Directive on Charging and Special Financial Authorities

Outlines management practices and controls to ensure that external and internal charging practices for services provided are consistent across government, the amounts charged respect legislative limits; and the consistent treatment of non-tax revenues that are not returned to the Consolidated Revenue Fund.
Date modified: 2024-03-20

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1. Effective date

  • 1.1This directive takes effect on .
  • 1.2This directive replaces the following Treasury Board policy instruments:
    • Policy on Interdepartmental Charging and Transfers Between Appropriations ()
    • Policy on Special Revenue Spending Authorities ()
    • Policy on Service Standards for External Fees ()
    • Directive on Internal Support Services ()
    • Directive on Specified Purpose Accounts ()
    • Directive on Receipt, Deposit and Recording of Money ()
  • 1.3Transitional considerations:
    • 1.3.1Subsection 4.2.4 of this directive, including subsections 4.2.4.1, 4.2.4. 2, 4.2.4.3, 4.2.4.5 and 4.2.4. 7, takes effect on April 1, 2021.
    • 1.3.2Subsections 4.2.5.1.1 and 4.2.6 will take effect on .

2. Authorities

  • 2.1This directive is issued pursuant to the authorities indicated in sections 7 and 39 of the Financial Administration Act.
  • 2.2This directive is issued pursuant to the authorities indicated in sections 4, 7, 17 and 20 of the Service Fees Act.

3. Objectives and expected results

4. Requirements

General

  • 4.1The chief financial officers (CFOs) are responsible for the following:
    • 4.1.1Ensuring that the revenue from charging is recorded as non-respendable if the department does not have the authority to respend the revenue collected; and
    • 4.1.2Consulting with central agencies when assessing the impact of external charging (Treasury Board of Canada Secretariat, Department of Finance Canada and Privy Council Office).

External charging (fees)

