CRA Update on Actions Taken in Response to Taxpayers’ Ombudsperson Recommendations

The Office of the Taxpayers’ Ombudsperson (OTO) examines issues that have the potential to impact a large number of taxpayers or segment of the population. Through its first 10 years of publishing reports on these systemic examinations, the OTO has submitted a number of recommendations to the Minister of National Revenue to assist the Canada Revenue Agency (CRA) in resolving the identified issues. The vast majority of these recommendations were accepted.

The following information is the CRA’s status update to our request about the actions it has taken to apply recommendations to 8 of our 11 reports in its procedures. An update with regards to recommendations included in our 3 latest reports can be found here.

Special Reports

The Right to Know: Examination of the sufficiency of information in Decision Letters from the Appeals Branch of the Canada Revenue Agency

(Submitted to the Minister August 2010)

Taxpayers’ Ombudsman’s recommendations to the CRA
Summary of the CRA’s actions

Recommendation #1:

“Once the Appeals Branch has reviewed a taxpayer’s objection or appeal and made a decision to confirm, vary, or reverse the CRA’s original decision, it should provide the taxpayer with the reasons for its decision in writing. These reasons need not refer to every factor or conclusion in the process of reaching the decision, but should be sufficient, when read in context, to show why the Appeals Branch made the decision it did.

Providing reasons means providing basic information about the decision, including a description of the decision, the authority under which the decision was made, a description of the main steps in the decision-making process, and reference to the main factual basis for the decision.

We recommend that CRA either provide these reasons in the body of the decision letter to the taxpayer, or institute a policy that the Report on Appeals or Summary Report is enclosed with every decision letter.”

Recommendation #1:

The CRA improved the clarity of Income Tax and GST/HST decisions letters for objections and CPP/EI decision letters for appeals to the Minister. The CRA also provided instructions and training to appeals officers.

For the Income Tax and GST/HST programs, appeals officers are required to prepare a detailed final letter to advise objectors of the decision. The final letter or Notice of Confirmation was revised to include the objector’s representations, the CRA’s reasons for the decision, and the authority under which the decision is made.

For the CPP/EI program, the decision letters were revised to include the decision as reflected in the recommendation section of the appeals officer’s report, a brief explanation of the reason for the decision, a paragraph that lists the legislation used in the appeal and a copy of the summary section from the appeals officer’s report must be attached.

 

Proving Your Status: Establishing Eligibility for the Canada Child Tax Benefit

(Submitted to the Minister October 2010)

Taxpayers’ Ombudsman’s recommendations to the CRA
Summary of the CRA’s actions
Recommendation #1: “Provide clear examples of the types of documents a taxpayer may submit as proof of eligibility and/or marital status during validation and control processes. These examples should be readily available on the CRA website under Validating Your Eligibility for Benefits and Credits, as well as in, or referred to in, any applicable pamphlets and forms.”

The CRA updated its website and publications to include clear information on eligibility for the Canada child benefit (CCB) as well as the CRA’s validation of eligibility. The information clarifies the validation process, the types of documents that may be submitted as well as how to send the documents to the CRA. In addition, the CRA included an educational component to its validation letters to assist benefit recipients in understanding the rules associated to the benefits they are receiving. For example, the validation letters contain information about shared custody, as well as detailed definitions about how the CRA determines marital status.

Although the CRA initially updated its website and publications to include information on “temporary eligibility” and “temporary shared eligibility”, this information was replaced with information on shared custody as a result of a legislative change that allowed parents to share custody of a child on a monthly basis, regardless of the eligibility arrangement. This eliminated the need for defining temporary forms of eligibility.

It was determined that to avoid confusion, only general information on the validation process would be included in the T4114 pamphlet. The next publication of the pamphlet, due to be released by the second quarter of 2018, will also be updated to include a link to the CCB validation website and the call centre phone number. The CCB validation website currently contains detailed information on the validation process and the call centre is available to respond to questions or help benefit recipients being reviewed respond to a review letter or questionnaire.

A direct link to the T4114 pamphlet is provided whenever it is referenced whether it is within another publication or on a related website.

