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Section II: Analysis of Program Activities by Strategic Outcome

Taxpayer and Business Assistance (PA1)

Benefit to Canadians

Our Taxpayer and Business Assistance area helps taxpayers, businesses, and registrants meet their obligations under Canada’s self-assessment system by providing access to timely and accurate information. Taxpayers have access to the information they need through a variety of channels (e.g., our Web site, telephones, paper publications, in person, and outreach). It also provides rulings and interpretations to clarify and interpret tax laws, as well as for CPP/EI purposes, and administers federal tax legislation governing registered plans and charities.

Our expected results are the criteria we use to measure our activities and report to Canadians on their effectiveness. We carry out this program activity to achieve the following:

Taxpayers, businesses, and registrants have access to timely and accurate tax information products and services; and non-compliance with applicable legislation by organizations and businesses administering and/or producing registered plans, charities, and excise dutiable products is detected and addressed.

PA1 Snapshot

Figure 6 Actual Spending

Key Volumetrics

Enquiries and Information Services – We handled more than 17.7 million public enquiries and over 35.6 million tax-related visits to the CRA Web site.

Excise and GST/HST Rulings and Interpretations – We processed over 3,700 written enquiries for rulings and interpretations and handled over 101,000 -related telephone enquiries.

CPP/EI Rulings – We processed over 73,000 requests for rulings.

Registered Plans – We administered approximately 33,000 plans (e.g., registered pension plans, deferred profit sharing plans, supplementary unemployment benefit plans, registered investments), reviewed related returns, and conducted 470 audits.

Charities – We processed over 80,000 annual information returns for registered charities, and conducted 719 audits.

Contribution to CRA Priorities

In support of this priority, in 2009-2010 we accomplished the following:

Lessons Learned

What worked well: We improved the quality of our services to taxpayers by making them more timely, accessible, and easier to use. We maintained our high caller accessibility levels on all of our enquiries lines. Compliance efforts within the tobacco industry were enhanced by developing and testing a prototype tobacco excise stamp. We also implemented initiatives for retroactive refunds and collecting increased charges under the Softwood Lumber Agreement, 2006 (SLA 2006).

What could be improved: In 2009-2010, our challenge was to continue the transformation of all service channels, allowing us to meet client needs in order to encourage voluntary compliance. We must continue to improve our diverse service offerings to address legislative change and increase our responsiveness to the evolving information needs of taxpayers. One way of ensuring that we continue these improvements is to capitalize on emerging technologies.

Performance Report Card

Assessment of Returns and Payment Processing (PA2)

Benefit to Canadians

Our programs contribute to individuals and businesses meeting their filing, reporting, and payment obligations. We undertake a wide range of activities to assess and process individual and business tax returns and payments. We use risk assessment, third-party data matching, and information validation to detect and address non-compliance.

Our expected results are the criteria we use to measure our activities and report to Canadians on their effectiveness. We carry out this program activity to achieve the following:

Individuals, businesses and registrants are provided timely and accurate tax assessment notices and tax payment processing while targeted reviews detect and address non-compliance by individuals with applicable tax laws.

PA2 Snapshot

Figure 7 Actual Spending

Key Volumetrics

Individual Returns Processing – We processed more than 26.7 million individual returns, over 11 million of which were paper; refunded almost $26.6 billion to more than 17 million individual taxpayers and processed over 229,000 trust returns. There were more than 338,000 additional individuals enrolled and over 4.5 million visits to My Account.

Business Returns Processing – We processed almost 1.6 million information returns. We also processed more than 1.9 million corporate returns and 7 million GST/HST returns.

We handled more than 34.4 million payments, totalling just over $357.9 billion.

Contribution to CRA Priorities

Lessons Learned

What worked well: We expanded our electronic service options to make it easier for taxpayers to interact with us. We processed individual and business tax and information returns and payments accurately and on time. We carried out pre-assessment and post-assessment activities to detect and address instances of non-compliance.

