. I assume an analysis was done, and I'd ask you to share that with the committee if that's possible. What would have been the cost and the time required to include the social insurance number in the gathering of information for the CEWS?

Mr. Bob Hamilton (Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency):
Madam Chair, I'll take an initial run at that. I don't have the cost estimate in front of me. It is fair to say that as we delivered the program, as I said earlier, there was a balance between how we could get the money out more quickly versus getting as much information as we possibly could for that initial verification. To ask employers to be able to provide the SIN was determined by us to disturb that equilibrium. It would have taken too long to get it out.

Mr. Philip Lawrence:
I appreciate that, Mr. Hamilton. I understand. We've had this conversation before, so I do appreciate that you're trying to answer the question, but I'm looking for the numbers for the sake of time. Would you commit to providing our committee with the analysis that was undertaken to not gather the SIN?

Mr. Bob Hamilton:
Let me just finish the response I had, which is to emphasize again that just because we don't collect information up front doesn't mean we can never go back and find out whether something inappropriate happened. We have that back end. I wanted to make that point. I'll give my colleagues an opportunity if they have information they'd like to provide on the spot, but otherwise we'd be happy to provide you with what we can in writing after this.

Mr. Luc Berthold:
Mr. Hamilton, I want to go back to my question and state it clearly. Have you ever imposed a penalty on a Canadian who had failed to complete this kind of declaration after purchasing a microwave oven on Amazon?

CRA response

The CRA built and delivered the CEWS program in an extremely short timeframe. The Department of Finance announced details of the CEWS program on March 27, 2020. The CRA then implemented the first phase of the program on April 27, 2020, with processing implemented on May 4, 2020.  

The decision regarding whether or not to collect SINs for the CEWS program was part of a balanced approach aimed at achieving the objectives of the program, i.e., getting emergency assistance to Canadians, as quickly as possible.

Due to the urgency and tight timeframes for delivering the subsidy, a cost analysis of the collection of the SINs was not done. Nevertheless, the CRA’s decision was made by balancing several important considerations:

• Timeframes and technology capability:  Building a system to collect SINs, cross match them to employer accounts and manage which ones were getting benefits for which companies during which period would have been complex and taken a significant amount of time to build. This would have delayed the target implementation date.
• Administrative burden on businesses at a critical time:  Extensive pre-payment validation would have delayed the CRA’s ability to process applications and disburse the subsidies. The CRA was concerned with asking large organizations to enter hundreds and possibly thousands of SINs. From an IT systems perspective, this could lead to users experiencing system timeouts due to the length of time it would be required to enter this information. This would have increased the administrative and time burden on businesses to prepare applications when they are looking to get emergency subsidy funds to keep employees gainfully employed.
• Feasibility of compliance activities post-payment:  Post-payment compliance activities, where the CRA goes back to a taxpayer to request supporting information or documentation, occur as part of normal CRA operations. The CRA determined that that approach could be undertaken in relation to the CEWS to verify subsidy claims. Hence, instead of utilizing the SIN as a verification measure for pre-payment validations, it was determined that reporting and other post-payment cross-matching activities during post-payment verifications were options that were more feasible.