Recommendation #2: “Form RC65 – Marital Status Change should provide examples of the types of documents that the CRA will accept from the taxpayer as valid documentation for a marital status change.”
Recommendation #3: “Information about “temporary eligibility” and “temporary shared eligibility” should be readily available to taxpayers, including definitions of the terms and the eligibility requirements. The definitions, eligibility requirements, and related information should be on the CRA website and applicable publications and referred to on form RC66 – Canada Child Benefits Application in the Shared Eligibility section of the form.”
Recommendation #4: “The information contained in the section Validating Your Eligibility for Benefits and Credits from the CRA website should be added to pamphlet T4114, Canada Child Benefits. This would enable taxpayers to obtain the necessary information about the CCTB program in one place.”
Recommendation #5: “Increase the visibility of Pamphlet T4114, Canada Child Benefits, on the Canada Child Tax Benefit (CCTB) page of the CRA website.”

Knowing the Rules: Confusion about the rules governing the Tax-Free Savings Account

(Submitted to the Minister June 2011)

Taxpayers’ Ombudsman’s recommendations to the CRA
Summary of the CRA’s actions

Recommendation #1:

That the CRA take steps to make Canadians more aware of the information about TFSA available on its website and elsewhere.

The CRA’s communication strategy for raising awareness and understanding of TFSA rules includes a mix of social media, Web, graphics, paid advertising, print articles, and radio. TFSA messaging has also been incorporated into the annual tax filing season campaign, which is one the CRA’s highest-profile communications campaigns, targeting all taxpayers and benefit recipients.

The CRA has directly engaged the financial sector by hosting a series of webinars and conducting outreach sessions. It continues to reach out to the financial services sector with the primary goal of ensuring that the industry remains educated on the requirements of the program. Overall, the relationship between the CRA and the financial services sector is strengthened with the common goal of ensuring that all Canadians participating in the program are well served.

The CRA regularly monitors and assesses the effectiveness of its communications and stakeholder engagement efforts.

Recommendation #2:

That the CRA continue to update the information available on the TFSA and be proactive in informing Canadians about how to find the tax rules governing the TFSA.

Recommendation #3:

That the CRA continue to work with the financial services sector to ensure that the CRA’s information products about the TFSA are widely available.

Earning Credits: Service and fairness issues in the assessment of tuition tax credits for expenses incurred attending educational institutions outside Canada

(Submitted to the Minister March 2012)

Taxpayers’ Ombudsman’s recommendations to the CRA
Summary of the CRA’s actions

Recommendation #1:

“The CRA ensure that determinations on eligibility for the tuition tax credit are based on the provisions of the Income Tax Act and not solely on its internal policies, practices, and procedures.”

The CRA regularly updates its instruction manuals to ensure that they reflect the applicable provisions of the Income Tax Act (ITA) and any changes to legislation. These instructions and updates are provided to CRA officers to ensure that they have the most recent and accurate information when reviewing claims for the tuition fees tax credit.

The CRA updated its website and publications to make information on the tuition fees tax credit clearer and more accessible. The updates included specific information on eligibility criteria as well as:

  • an explanation that institutions on Schedule VIII of the ITA and on the CRA maintained public list of qualified donees are automatically recognized as “universities outside Canada” for the purposes of the tuition fees tax credit;

  • links to websites maintained by different organizations that are used by the CRA to verify claims for the tuition tax fees credit made by students who attend educational institutions outside Canada;

  • instructions to contact the CRA to confirm if a particular foreign educational institution is recognized.

The recommendation to post a list of educational institutions outside Canada has not yet been implemented. However, the CRA does believe that this recommendation has merit and is working on publically posting a list of the educational institutions outside of Canada that it has already recognized for the purposes of the tuition tax credit. This list should be made available on its website by the end of the fourth quarter of the 2018-2019 fiscal year, at the latest.

 

 

Recommendation #2:

“The CRA provide clear, accurate, and timely information to taxpayers about the criteria for determining eligibility for the tuition tax credit.”

Recommendation #3:

“The CRA post on its Web site and in other media a list of the educational institutions outside Canada that have already been recognized by the CRA as a “university outside Canada” for the purpose of paragraph 118.5(1)(b) of the ITA, while emphasizing that the list is neither determinative nor exhaustive.”

Recommendation #4:

“The CRA provide a clear and accessible explanation that institutions on the list of qualified donees and Schedule VIII of the ITA are automatically recognized as “universities outside Canada” for the purposes of the tuition tax credit.”

