Ombudsperson Final Update – Sub-standard

The Sub-Standard report was released following a systemic examination looking into delays at the Canada Revenue Agency’s (CRA) in processing individual income tax and benefit returns and adjustment requests. These delays have been, and continue to be, one of the top issues our Office hears about.

The examination was launched in March 2019 and looked into CRA’s processes, its published service standards, its reporting against those standards, and service issues that arose from delays in processing individual income tax and benefit returns and adjustment requests.

Despite the CRA reporting that it mostly met or exceeded its published service standards for the processing of these documents, taxpayers’ experience did not necessarily align with this. A lack of clarity in the CRA’s published information leaves many filers unaware that their returns and adjustment requests may be excluded from or processed outside of the CRA’s published service standard timeframes. When filers contact the CRA, they are not provided clear information on how long it will take to process their returns and adjustment requests.

Many issues were identified in the report, but, of particular note, was the need for the CRA to set clearer expectations with taxpayers and to inform them of any delays. To address these issues, the former Taxpayers’ Ombudsperson, Sherra Profit, made 15 recommendations to the Minister of National Revenue and the Chair of the Board of Management of the CRA.

This examination focused solely on individual income tax and benefit returns and adjustment requests. However, where applicable, the recommendations apply to all types of tax returns and adjustment requests processed by the CRA.

For the majority of filers, the CRA aims to meet its set service standard timeframes for processing returns and adjustment requests. For those whose returns or adjustment requests are excluded from the service standards (or those who fall into the 5% that may not be processed within the service standards), the CRA has not set an expectation for a timely processing of their return or adjustment request.

Although the CRA states it is committed to processing returns and adjustment requests “with all due dispatch” in its action plan, we find that because the CRA meets its service standards for the majority of filers, it accepts not meeting them for all filers. 

An important aspect of the relationship between tax filers and the CRA is having published service standards to serve as a guideline for what filers should expect from the CRA when it is processing their returns and adjustment requests. It is also a right, as outlined in the Taxpayer Bill of Rights (Right 6). Once the two or eight weeks provided in the published service standards elapse, filers conclude that the processing of their return or adjustment request is delayed. This can cause taxpayers to feel frustrated and can cause downstream impacts on the filers and on other processes within the CRA.

Currently, the CRA does not have published service standards for returns filed after the filing due date, or for returns or adjustment requests listed as excluded or complex. The CRA does not consider the processing of any of those returns or adjustment requests to be delayed if the CRA meets its internal target processing timeframes. 

Our research, along with feedback from individual taxpayers, shows that delays have a negative impact on filers, including personal and financial hardship. We have learned it is not only the delays that filers find frustrating, but also the lack of clear and accurate information from the CRA about expected timeframes and delays. Filers want to know when they can expect their documents to be processed, and if there is a delay, they want to know why it is delayed and when they can expect it to be completed.

For returns or adjustment requests that are not excluded from the service standards, but that must be sent to one or more specialized processing workflow, the CRA states they are included in the calculation of its performance against the service standards but will often be delayed. However, in practical application, when a filer enquires about the status of the processing of a return or adjustment request that exceeds the service standards, the CRA takes no action if it is still within its internal target processing timeframe.

The disconnect between filers and the CRA becomes apparent when we look at the complaints and feedback we receive. Filers consider a return or adjustment request to be delayed when the published service standards are not met.

We made 15 recommendations in the report. The CRA partially agreed with all of them and created an action plan. 

The Taxpayers’ Ombudsperson recommended that the CRA publish service standards for processing late-file T1 income tax and benefit returns, and all T1 adjustment requests excluded from the current service standards, so it can accurately measure and report on whether it is meeting its requirement to process income tax and benefit returns and adjustment requests in a timely manner, per section 152(1) of the Income Tax Act and articles 5, 6 and 13 of Taxpayer Bill of Rights.

The CRA partially agreed with this recommendation. It indicated: 

The CRA’s response did not detail any action which would lead to establishing service standards for late-file T1 income tax and benefit returns. That said, the CRA did pilot a service standard for complex T1 adjustment requests. This led to implementing a new service standard for complex T1 adjustment requests on April 1, 2024.  However, this improvement excludes requests filed for international individuals, non-residents, and emigrants. As such, the CRA’s actions fall short.