  • 4.2CFOs are responsible for the following:
    • 4.2.1Ensuring that the authority under which fees are fixed has been identified;
    • 4.2.2Providing the deputy head with assurance that cost estimates for a new or amended fee are reasonable;
    • 4.2.3Ensuring that fees do not exceed the full costs to government to provide the service or regulatory scheme unless the responsible authority may charge fees that exceed costs (for example, proprietary charges);
    • 4.2.4Ensuring that a departmental policy and procedures for granting remissions to fee- payers under section 7 of the Service Fees Act are established and adhered to by:
      • 4.2.4.1Ensuring that the departmental remission policy sets out ways to determine whether a service standard is not met and what amount is to be remitted, including but not limited to:
        • 4.2.4.1.1The proportion by which the standard is not met;
        • 4.2.4.1.2The impact on the fee-payer of the standard not being met;
        • 4.2.4.1.3Any circumstances beyond the department’s control that may impact its ability to meet the standard; and
        • 4.2.4.1.4Any role that the fee-payer may play in the standard not being met;
      • 4.2.4.2Ensuring that the portion of a fee to be remitted is proportional to the degree that the service standard was not met;
      • 4.2.4.3Ensuring that interest is not paid for remissions made under section 7 of the Service Fees Act and including this practice in the departmental remission policy (section 4.1.6 of the Directive on Payments does not apply to fee remissions);
      • 4.2.4.4Ensuring that applicable service standards are referenced in the departmental remission policy;
      • 4.2.4.5Ensuring that remissions are granted to a fee-payer in the form of a refund, a credit, a waiver or other manner acceptable to the department;
      • 4.2.4.6Ensuring that the form/method of granting remissions to a fee-payer is set out in the departmental remission policy; and
      • 4.2.4.7Ensuring that the departmental remission policy and procedures are available to the public;
    • 4.2.5Ensuring that annual and periodic fee adjustments are implemented and charged, if applicable, and that the amount of the fee is updated on all departmental websites and documentation by:
      • 4.2.5.1Ensuring that the anniversary date for the annual adjustment under section 17 of the Service Fees Act is April 1 (in exceptional circumstances, departments may choose a different date for fees in consultation with the Treasury Board of Canada Secretariat);
        • 4.2.5.1.1Ensuring that any change in the anniversary date for a fee pursuant to subsection 17(5) of the Service Fees Act, in consultation with Treasury Board of Canada Secretariat, is published in the departmental fees report before the change comes into effect;
      • 4.2.5.2Ensuring that the adjustment date for fees subject to other adjustment mechanisms is April 1 (in exceptional circumstances, departments may choose a different date for fees in consultation with the Treasury Board of Canada Secretariat);
    • 4.2.6Ensuring that when fees, that are subject to subsection 17(1) of the Service Fees Act, are rounded down pursuant to subsection 17(4), departments:
      • 4.2.6.1Establish and implement a process and procedures to ensure that, when the annual Consumer Price Index adjustment is calculated, the amount of the adjustment is calculated using the non-rounded down amount of the previous year’s fee;
      • 4.2.6.2Publish the rounded fee in the department’s annual fees report;
      • 4.2.6.3Ensure that fees that are not based on formulas are rounded down in the following manner:
        • 4.2.6.3.1Fees lower than $51.00 cannot be rounded down;
        • 4.2.6.3.2Fees that are between $51.00 to $500.00 are rounded down to the nearest $0.25;
        • 4.2.6.3.3Fees that are between $500.00 to $5,000.00 are rounded down to the nearest $1.00;
        • 4.2.6.3.4Fees that are $5,000.00 and above are rounded down to the nearest $5.00;
      • 4.2.6.4Ensure that the elements adjusted by the Consumer Price Index, within the formula-based fees, are rounded down in the following manner:
        • 4.2.6.4.1Formula-based fee elements lower than $51.00 cannot be rounded down;
        • 4.2.6.4.2Formula-based fee elements that are between $51.00 to $500.00 are rounded down to the nearest $0.25;
        • 4.2.6.4.3Formula-based fee elements that are $500.00 and above are rounded down to the nearest $1.00;
    • 4.2.7Ensuring that fee-payers are consulted when introducing a proposed periodic fee adjustment, in lieu of following the requirement of section 17 of the Service Fees Act;
    • 4.2.8Ensuring that a departmental plan to periodically review activities for which fees are charged is established and implemented, and contains:
      • 4.2.8.1The description of the review cycle;
      • 4.2.8.2The program responsible for the review;
      • 4.2.8.3The methodology for conducting the review and delivering recommendations for approval;
      • 4.2.8.4The process and timelines to address and report on corrective actions;
    • 4.2.9Ensuring that an annual report is developed, in accordance with section 20 of the Service Fees Act, regardless of whether or not the Service Fees Act applies, in the manner prescribed by the Treasury Board of Canada Secretariat, excluding fees listed in subsection 2(3) of the Service Fees Act.
  • 4.3Senior departmental managers are responsible for the following:
    • 4.3.1Ensuring that departmental legal services have been consulted when considering amending an existing fee or establishing a new fee;
    • 4.3.2Establishing service standards for fees charged for a service, the use of a facility, the conferral of a right or privilege, and a regulatory process, in accordance with relevant Treasury Board policies and directives, including the Policy on Service and Digital and the Cabinet Directive on Regulation;
      • 4.3.2.1Ensuring that whether a service standard has been met is determined on an individual fee basis;
    • 4.3.3Ensuring that fee proposals are developed and provided in full to the Treasury Board of Canada Secretariat for review, regardless of whether or not the Service Fees Act applies, before amending an existing fee or establishing a new fee and before consulting with the public. This requirement does not apply to fees that are set by contract or by a method that is out of the department’s control (for example, by auction);
      • 4.3.3.1Ensuring that fee proposals contain:
        • 4.3.3.1.1A description of the activity for which a fee is charged;
        • 4.3.3.1.2Related total costs and cost-recovery rates, where applicable;
        • 4.3.3.1.3The proposed fee amount;
        • 4.3.3.1.4The pricing factors;
        • 4.3.3.1.5The rationale for the proposed fee;
        • 4.3.3.1.6The related service standard (if applicable);
        • 4.3.3.1.7An impact assessment;
        • 4.3.3.1.8The expected revenue from the fee; and
        • 4.3.3.1.9Other information that is deemed relevant to the department or required by the Treasury Board of Canada Secretariat;
    • 4.3.4Establishing and implementing processes for tracking and monitoring the charging of fees, compliance with service standards, and remissions, where applicable.

