Canada Revenue Agency Annual Report to Parliament 2013-2014

Appeals

The CRA provides a fair and impartial redress process to resolve disputes and requests for relief arising from decisions made by the CRA. If taxpayers are not satisfied with the outcome of this process, they can appeal to the courts.

Appeals Financial resources
(in dollars)
Human resources
(FTEs)
Planned 194,984,626 1,634
Actual 190,219,4561 1,732
Difference 4,765,170 (98)

 

chart described in the table below
Program spending at a glance
Income and commodity tax – Objections, determinations, and appeals to the courts 84%
Canada Pension Plan/employment insurance appeals to the minister and appeals to the courts 1%
Service complaints 4%
Taxpayer relief 11%
Total 100%

Income and commodity tax – Objections, determinations, and appeals to the courts

Income and commodity tax – Objections, determinations, and appeals to the courts Financial resources
(in dollars)
Human resources
(FTEs)
Planned   163,551,896 1,214
Actual   159,394,641 1,275
Difference   4,157,255 (61)

The CRA interacts with millions of taxpayers, GST/HST registrants, and benefit recipients each year. Our goal is to make sure each taxpayer is treated fairly and according to the appropriate tax laws, beginning with the Income Tax Act.

Whenever a taxpayer or benefit recipient disagrees with a CRA decision, they can request a review. To launch a formal redress process, the taxpayer files an objection and receives a letter of acknowledgement from the CRA. To ensure impartiality, we assign an appeals officer who was not involved in the original assessment, determination, or ruling to work with the taxpayer to try to resolve the dispute. In cases where we are unable to resolve a tax dispute to the taxpayer's satisfaction, the taxpayer has the right to appeal to the Tax Court of Canada or the Federal Court.

The CRA is committed to providing objective, fair, transparent, and timely administrative reviews. The ultimate goal is to provide a sound decision that will respond to the taxpayer or benefit recipient who put forward the objection and will build trust in the tax system. Our decisions are not arbitrary or subjective—every decision is firmly grounded in legislative authority to ensure all taxpayers are treated fairly and consistently.

Faster Processing, Decreasing Costs

The CRA's growing focus on aggressive tax planning in recent years contributed to a growing backlog of income tax objections and subsequent appeals to the courts.

Bill C-48 received Royal Assent on June 26, 2013, amending the Income Tax Act retroactively to 2002. The amendment affects selected groups of objections involving more than 107,000 taxpayers. Between August 2013 and March 2014, the CRA communicated with 25,600 taxpayers to offer resolution to the dispute. Of these, 19,300 accepted the resolution. Along with objections from other similar groups, we anticipate completing about 44,500 objections in 2014-2015.

In addition to resolving these group objections, the CRA has continued to find more efficient ways of processing objections. By distributing low-complexity objections to tax centres across Canada, the CRA can reduce turnaround times. In 2013-2014, we also began a review of information technology systems related to appeals to identify potential efficiencies and improvements.

The ability to process and clear some of the existing backlog, combined with a decrease in new files coming in during the reporting period, enabled us to reduce the closing inventory. The closing inventory for 2013-2014 was 197,278 which is lower than the 2012-2013 closing inventory of 208,559 leaving us with 11,000 fewer objections to resolve.

83,708

DID YOU KNOW?
We received 83,708 objections

Key results:

91,214

We resolved 91,214 income and commodity tax disputes

Canada Pension Plan/employment insurance appeals to the minister and appeals to the courts

Canada Pension Plan/employment insurance appeals to the minister and appeals to the courts Financial resources
(in dollars)
Human resources (FTEs)
Planned 4,910,146 154
Actual 2,300,606 126
Difference 2,609,540 28

The CRA provides a timely, objective, fair, and transparent dispute resolution process for taxpayers who want to appeal a CRA decision relating to an assessment or ruling made under the Canada Pension Plan or the Employment Insurance Act. Once we issue a decision on an appeal, the decision can be further appealed to the Tax Court.

Increased emphasis on the timeliness of these decisions has reduced the average time it took to resolve a CPP/EI appeal. The average time fell to 140 days from the previous year's average of 150. The program also saw an improvement of 13% in 2013-2014 in meeting its internal objectives for the timely resolution of CPP and EI appeals.