Since there are many exclusions for processing tax returns, the CRA is not able to set clear expectations with taxpayers. In turn, this likely leads to more enquiries from taxpayers, creating additional demands on its already strained contact centres. Additional service standards would not only hold the CRA more accountable, it would also help to set expectations with taxpayers.

We have concluded that the CRA’s action plan for this item has not sufficiently addressed our recommendation. 

The Taxpayers’ Ombudsperson recommended that the CRA improve its service standards by:

• increasing the percentage of time it is expected to meet the service standard for digitally-filed T1 income tax and benefit returns.
• decreasing the length of time it takes to process paper-filed T1 income tax and benefit returns.

The CRA partially agreed with this recommendation. It stated the following:

The CRA’s response does not detail any concrete action that would lead to improving its service standards. Since the recommendation was made, there has been no change to increase the percentage of time the CRA is expected to meet the service standard for digitally-filed T1 income tax and benefit returns, or to decrease the length of time it takes to process paper-filed T1 income tax and benefit returns.

While the CRA indicated that “the volume of returns that necessitate human intervention will be decreased and processing times for those returns that require manual (re)assessments will be reduced,” it should also work towards lowering the processing time.

The CRA concluded that it has addressed this recommendation in full. However, in our view, more work is still needed to fully address this recommendation.

The Taxpayers’ Ombudsperson recommended that the CRA improve the clarity, transparency, and consistency of the language it uses to describe the types of T1 income tax and benefit returns and adjustment requests included and excluded from the application of the various service standards, and the calculation of the CRA’s performance against those standards, ensuring to address issues raised in this report about confusion on certain types of workflows.

The CRA partially agreed with this recommendation. In the update it provided on its action plan in 2021, the CRA indicated the following: 

We have also noticed that the CRA provides more details about complex T1 adjustments requests on its How to change your return web page. However, in many of the complaints we received about T1 adjustment processing times, taxpayers are still questioning why it takes so long for the CRA to process their requests, especially since most of them consider their request to be simple. This disconnect leads us to believe that there is a lack of clarity in the language used by the CRA.

We have concluded that the CRA’s action plan did not sufficiently address recommendation 3, since many taxpayers are still coming to our Office confused about these processes.

The Taxpayers’ Ombudsperson recommended that the CRA clearly indicate in its published information on service standards for T1 adjustment requests, the standard timeframes for those requests made verbally.

The CRA partially agreed with this recommendation. The CRA indicated that, 

Further, in the 2021 update on its action plan, the CRA informed us of the following: 

We are satisfied that the wording of the service standard for T1 reassessments – paper, now includes telephone enquires that are re-directed to the tax centres for processing. Currently, the CRA indicates the following on their web page Service Standards 2024-2025:

We have concluded the CRA’s action plan has addressed our recommendation. 

The Taxpayers’ Ombudsperson recommended that the CRA publish approximate processing timeframes for T1 income tax and benefit returns and adjustment requests, by type of processing workflow.

The CRA partially agreed with this recommendation. It agreed to make more information on processing timeframes by type of processing workflow available. The CRA also referred to its Check CRA Processing Times tool, which was published on Canada.ca in December 2019.

In 2023–2024, the CRA updated the Check CRA Processing Times tool to include the expected processing times for complex adjustment requests. Currently, the processing times tools allows taxpayers to:

• find out timeframes for processing T1 income tax and benefit returns and adjustment requests
• filter by type of processing workflow (submitted electronically or by paper)

We have concluded that the CRA’s action plan has addressed our recommendation. 

The CRA partially agreed with this recommendation. The CRA stated the following: 

In January 2021, the CRA completed a review of the wording of the T1 reassessments – paper service standard to include telephone enquires that are re-directed to the tax centres for processing.

We have concluded that the CRA’s action plan has addressed our recommendation. 

The Taxpayers’ Ombudsperson recommended that the CRA change the wording used in publicly describing, and reporting its performance against, service standards for processing T1 income tax and benefit returns, from "fiscal year" to "filing season"; and if unable to do so, ensure information is clearly publicly provided about the specific period of time on which the CRA is reporting.