Internal Charging for enterprise services

  • 4.4CFOs are responsible for the following:
    • 4.4.1Ensuring that the amount to be charged does not exceed the approved estimate. The rate may exceed the value of related expenditures only if approved by the Treasury Board;
    • 4.4.2Ensuring that Treasury Board approval is obtained for the rates to be charged to client departments for mandatory services that are not funded by appropriations:
      • 4.4.2.1Except where the Treasury Board has authorized the department to set rates directly; and
    • 4.4.3Ensuring that rates set for services to Crown corporations or non-federal organizations are consistent with the mandate of the department and do not exceed the full cost to government of providing the service.
  • 4.5Senior departmental managers are responsible for the following:
    • 4.5.1Working with the CFO to ensure that the fees charged are reasonable and within the department’s authority;
    • 4.5.2Estimating the cost to deliver the service;
    • 4.5.3Ensuring that a written agreement is established and approved by authorized representatives of both departments before services are provided. The written agreement must define the following:
      • 4.5.3.1The cost of the service and the rate;
      • 4.5.3.2The service standard; and
      • 4.5.3.3All relevant accountabilities.
    • 4.5.4Ensuring that invoices to client departments have sufficient detail to support client Financial Administration Act section  34 certification.

Internal charging for internal support services (section 29.2 of the Financial Administration Act)

  • 4.6CFOs are responsible for the following:
    • 4.6.1Ensuring that interdepartmental charges are made to recover an amount that is equal to or less than incremental costs incurred in providing services, except where:
      • 4.6.1.1Charges may be waived where the cost of providing services to the other department is not material.
  • 4.7Senior departmental managers are responsible for the following:
    • 4.7.1Ensuring that the arrangements between collaborative departments do not result in the transfer of services that are subject to specific legislation or other Treasury Board direction;
    • 4.7.2Ensuring that the proposed activities are administrative in nature and support one of the services listed under section 29.2(4) of the Financial Administration Act;
    • 4.7.3Working with the CFO to ensure that the amounts charged are reasonable and within the department’s authority;
    • 4.7.4Ensuring that a written agreement is established and approved by authorized representatives of both departments before services are rendered. The written agreement must define the following:
      • 4.7.4.1The method that will be used to determine the cost of the service;
      • 4.7.4.2The service standard; and
      • 4.7.4.3All relevant accountabilities.
    • 4.7.5Ensuring that invoices to client departments have sufficient detail to support client Financial Administration Act section 34 certifications.

Revolving funds

  • 4.8CFOs are responsible for the following:
    • 4.8.1Ensuring that separate accounts are maintained for each revolving fund;
    • 4.8.2Ensuring that financial statements are prepared annually for each revolving fund in accordance with the Government of Canada Accounting Handbook, and with the Public Sector Accounting Standards and the Public Sector Guidelines issued by the Chartered Professional Accountants of Canada (CPA Canada);
    • 4.8.3Establishing and implementing processes for developing and updating the business plan;
    • 4.8.4Ensuring that an annual assessment of the operational and financial performance of the fund occurs in relation to the business plan, and ensuring that remedial actions are taken, if required;
    • 4.8.5Ensuring that the fund will be self-sufficient over its business cycle; and
    • 4.8.6Informing the Treasury Board of Canada Secretariat of any significant changes in the operating environment or in the fund’s financial performance.
  • 4.9Senior departmental managers are responsible for the following:
    • 4.9.1Ensuring that the business plan is regularly reviewed and updates are provided annually to the CFO;
    • 4.9.2Ensuring that interest is charged for the use of the drawdown authority;
    • 4.9.3Ensuring that Treasury Board approval is obtained prior to seeking parliamentary approval for any matter relating to a revolving fund;
    • 4.9.4Ensuring that Treasury Board approval is obtained for planned changes to key operating aspects of the fund, including changes to the following:
      • 4.9.4.1The scale and materiality of the activities of the revolving fund;
      • 4.9.4.2Resources or assets transferred to or from the fund, or obligations assumed or relinquished by the fund;
      • 4.9.4.3The elements of direct or indirect costs to be charged to the fund, or the basis for allocating indirect overhead costs to the fund; and
      • 4.9.4.4The basis of fees or rate setting.

Vote netted revenues

  • 4.10CFOs are responsible for the following:
    • 4.10.1Ensuring that vote wording is provided to the Treasury Board of Canada Secretariat for inclusion in appropriation acts;
    • 4.10.2Seeking parliamentary approval on an annual basis for vote netted revenue authority through an appropriation act;
    • 4.10.3Implementing internal controls to ensure that respendable revenues are used to offset related expenditures incurred in the same fiscal year;
    • 4.10.4Ensuring that revenues are recorded as non-respendable revenue when they are not related to expenditures incurred to provide the service;
    • 4.10.5Seeking Treasury Board approval to offset expenditures using respendable revenue amounts received in a fiscal year in excess of 125% of the amount approved by Treasury Board in the Estimates process; and
    • 4.10.6Ensuring that recoveries of expenditures that are charged to the capital vote are recorded as non-tax, non-respendable revenues.
  • 4.11Senior departmental managers are responsible for the following:
    • 4.11.1Ensuring that an authority to charge has been confirmed and that Treasury Board approval is obtained for the use of specified revenues to finance activities or programs when seeking vote netted revenue authority from Parliament.