If the administrative review of a CPP/EI appeal does not resolve the taxpayer's dispute, the taxpayer can appeal to the Tax Court of Canada. In these instances, the CRA works with the Department of Justice. There has been a decrease in the number of CPP/EI appeal files received at the Tax Court of Canada in the last few years: a 31% reduction in the number of CPP/EI appeals to the Tax Court of Canada compared with 2011-2012. This decrease is explained in part by our commitment to transparency in explaining our decisions. Taxpayers receive a complete analysis and explanation, which we believe increases their understanding of the decision and reduces the number of appeals to the courts.

Key results:

Taxpayer Bill of Rights  

In June 2013, the Minister added a new right to the Taxpayers Bill of Rights. Right #16 provides the assurance that service complaints or requests for formal reviews will not attract reprisal. Any allegation of reprisal will be investigated by the CRA. This provides an objective and impartial review by making sure the investigation is conducted independently of the office associated with the complaint. 

Service complaints

Service complaints  Financial resources
(in dollars)
Human resources
(FTEs)
Planned   7,844,409 95
Actual   7,578,574 87
Difference   265,835 8

The CRA offers a three-step process to resolve service-related issues resulting from mistakes, undue delays, misleading information, or concerns about behaviour of CRA employees. Since some service complaints result from a lack of information or simple miscommunication, we first encourage taxpayers to talk with us. Taxpayers who are still not satisfied may file a formal complaint with the CRA's service complaints program. If the resolution we provide is unsatisfactory, taxpayers have the right to submit a complaint to the Office of the Taxpayers' Ombudsman.

In 2013-2014, our analysis of trends in service-related issues helped us to identify and confirm service gaps and to prioritize needs for service improvements. During the reporting period, the CRA:

95%

DID YOU KNOW?
More than 95% of the service complaints were resolved within 30 business days

Key results:

Taxpayer relief

Taxpayer relief Financial resources
(in dollars)
Human resources
(FTEs)
Planned   18,678,175 171
Actual  20,945,635 244
Difference   (2,267,460) (73)

The CRA's Taxpayer Relief Program helps taxpayers who may not be able to meet their tax obligations because of personal misfortune or circumstances beyond their control. When taxpayers disagree with how the CRA applied the taxpayer relief provisions, they can ask the Federal Court to intervene.

The taxpayer relief provisions give the minister the authority to cancel or waive penalties and interest otherwise payable. They also provide the discretion to allow certain late, amended, or revoked elections, and issue income tax refunds or reduce amounts payable beyond the normal three-year period. This allows the CRA to take a common-sense approach to helping taxpayers who are unable to comply with certain tax obligations, such as filing a return by its due date, or paying or remitting an amount when required.

The CRA issues media releases and posts information on its website to tell taxpayers who have been affected by disasters that they will have access to the taxpayer relief provisions if they are unable to meet their tax obligations. For example, in 2013, Canadians from several regions, including Alberta, Ontario, Quebec, and Atlantic Canada, had to rebuild because of flooding, severe weather conditions, and other tragic events. On July 25, 2013, the Minister announced taxpayer relief measures for Canadians affected by the disaster in Lac-Mégantic, Quebec.

Tax relief in extraordinary circumstances  

Disasters struck some Canadian communities during 2013, disrupting the lives of thousands of families and interrupting the affairs of hundreds of businesses. Severe spring flooding in western Canada and extreme weather in other regions forced many taxpayers to spend weeks preoccupied with preserving and restoring their property and their belongings. Then in July 2013, tragedy struck Lac Mégantic, Québec when a rail derailment and the resulting fire caused significant loss of life and destruction of property, impacting the entire community for many months.

These extraordinary events made it impossible for some taxpayers to file on time which, under normal circumstances, would expose them to penalties. Fortunately, the CRA was able to waive such penalties for many of the affected taxpayers through the tax relief provisions of the Income Tax Act. The Tax relief program helped the affected taxpayers to focus their efforts on helping their families and neighbours while their communities recovered from disaster.