The CRA partially agreed with this recommendation. The CRA’s response did not detail any concrete action that would lead to improvements to the wording referenced in the recommendation. It only indicated that:

We checked on the CRA’s Service Standards in the CRA web page and found that since 2018-2019, the CRA changed the wording used in publicly describing and reporting its performance against service standards for processing T1 income tax and benefit returns. It revised the wording from "fiscal year" to "filing season", as we recommended.

We encourage the CRA to provide the specific period of time for which the filing season ran. For instance, the CRA provided the filing season date range in a footnote of the 2018-2019 performance report; however, it did not provide this detail for the following years.

Although we detail other action items the CRA could do to improve its communication, we have concluded that the CRA’s action plan has addressed our recommendation. 

The Taxpayers’ Ombudsperson recommended that the CRA notify filers, by letter when their T1 income tax and benefit return (return) is referred to any specialized processing workflow where processing times may exceed the published service standard, and where the filer has not signed up for online mail. The letter should include a timeframe within which the filer can reasonably expect their return to be completed, or the revised service standard should the CRA have created one. Where a filer has signed up for online mail, pending full implementation of phase two of the progress tracker, that the CRA advise the filer through online mail when their return is referred to any specialized processing workflow where processing times may exceed the published service standard.

The CRA partially agreed with this recommendation. It acknowledged that taxpayers should be informed with respect to the status of their files. The CRA referred to its Check CRA Processing Times tool and indicated that:

The CRA added that it “will monitor the success of this new tool and determine if further enhancements, such as letters, should also be considered.”

Currently, to find out the standard processing times of their tax returns and other tax-related requests sent to the CRA, taxpayers can use the Check Processing Times tool. Those who have registered for a CRA account can view and manage their income tax and benefit information online by using the Progress tracker tool available through their CRA online account.

As for the letter to inform taxpayers when their T1 income tax and benefit return is referred to any specialized processing workflow and where processing times may exceed the published service standard, the CRA’s response did not identify whether or not it sends this type of letter to impacted taxpayers.  

We have therefore concluded that the CRA’s action plan for this item has not sufficiently addressed recommendation 8.

The Taxpayers’ Ombudsperson recommended that the CRA include in the acknowledgement letter sent for complex T1 adjustment requests a timeframe within which the filer can reasonably expect their T1 adjustment request to be completed.

The CRA partially agreed with this recommendation. The CRA responded as follows: 

As mentioned in our analysis of the CRA’s actions for recommendation 1, the CRA did pilot a service standard for complex T1 adjustment requests. This led to the CRA implementing a new service standard for complex T1 adjustment requests on April 1, 2024. As for the inclusion of outgoing acknowledgment letters, detailing when taxpayers can reasonably expect their T1 adjustment request to be completed, the update from the CRA did not provide any details.

We have concluded that the CRA’s action plan has addressed the spirit of our recommendation.

The CRA partially agreed with this recommendation. The CRA stated that it will “improve its analytics and improve its tracking systems.” It said it was also “committed to ensuring internal consistency in terminology and definitions.”

In the 2020 update on its action plan, the CRA confirmed that

While we can see some improvements with the consistency in the CRA’s terminology and definitions, we did not examine the efficiency of the CRA’s processing systems for individual returns. That said, we have concluded that the CRA has addressed our recommendation. 

The CRA partially agreed with this recommendation. It stated the following:  

In the 2022 update on its action plan, the CRA informed us that it continues to explore various methodologies to improve processing times for all workflows, but did not refer to any changes to its first-in, first-out policy.

While the CRA based its decision on the importance to maintain fairness and efficiency in processing through its first-in, first-out policy, fairness does not always mean treating everyone equally. Fairness may also mean taking into consideration someone’s specific circumstances. When the CRA discusses right 5 of Taxpayer Bill of Rights, the “right to be treated professionally, courteously, and fairly,” it advises taxpayers that,

Taking the above into consideration, we have concluded that the CRA’s action plan has not addressed our recommendation.

The Taxpayers’ Ombudsperson recommended that the CRA reduce the time taken to refer T1 income tax and benefit returns and adjustment requests to different areas within the CRA during processing, to minimize the time T1 income tax and benefit returns and adjustment requests sit in a queue or inventory before they are worked.