Special purpose money

  • 4.12CFOs are responsible for the following:
    • 4.12.1Obtaining approval from the Receiver General before accepting the related special purpose money when:
      • 4.12.1.1A new account for special purpose money is established;
      • 4.12.1.2A change in the authority is required; or
      • 4.12.1.3The purpose of an existing account has changed;
    • 4.12.2Ensuring that the use of special purpose money:
      • 4.12.2.1Is restricted to payments to third parties or other government departments and, when authorized, temporary costs related to administering the fund; and
      • 4.12.2.2Is not transferred to other accounts within the department;
    • 4.12.3Once the purpose associated with special purpose money is achieved, ensuring that:
      • 4.12.3.1Any balance in the account is returned to the other party; or
      • 4.12.3.2If there is no obligation to return the funds to the other party, the balance is transferred to a non-tax, non-respendable revenue account; and
      • 4.12.3.3The Receiver General is informed and the account is closed.
  • 4.13Senior departmental managers are responsible for the following:
    • 4.13.1Accepting special purpose money only when the specified purpose is within the department’s mandate.

Receipts that are respendable

  • 4.14CFOs are responsible for the following:
    • 4.14.1Ensuring that receipts, excluding situations detailed in Appendix A, are credited to only the following:
      • 4.14.1.1Statutory appropriations if listed in Appendix A; or
      • 4.14.1.2Lapsing appropriations if listed in Appendix A:
        • 4.14.1.2.1Otherwise, the receipt should be recorded as a refund of a previous year’s expenditure.

Other government department (OGD) suspense accounts

  • 4.15CFOs are responsible for the following:
    • 4.15.1Ensuring that OGD suspense accounts are used only when the department is administering a program on behalf of another department;
    • 4.15.2Ensuring that a written agreement that clearly establishes all relevant accountabilities and identifies all delegation of financial authorities, is approved by authorized representatives of both departments before funds are transferred to the administering department;
    • 4.15.3Ensuring that the funding has been recorded in the OGD suspense account before any expenditures are incurred;
    • 4.15.4Ensuring that the OGD suspense account balance is zero at the end of the fiscal year by returning surplus funds to the partner organization.
  • 4.16Senior departmental managers are responsible for the following:
    • 4.16.1Confirming with the Privy Council Office that the nature, materiality and duration of the planned arrangement do not warrant a change in the machinery of government.

5. Roles of other government organizations

  • 5.1Not applicable.

6. Application

  • 6.2This directive is issued pursuant to the authorities indicated in sections 7 and 39 of the Financial Administration Act and sections 4, 7, 17 and 20 of the Service Fees Act. The following exemptions apply:
    • 6.2.1If sections 4 to 6 (service standards) of the Service Fees Act do not apply, subsection 4.3.2 of this directive does not apply;
    • 6.2.2If section 7 (remissions) of the Service Fees Act does not apply, subsection 4.2.4 of this directive does not apply; and
    • 6.2.3If section 17 (Consumer Price Index) of the Service Fees Act does not apply, subsections 4.2.5.1 and 4.2.6 of this directive do not apply;
  • 6.3Except as otherwise provided in this directive, all other requirements of this directive apply, regardless of whether the Service Fees Act applies.

7. References

8. Enquiries

Appendix A: Standard on receipts that are respendable pursuant to section 39 of the Financial Administration Act

A.1 Effective date

  • A.1.1These procedures take effect on .
  • A.1.2These procedures replace portions of the Directive on Receipt, Deposit and Recording of Money ().

