ARCHIVED - Ombudsman update - Rights and Rulings (2017)
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Canada Pension Plan (CPP) and Employment Insurance (EI) are social programs designed to provide financial support against a loss of income due to a loss of employment, retirement, disability, or death. These programs are jointly administered by Employment and Social Development Canada (ESDC) and the Canada Revenue Agency (CRA). While ESDC is responsible for determining eligibility for benefits under the Canada Pension Plan or Employment Insurance Act, the CRA’s CPP/EI Rulings Program determines if a workerFootnote 1 is an employee or self‑employed, and if their work is pensionable under the CPP or insurable under the EI Act.
The Office of the Taxpayers’ Ombudsman (OTO) opened the Rights and RulingsFootnote 2 examination after receiving complaints that the CRA’s CPP/EI ruling letters did not contain sufficient explanation of the CRA’s decision. The complaints stated the letters only referenced the applicable legislation, not the specific facts leading to the CRA’s decision, and without a complete explanation, workers and payersFootnote 3 were uncertain as to the reason for the ruling and whether they should appeal it.
Through our review we also identified a second issue: we noted workers and payers were unaware of the tax and other consequences resulting from a change to the definition of their employment relationship.
Our review of CPP/EI ruling letters found there was no explanation on the facts used to justify the decision, only the decision itself, the applicable legislation, an explanation of the recipient’s right to appeal, and the contact information for the officer who handled the case. The CRA informed us the decision making process for CPP/EI rulings involves too many variables to include an explanation in each of the rulings letters, and the CRA determined an explanation would not necessarily guarantee the worker or payer would understand the decision.
The CRA stated there were two ways to receive an explanation on a ruling: first, the worker or payer could call the CPP/EI Rulings Officer who handled the case and ask for a verbal explanation; and second, they could request a copy of the CPP/EI Rulings Report. The CPP/EI Rulings Report is a document used by the CPP/EI rulings officers to outline their decision making process, and includes all the relevant facts, actions, analysis and legislative provisions taken into consideration. Although this report would explain the CRA’s decision to workers and payers, they were not aware of their right to access or request it. There was nothing in the rulings letters or on the CRA’s webpages to advise they were able to request the report from the CRA.
Ultimately we found it was not feasible to provide a written explanation in each of the rulings letters. Instead, we determined the CRA should inform workers and payers of the different methods to receive an explanation of the decision. To satisfy the right to expect the CRA to be accountable and provide workers and payers with the understanding of the decisions made on their behalf, the Taxpayers' Ombudsman made the following recommendations to the Minister of National Revenue:
- The Taxpayers’ Ombudsman recommends that the Canada Revenue Agency provide information in the Canada Pension Plan (CPP) and Employment Insurance (EI) rulings letters that workers and payers have the right to request a copy of the CPP/EI Rulings Report, and provide instructions on how to request it.
- The Taxpayers’ Ombudsman recommends that, where applicable, the Canada Pension Plan and Employment Insurance ruling letters inform the workers and payers that an amount owing or over-contribution may result from the decision.
- The Taxpayers’ Ombudsman recommends that the Canada Revenue Agency updates the relevant sections of its publications and webpages to clearly communicate with the workers and payers involved in a Canada Pension Plan (CPP) and Employment Insurance (EI) ruling about what they need to do after a ruling is made, including the steps required by workers and payers to pay any outstanding CPP contributions and/or EI premiums.
- The Taxpayers’ Ombudsman recommends that the Canada Revenue Agency continue to include in their Canada Pension Plan (CPP) and Employment Insurance (EI) rulings letters:
a. the name and telephone number of the rulings officer and an invitation to contact the rulings officer to receive
an explanation of the rationale behind the decision; and
b. reference to the “Have you received a CPP/EI ruling?” website.
- The Taxpayers’ Ombudsman recommends that the Canada Revenue Agency determine whether changes can be made to increase efficiencies to all for the inclusion of an explanation of the relevant factors within each rulings letter.
The CRA agreed with the findings of the Rights and Rulings Report. It stated it would implement recommendations two, three, four and five, and agreed in principle with the first, saying it would conduct a pilot before a final decision was made regarding implementation.
In August 2018, the CRA provided an update on the status of the actions taken to address the recommendations in the Rights and Rulings report. The CRA reported it had fully implemented all five of the recommendations. The CRA updated the CPP/EI ruling letters to include a section informing recipients of their right to request a copy of the CPP/EI rulings report as well as instructions how to request it. Initially, the CRA did a pilot project to determine the impact of including this information, for example, whether there would be a significant increase in requests for rulings reports. After determining that the initial pilot did not provide sufficient information on the potential impact to the program, the CRA re-ran the pilot in a different region. The CRA’s findings demonstrated that more ruling report requests were received. The revised section was included in all letters by the end of September 2018.
The rulings letters were also amended to inform workers and payers, if they have questions about any potential consequences from the decision, they can visit the Have you received a CPP/EI Ruling webpage or call the toll-free number to ask a CRA agent.Footnote 4 The CRA stated the webpage continues to be regularly updated to include all relevant information for workers and payers on what needs to be done after a decision has been made. Information is provided regarding over-contribution or amounts owing when a ruling decision changes the pensionability and insurability of employment. There are links to information on how to pay outstanding CPP contributions or EI premiums as well as information on how to appeal a ruling.Footnote 5
The CRA also updated the RC4110 Employee or Self-Employed? guide to include a paragraph referring workers and payers to the Have you received a CPP/EI Ruling webpage.Footnote 6
The rulings letters continue to include the contact information of the rulings officer so the worker or payer can contact them at any time. As part of the implementation plan for the revised rulings letters, the CRA completed training in early September 2018 for its CPP/EI rulings staff to ensure they were comfortable with the changes and able to provide all the necessary information to workers and payers. The training included topics such as Access to Information and Privacy legislation, informal requests for information, and releasing rulings reports.
With respect to the final recommendation asking the CRA to determine whether changes could be made to increase efficiencies and provide an explanation of the relevant factors leading to a decision within each rulings letter, the CRA found that it was not logistically possible to include a full explanation on the letters but added general information on the CRA’s approach to determining a person’s employment status. Where applicable, the CRA has also included links to CPP/EI Explained articles so recipients can read more about how decisions are made on cases similar to their own.
The key issue that prompted the Rights and Rulings report was an overall lack of information in the CRA’s CPP/EI rulings letters. The Ombudsman finds the CRA has sufficiently addressed the issues raised in the report and implemented the recommendations. Following the implementation of the recommendations outlined in the report, the OTO has not received any further complaints related to CPP/EI rulings letters.
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