What could be improved: This program activity plays a key role as Canadians make use of measures introduced through budget announcements and economic updates at the federal, provincial, and territorial levels of government. Under tight timeframes, our challenge is to ensure that these measures are in place and that we are positioned to maintain effective delivery of our programs while continuing to focus on long-term sustainability with respect to modernization, integration, financial limitations and public expectations.

Performance Report Card

Accounts Receivable and Returns Compliance (PA3)

Benefit to Canadians

Our Accounts Receivable and Returns Compliance area manages the largest debt collection service in Canada. It collects receivables arising from taxes (income tax,GST/HST) and programs such as the Canada Pension Plan, Employment Insurance, and defaulted Canada student loans. In addition, this area promotes compliance with Canada’s tax legislation covering employers, payroll, and GST/HST.

Our expected results are the criteria we use to measure our activities and report to Canadians on their effectiveness. We carry out this program activity to achieve the following:

Non-compliance by individuals, businesses and registrants with the filing, registration, and remitting requirements of applicable tax laws is detected and addressed to protect Canada’s revenue base.

PA3 Snapshot

Figure 8 Actual Spending

Key Volumetrics

Accounts Receivable – TSO cash collections totalled $12.4 billion of which the National Pools actions contributed $1.1 billion. We resolved over 95% of the dollar value of new debt intake.

Returns Compliance – More than 728,000 returns were obtained from individuals and corporate taxpayers who had not filed their returns, over 7,600 non-registrants were identified and 552,000 payroll non-compliance occurrences were completed. Our Contract Payment Reporting Initiative secured a total of 43,425 additional individual and corporate tax returns.

Contribution to CRA Priority

Lessons Learned

What worked well: In 2009-2010, we mostly met the targeted level of resolving our tax debt and government programs’ (non-tax) debt on a timely basis. Our tax debt and government programs’ (non-tax) debt were within targeted levels. Non-compliance was detected and addressed within targets.

What could be improved: Our challenge is to identify, address, and prevent non-compliance, and to ensure we continue to resolve tax debt on a timely basis and keep it within targeted levels

Performance Report Card

Reporting Compliance (PA4)

Benefit to Canadians

We undertake examinations, audits, and investigations to ensure compliance with Canada’s tax laws. This includes verification and enforcement activities at the domestic and international level, as well as the administration of international tax agreements. We also provide information to taxpayers to help them comply. We conduct research to improve identification of non-compliance and develop strategies to address it.

Our expected result is the criteria we use to measure our activities and report to Canadians on their effectiveness. We carry out this program activity to achieve the following:

Non-compliance by individuals, businesses and registrants with the reporting requirements of the legislation the CRA administers is identified and addressed to protect Canada’s revenue base.

PA4 Snapshot

Figure 9 Actual Spending

Key Volumetrics

International and Large Businesses – We conducted 51,600 audits, resulting in a fiscal impact of $7.2 billion.

Small and Medium Enterprises – We conducted 380,373 audits and examinations, resulting in a fiscal impact of almost $2.1 billion.

Enforcements and disclosures – We conducted 928 audits under the Special Enforcement Program, identifying $78 million in additional tax owing. We also referred 149 income tax and GST/HST cases to the Public Prosecution Services of Canada.

Scientific Research and Experimental Development Program – This program provided almost $3.3 billion in tax credits to over 21,000 claimants.