The Taxpayer Relief Program has received significantly more requests over the past several years as Canadians become more familiar with options available to them when they encounter challenges complying with their tax obligations. The increased volumes have put pressure on the CRA's ability to provide timely responses. To relieve these pressures, the CRA has invested significant resources to improve timeliness. We invested in system enhancements allowing for better file management, training, and better tools to help staff address requests.

The CRA website tells taxpayers how to submit a taxpayer relief request, what information to include, and what the time limit is for requesting relief.

Key results:

Performance results

Program/sub-programs
Appeals
Expected results Performance indicators Targets Results
Taxpayers receive a timely review of contested decisions made under legislation administered by the CRA and the handling of service complaints is timely and consistent  Percentage of targeted levels of timeliness and consistency for income tax and commodity tax objections, CPP/EI appeals to the minister, and service complaints that are met or mostly met: 100% 100%
 
  • First contact letter for disputes within 30 calendar days (target: 85%)
   
 
  • Problem resolution program – acknowledge receipt within two business days (target: 95%)
   
 
  • Problem resolution program – resolve problem within 15 business days (target: 95%)
   
 
  • Service complaints – acknowledge receipt within two business days (target: 80%)
   
 
  • Service complaints – resolve the complaint within 30 business days (target: 80%)
   
Taxpayers receive an impartial review of contested decisions made under legislation administered by the CRA  Taxpayers receive an impartial review of contested decisions made under legislation administered by the CRA 100%  100%
Program/sub-programs
Income and commodity tax – Objections, determinations, and appeals to the courts
Expected results Performance indicators Targets Results
Taxpayers receive a timely, impartial, and responsive review of contested decisions made under the Income Tax Act, the Excise Act, and the Excise Tax Act  Percentage of decisions on objections filed under the Income Tax Act, the Excise Act, and the Excise Tax Act completed within established time frames 85%  80%2
  Percentage of decisions on objections filed under the Income Tax Act, the Excise Act, and the Excise Tax Act determined to meet or exceed consistency standards 90% 96.5%
  Percentage of decisions on objections filed under the Income Tax Act, the Excise Act, and the Excise Tax Act determined to be impartial meets or exceeds target 95% 99.2%
Program/sub-programs
Canada Pension Plan/employment insurance appeals to the Minister and appeals to the courts
Expected results Performance indicators Targets Results
Taxpayers receive a timely review of contested decisions made under the Canada Pension Plan or the Employment Insurance Act  Percentage of reviews of appeals to the minister filed under the Canada Pension Plan or the Employment Insurance Act completed within established time frames 85%  76%3
Taxpayers receive an accurate review of contested decisions made under the Canada Pension Plan or the Employment Insurance Act Percentage of decisions regarding CPP/EI appeals to the minister determined to meet or exceed accuracy standards 90% 99.8%
Taxpayers receive an impartial review of contested decisions made under the Canada Pension Plan or the Employment Insurance Act  Percentage of decisions of CPP/EI appeals to the minister determined to be impartial 95% 99.8%
Program/sub-programs
Service complaints
Expected results Performance indicators Targets Results
Taxpayers are issued timely acknowledgements to their service complaints  Percentage of service complaints acknowledged within two business days   80% 85.8%
Taxpayers receive timely resolutions to their service complaints  Percentage of service complaints resolved within 30 business days   80% 95.3%
Program/sub-programs
Taxpayer relief
Expected results Performance indicators Targets Results
Taxpayers receive a timely response to requests for interest relief or penalty relief or both  Percentage of decisions on taxpayer relief requests determined to meet or exceed consistency standards    85% 98.5%

Footnote 1: The figure represents the actual spending for the CRA on a modified cash basis, based on Parliamentary appropriations used. See pages 106-107 for an explanation of how actual spending relates to results in the CRA Financial Statements – Agency Activities.

Footnote 2: Established timeframe targets were mostly met in 2013-2014. Processing improvements will continue to be implemented.

Footnote 3: An increase in intake in 2012-2013 as a result of changes in the Pensionable and Insurable Earnings Review program and in an increase in major investigation files resulted in unexpected increases in inventory. Consequently, 2013-2014 internal objective results on disposals were negatively affected.

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