Recommendation #5:

“The CRA consider posting links on its Web site to the lists that are maintained by different organizations in various countries but are utilized by the CRA to verify tuition tax credit claims made by students who attend educational institutions outside Canada.”

Acting on ATIP: Service issues in the Canada Revenue Agency's Access to Information and Privacy processes

(Submitted to the Minister March 2012)

Taxpayers’ Ombudsman’s recommendations to the CRA
Summary of the CRA’s actions

Recommendation #1:

“Ensure that the ATIP Directorate has efficient processes and adequate resources to reduce the backlog and process information requests in a timely manner.”

The CRA has completed extensive work on improving informal disclosure in the Agency since the Acting on ATIP report was published in 2012.

The CRA has taken actions to address the access to information and privacy backlog by reviewing and allocating additional resources and finding efficiencies with regard to processing procedures including initiating a Lean Six Sigma program in the ATIP Directorate. The CRA also developed an internal directive and training strategy for CRA employees and managers that serves to expand awareness of informal disclosure as well as enhanced training products. In addition, the Agency updated its website with more comprehensive information for Canadians on making formal and informal requests for information from the CRA, as well as information on completed ATIP requests and timelines to complete requests. Most recently the Agency recruited junior support officers to improve service excellence with requesters by discussing and clarifying requests.

The CRA continues its work in support of informal disclosure including further development of training and awareness tools.

Furthermore, the CRA supports open government by continually expanding and enhancing its services and web presence to ensure Canadians have easy access to the information they need, proactively disclosing information to the public about CRA corporate plans and procedures, acts, regulations and making anonymized and aggregated datasets available on the Government of Canada’s Open Government portal.

 

 

Recommendation #2

“Promote the use of informal disclosure internally.”

Recommendation #3:

“Develop and communicate to its personnel clear policies and procedures for informal disclosure.”

Recommendation #4:

“Provide enhanced training to its personnel with regard to informal requests for information, particularly in the program areas that receive the most requests.”

Recommendation #5:

“Provide more complete information publicly to taxpayers about informal requests for information through its website, publications, and telephone enquiries lines.”

Recommendation #6:

”Advise requestors when the extended deadline will not be met for their request and it will fall into deemed-refusal status.”

Recommendation #7:

”Continue and enhance the release of completed access to information requests through its virtual reading room, and update its communication products in order to raise awareness of this service.”

Getting It Right: Investigation of service and fairness issues arising from the misallocation of payments by the Canada Revenue Agency

(Submitted to the Minister July 2012)

Taxpayers’ Ombudsman’s recommendations to the CRA
Summary of the CRA’s actions

Recommendation #1:

”Review its standards and procedures for processing payments to ensure that clerks are afforded sufficient time to perform their duties with accuracy as well as efficiency.”

The CRA initially doubled its standard for processing payments from 24 hours to 48 hours from the time of receipt. After additional review, that timeframe was increased to 72 hours to ensure that clerks had enough time to accurately process payments.

The CRA reviewed its internal standards and procedures for processing payments and found that smaller batch sizes allowed for easier detection and correction of errors. As a result of this study, batch sizes were reduced from 200 to 50 payments per batch.

In an effort to improve the level of information available to taxpayer and to educate them on correct payment remittance, the CRA made several improvements to its communication strategy, such as:

  • continuing to make its payments webpage more user-friendly;

  • adding information to its website to inform taxpayers on what to do if a payment is not applied as expected;

  • providing taxpayers with clearer information on making payments in the T1 guide;

  • working with third parties, such as the Chartered Professional Accountants of Canada, the Efile Association of Canada, the Canadian Payroll Association, and financial institutions to identify any issues as well as educating them on ways to avoid and correct errors.  

Recommendation #2:

“Determine the optimal payment batch size for the detection and correction of errors.”

Recommendation #3:

“Inform and educate taxpayers on how to avoid making remittance errors as well as how to have them corrected when they do occur.”

Donor Beware: Investigation into the sufficiency of the Canada Revenue Agency's warnings about questionable tax shelter schemes

(Submitted to the Minister December 2013)

Taxpayers’ Ombudsman’s recommendations to the CRA
Summary of the CRA’s actions

Recommendation #1:

“Continue to develop and apply innovative and effective communication strategies to warn taxpayers about the potential consequences of participating in tax shelter donation schemes, including a determination of key audiences and distribution targets.”