Contribution to CRA Priorities

Lessons Learned

What worked well: In 2009-2010, we continued our strong enforcement record, promoted public messaging to deter non-compliance, and enhanced the administration of the Voluntary Disclosures Program and the Scientific Research and Experimental Development program. We completed our second Compliance Review, identifying five major compliance priorities, and worked to improve our understanding of compliance risks that challenge the Canadian tax system. Over the last few years, our assessment of having met our expected result for reporting compliance activities has been based on a variety of performance indicators as we try to find those that most effectively measure achievement of the result. This year, we have introduced several new indicators into the performance report card, on , that focus on the extent to which our compliance activities resulted in a change to the amount of tax owed, and the revenue recovered through those changes. We see an ongoing challenge in measuring how effective our verification, audit and enforcement activities are in addressing and detecting overall reporting non-compliance

What could be improved: In 2009-2010, as in previous years, the increasing complexity of the Canadian economies presents ongoing challenges to detecting and deterring non-compliance. Although we continue to achieve strong ratings overall for our performance management framework, we recognize the need to further strengthen this area. This challenge is common to tax administrations internationally, but we will continue to work towards using the best measures available to assess that we are achieving the desired result for reporting compliance.

Performance Report Card

Appeals (PA5)

Benefit to Canadians

Taxpayers can dispute assessments and determinations pertaining to income tax and commodity taxes, and Canada Pension Plan/Employment Insurance (CPP/EI) assessments and rulings.

Our Service Complaints process provides taxpayers with a formal avenue of recourse to the service rights contained in the Taxpayer Bill of Rights. If taxpayers disagree with a decision resulting from our Service Complaints process, they can file recourse actions with the Taxpayers’ Ombudsman.

Our expected results are the criteria we use to measure our activities and report to Canadians on their effectiveness. We carry out this program activity to achieve the following:

Taxpayers receive a timely and impartial review of contested decisions made under legislation administered by the CRA and the handling of service complaints is timely and consistent.

PA5 Snapshot

Figure 10 Actual Spending

Key Volumetrics

Disputes – We resolved more than 67,000 disputes. The total taxes in dispute amount to more than $13.7 billion (the value of workable files is $4.7 billion, and the value of non-workable files is almost $9.0 billion.

Taxpayer Relief Provisions – A total of 82,911 requests for relief from interest and penalties were processed by the CRA; 51,218 of these requests were allowed in favour of the taxpayer. The total value of all cancellations and waivers was more than $478 million for 332,141 taxpayers.

Contribution to CRA Priorities

Lessons Learned

What worked well: In 2009-2010, we demonstrated fairness in our review of taxpayers’ contested decisions. However, it has taken us more time to provide decisions due to a sharp increase in disputes related to aggressive tax planning schemes. Service complaints and the taxpayer relief provisions were administered consistently, in support of our commitment to fairness.

What could be improved: Our challenge is to manage CRA business processes to effectively respond to the increased volume of income tax disputes resulting from targeted compliance activities that focus on questionable tax planning and other schemes.

Performance Report Card

Benefit Programs (PA6)

Benefit to Canadians

We contribute directly to the economic and social well-being of Canadians by delivering benefits, credits, and services to eligible recipients. We administer the Canada Child Tax Benefit, the goods and services tax/harmonized sales tax credit, and the Children’s Special Allowances, which are core federal programs that issue benefit payments. We also deliver the Universal Child Care Benefit on behalf of Human Resources and Skills Development Canada, the Disability Tax Credit, as well as other benefit and credit programs and services on behalf of provincial, territorial, and other federal government clients.

Our expected results are the criteria we use to measure our activities and report to Canadians on their effectiveness. We carry out this program activity to achieve the following:

Benefit recipients are provided timely and accurate eligibility determinations and payments, and have access to timely and accurate information.

PA6 Snapshot

Figure 11 Actual Spending

Key Volumetrics

Benefit Programs Client Services – We handled almost 6.5 million telephone enquiries.

Benefit Programs Administration – We issued 88.5 million benefit payments totalling over $17.6 billion^{[Footnote 1]}  to almost 11.5 million recipients. We determined $816 million in Disability Tax Credit (DTC) for 547,000 individuals. We processed 729,000 applications and elections, 726,000 account maintenance adjustments, and 1,023,000 in-year GST/HST credit account redeterminations.

Direct transfer payments under statutory programs – We issued $215 million under the Children’s Special Allowances (CSA) program.