The CRA partially agreed with this recommendation: 

We expect that the CRA is not only monitoring and analyzing trends with respect to all tax returns, but is also taking concrete actions that can minimize the time T1 income tax and benefit returns and adjustment requests sit in a queue or inventory before they are processed.

We have concluded that the CRA’s action plan has addressed the spirit of recommendation 12.

The Taxpayers’ Ombudsperson recommended that the CRA examine the entirety of the journey of T1 income tax and benefit returns and adjustment requests and the full impact of processing timelines on filers, to reduce processing timeframes of T1 income tax and benefit returns and adjustment requests, where possible, and address the root cause(s) of delays. This analysis should also be applied in the allocation of Budget 2019 additional funding for processing T1 adjustment requests, to ensure funds are allocated effectively to address the root causes(s) of delays.

The CRA partially agreed with this recommendation. It reiterated its response for recommendation 12. It also informed us that 

The goal of our recommendation was for the CRA to find ways to reduce processing timeframes of T1 income tax and benefit returns and adjustment requests, where possible, and to address the root causes of delays in processing these requests. However, the CRA indicated in its response “that the vast majority of returns filed are already processed in a timely and expedient manner.”

That said, since we made this recommendation, we continue to hear about delays in processing T1 income tax and benefit returns and adjustment requests from many taxpayers. Even if these complaints do not represent the vast majority of returns referred to in the CRA’s response, they are an indication that actions need to be taken to address the root causes of these delays, to reduce the processing timeframes, even for complex tax situations.

As the root causes for processing delays continue to persist, we have concluded that the CRA’s action plan has not addressed recommendation 13.

The Taxpayers’ Ombudsperson recommended that, where possible, the CRA address system limitations so more T1 income tax and benefit returns can be processed in a more timely manner with less manual intervention.

The CRA partially agreed with this recommendation. It agreed “to continue to address system limitations in order to reduce processing times and reduce manual intervention.”

In the 2020 update of its action plan, the CRA confirmed that

The CRA has concluded that it has addressed this recommendation in full and we agree with this conclusion.

The Taxpayers’ Ombudsperson recommended that the CRA utilize improved analytics and implement more transparent policies and procedures relating to the information call centre agents can provide to filers, including where the T1 income tax and benefit return or adjustment request is being processed, what is causing processing delays beyond the applicable service standard, as well as an anticipated timeframe for processing.

The CRA partially agreed with this recommendation: 

The CRA indicated it “has already taken steps to ensure agents have access to information and tools, in order to provide the status of taxpayer files.” The CRA also referred to its progress tracker tool in the CRA secure portals (My Account, My Business Account) to enable taxpayers to track the progress of their requests. This tool has been available since May 2021.

With the many challenges CRA’s contact centres are currently facing, the progress tracker tool appears to be a good alternative for taxpayers or their representative to be informed when a file was received and its status in the processing cycle. However, it is not helpful if the target date changes without explanation, which is something we have heard from taxpayers.

The CRA indicated that it “will monitor the effectiveness of this service and determine if it meets the needs of Canadians, and determine if and how this information can be used by call centre agents.” That said, even if this information can be used by contact centre agents, it might not be very useful for taxpayers if the information provided by agents does not contain the details they want to know. For example, the CRA indicates on its Progress Tracker web page:

In addition, in the event that contact centre agents are able to know more than what is shown in the progress tracker tool, it is unclear what information they are allowed to provide to taxpayers on the phone. We are still hearing complaints from taxpayers that they are not getting specific information about delays affecting their T1 income tax and benefit return or adjustment requests.

The goal of our recommendation was for the CRA to use improved analytics and implement more transparent policies and procedures relating to the information contact centre agents can provide to filers. It remains unclear how the CRA’s current policies and procedures allow for more transparency and clarity for taxpayers.

Therefore, we have concluded that the CRA’s action plan has not sufficiently addressed our recommendation. 

While we acknowledge the challenges the CRA faces, which are outlined in its overarching responses, and are satisfied to see the improvements it has made following our recommendations, we are of the opinion that more steps need to be taken to meet taxpayers’ expectations. Receiving clearer and more transparent information would allow taxpayers to better understand when they can expect a response for return or adjustment requests that exceed the service standards.

We will continue to monitor potential issues regarding returns and requests processed at the CRA through: complaints we receive, information the CRA provides online, outreach (when possible), and media reports.