The CRA mailed Tax Alerts and/or News Releases to identified participants as a means of warning them about the consequences of becoming involved in tax shelter donation schemes. The CRA updated its Tax Alerts and website with helpful tips, a general warning to taxpayers, and reminders

  • to be diligent in reviewing a tax shelter before participating in it;

  • that the use of CRA material or of links to the CRA website in promotional products do not mean that the CRA has approved or supports the scheme;

  • that a “tax shelter identification number” is not an approval of the tax shelter by the CRA nor does it guarantee that a participant will be entitled to any of the tax benefits associated with the tax shelter.

The CRA regularly issues News Releases when registered charities have their status revoked because of their involvement in tax shelter gifting arrangements. The CRA adopted a proactive approach in providing cautionary information to newly registered organizations to discourage their future participation in tax shelter schemes.

To better target messaging to vulnerable groups, the CRA conducted research on the demographics of participants in more recent schemes. Tweetbanks were updated to leverage social media. Stories appeared on NewsCanada.ca and on the CRA website during Fraud Prevention Month explaining the tax consequences of participating in these schemes. Several media requests and an on camera media interview gave CRA the opportunity to again warn Canadians of the consequences of participating in these schemes.

The CRA has effectively and successfully eliminated mass-marketed, abusive gifting tax shelters. Participation in these tax shelters and similar donation arrangements which had increased dramatically from the late 1990s into the 2000s was eliminated by 2015.

Recommendation #2:

”Develop effective communication products that provide clear examples of tax schemes that do not conform to the Income Tax Act as well as warn of the potential consequences of participating in tax shelter donation schemes and distribute as effectively as possible.”

Recommendation #3:

“Warn taxpayers about questionable gifting tax shelters in a timely manner by monitoring trends in the structuring of, and investing in, these schemes and make such information publicly available as soon as possible”

Recommendation #4:

“Explore ways of discouraging promoters of questionable gifting tax shelters from using information from the CRA to promote their products and provide clear warnings to the public that by issuing a “tax shelter identification number” the CRA is not approving a tax shelter or confirming that it conforms to the Income Tax Act.”

Alive and Well: An investigation into the erroneous coding of taxpayers as deceased by the Canada Revenue Agency

(Submitted to the Minister February 2014)

Taxpayers’ Ombudsman’s recommendations to the CRA
Summary of the CRA’s actions

Recommendation #1:

“Ensure that the forms upon which the date of a death is to be entered are clear, easy to understand, and less likely to cause errors.”

The CRA has acted on all the recommendations in the report by taking the following actions:

  • revising the front page of the Income Tax and Benefit Return to reposition and reword the section on date of death, for greater clarity;

  • updating its internal procedures to ensure that the date of death information received by telephone is accurate;

  • introducing enhancements to how it monitors all activities related to a date of death which included timeframes for correcting errors.

In addition, Bill C-247, Main Point of Contact with the Government of Canada in case of Death Act, received Royal Assent on June 18, 2015. This act made Service Canada the primary point of contact with the federal government upon the death of a Canadian citizen or resident. This legislation potentially eliminates the possibility of the CRA coding taxpayers as deceased in error.

 

 

Recommendation #2:

“Consider following up with the person or persons, who have reported a taxpayer’s date of death by telephone and are responsible for submitting documentation to substantiate the date of death, to ensure it is provided and matched to the deceased taxpayer’s account.”

Recommendation #3:

“Continue to gather statistics on the number of taxpayers coded deceased in error and analyze trends in causation, as well as increases or decreases in the number of errors made.”

Recommendation #4:

“Gather and analyze statistics on the length of time it takes to correct the coding errors and assess performance with respect to its internal program target of 48 hours.”

Recommendation #5:

“Continually review and update procedures to reduce the potential for human error by CRA employees and ensure that those procedures are communicated to relevant staff and management.”

Recommendation #6:

“Work with partners in other government departments and provincial ministries to identify sources of errors and ways to minimize the transmission of incorrect information, and to ensure effective communication of corrective actions in those cases where errors do occur.”

Recommendation #7:

“Validate the findings from the analysis of trends in errors and implement further changes to procedures or provide further training where required, both for errors committed internally by the CRA and received from external sources.”

Recommendation #8:

“Put in place and monitor control measures to ensure that when errors do occur, they are detected and corrected as rapidly as possible.”

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