Contribution to CRA Priorities

Lessons Learned

What worked well: In 2009-2010, we met each challenge we encountered. We maintained exceptional performance in delivering programs while incorporating important additions and changes to our programs and services. Our results show that we consistently administered reliable, high-quality programs and services to benefit recipients and client governments during one of the most difficult economic periods that Canadians have faced in many years.

What could be improved: We understand the importance that Canadians place on our reliable and accurate delivery of payments and credits on behalf of our government clients. We are challenged each year to ensure that increased needs and limited resources do not have a negative effect on our delivery of essential benefits and services.

Performance Report Card

Internal Services (PA7)

Benefit to Canadians

The CRA delivers high-quality tax, benefit, and related services on behalf of governments across Canada. Providing internal services is an integral part of the overall effectiveness of our program delivery. We set the business conditions that foster excellence in program delivery through responsible management practices, such as effective accountability and oversight measures, as well as sound management of enterprise risk, human resources, information technology, business knowledge, information, and growth. In support of our two strategic themes, our internal services must be fully integrated to ensure that our tax and benefit services have the guidance, infrastructure, and resources needed for successful delivery.

PA7 Snapshot

Figure 12 Actual Spending

Contribution to CRA Priorities

Lessons Learned

What worked well: In 2009-2010, we delivered on our management priorities through timely and responsive decision-making, a fully accountable senior management culture, streamlined management policies and practices, and improved planning and reporting.

What could be improved: In 2009-2010, our challenge was to make the best use of all available resources, from human resources capacity and capability to information technology sustainability and responsiveness to support new and ongoing business needs, and cope with the shifting landscape in which the CRA operates.

Our efforts over the past year in implementing the action plan initiatives demonstrate our commitment to make sure that Canadians have all of the information they need, not only to meet their tax obligations but also to take full advantage of the tax savings to which they may be entitled.

Canada’s Economic Action Plan Initiatives

Through Canada’s Economic Action Plan, the federal government provided significant new personal income tax relief. The measures were effective as of January 1, 2009, and provided benefits particularly for low- and middle-income Canadians.

The CRA implemented many of the action plan initiatives, like personal income tax relief and an increased Working Income Tax Benefit, as well as other measures to help families, seniors, workers, and persons with disabilities. We also administered corporate income tax reductions that were put in place to help Canadian businesses weather the effects of the global economic challenges, to maintain and create jobs, and to emerge from the economic downturn even stronger.

The CRA was provided with $12.3 million in action plan funding, related to the Home Renovation Tax Credit, Home Buyers Tax Credit, late filing and incorrect format penalties and simplification of GST/HST for the direct selling industry. This amount represents only 0.25% of the CRA’s 2009-2010 authorities.

In February of 2009, shortly after the introduction of the Economic Action Plan, our minister announced the launch of the “You’ve earned it. Claim it” advertising campaign to inform Canadians of the tax credits and benefits available to them.

The action plan highlighted the following programs that we administered and delivered on behalf of Canadians.

The Working Income Tax Benefit Program provided a refundable tax credit for eligible working low-income individuals and families who are already in the workforce and encouraged Canadians to enter the workforce.

For the 2009 tax year, the Home Renovation Tax Credit Program provided a non-refundable tax credit for eligible expenses incurred for work performed or goods acquired for an eligible dwelling.

The Canada Child Tax Benefit Program provided a tax-free monthly payment to eligible families to help them with the cost of raising children under the age of 18. Through the Economic Action Plan, the federal government raised the level at which the National Child Benefit Supplement amount for low-income families and the Canada Child Tax Benefit are phased out, so that eligible families with two children received an additional benefit of up to $436 starting in July 2009.

^{[Footnote 1]} Including the $816 million in entitlements to the DTC program, which are delivered through the T1 assessing process rather than as direct cash payments, the total amount of benefits and credits issued is $18.4 billion.

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