A.2 Procedures

  • A.2.1These procedures provide details on the requirements set out in subsection 4.14 of the Directive on Charging and Special Financial Authorities.
  • A.2.2Mandatory procedures are as follows:
    • A.2.2.1Exclusions: Receipts may not be credited to a lapsing appropriation or a statutory appropriation when they are for the following:
      • A.2.2.1.1A revolving fund;
      • A.2.2.1.2Revenues under a vote netted authority; or
      • A.2.2.1.3Special purpose money;
    • A.2.2.2Lapsing appropriations: Receipts may be credited to a lapsing appropriation if charged in the same fiscal year as the original disbursement. The receipt against which the related expenditure (advance or payment) was charged must fall within one of the following situations:
      • A.2.2.2.1Recovery of an overpayment to a supplier;
      • A.2.2.2.2Recovery of a duplicate payment issued to a supplier;
      • A.2.2.2.3Recovery of an erroneous payment to a supplier;
      • A.2.2.2.4Recovery of delinquent account travel card charges that are paid on behalf of the cardholder by the department and recovered from the cardholder or employee;
      • A.2.2.2.5Repayment of an accountable advance;
      • A.2.2.2.6Repayment of a repayable contribution as described in the Directive on Transfer Payments;
      • A.2.2.2.7Refund from the return of goods;
      • A.2.2.2.8Refund of sales or excise taxes and custom duties;
      • A.2.2.2.9Refund of an advance payment;
      • A.2.2.2.10Refund resulting from the settlement of contractual disputes;
      • A.2.2.2.11Refund resulting from a manufacturer’s rebate, price reduction, volume discounts or other price adjustment;
      • A.2.2.2.12Refund resulting from a landlord’s rebate representing a cash lease incentive where a government department is a lessee;
      • A.2.2.2.13Payment received further to an indemnification;
      • A.2.2.2.14Payment received following a claim for loss of or damage to a Crown asset;
      • A.2.2.2.15Rebate resulting from contractual arrangements;
      • A.2.2.2.16Reimbursement from an organization for its agreed share of costs further to a cost-sharing arrangement;
      • A.2.2.2.17Repayment of travel expenses such as personal stopovers and side trips for which charges were included in a departmental invoice but that are the responsibility of the employee or traveller; and
      • A.2.2.2.18Repayment by employees of expenses of a personal nature, such as cellular telephone charges, for which payment was made by the department.
    • A.2.2.3Statutory appropriations: The following receipts may be credited to a statutory appropriation in the fiscal year they are received:
      • A.2.2.3.1Refund of an expenditure;
      • A.2.2.3.2Recovery of an overpayment;
      • A.2.2.3.3Repayment of an advance; and
      • A.2.2.3.4Repayment of a budgetary loan that was originally charged to the statutory appropriation.

Appendix B: Definitions

department (ministère)
A “federal entity,” as defined in the Service Fees Act, or “department,” as defined in the Financial Administration Act.
enterprise services (services intégrés)
Services offered by departments that have the mandate to provide services across government (formerly referred to as common service organizations).
fee (frais)
An amount charged for the provision of a service, use of a facility, product, regulatory process, regulatory scheme, or conferral of a right or privilege (licence, permit or other authorization).
fee set by contract (frais établis par contrat)
A fee established under a contract between a department (as defined in section 2 of the Financial Administration Act) and an external party.
full cost to government (coût total pour le gouvernement)
The sum of all costs (direct and indirect) incurred by the government in the supply of a good, service, property, or right or privilege.
incremental cost (coûts différentiels)
An increased cost to a supplier’s appropriation resulting from an additional requirement to provide additional goods or services.
other government department suspense account (OGD suspense account) (comptes d’attente d’autres ministères)
An account that allows a funding department to temporarily record funding for an administering department to access and incur expenditures on their behalf.
periodic fee adjustment (rajustement périodique des frais)
A fee adjustment that is made according to an established frequency, based on a specific rate, formula or other factor, other than by section 17 of the Service Fees Act.
related expenditures (dépenses afférentes)
Expenditures charged against a departmental spending authority that supports the program that produces revenues where the department has the authority to use revenues to offset related expenditures.
remission (remise)
The reimbursement to a fee-payer of a fee or portion of a fee paid in respect of a service, use of facility, right or privilege or regulatory process, for which the department determines the service standard was not met.
revolving funds (fonds renouvelables)
Funding mechanisms in which revenues remain available in order to finance continuing operations without fiscal year limitations. In the Government of Canada, revolving funds are used as alternative means of providing funding for specific purposes. The use of revolving funds is appropriate for large, distinct activities that provide client-oriented services where costs can be financed from revenues over a reasonable business cycle.
service standard (norme de service)
A public commitment to provide a service, use of a facility, regulatory process, or conferral of rights and privileges, in a way that is measurable and relevant to the fee-payer under normal circumstances. The performance standard referred to in the Service Fees Act is the equivalent of a service standard.
special purpose money (fonds destinés à des fins déterminées)
Monies received or collected from outside parties and deposited in the Consolidated Revenue Fund pursuant to subsection 21(1) of the Financial Administration Act. The money may be disbursed only for the purpose specified in the instrument (such as, act, trust, treaty, undertaking or contract) under which it is received. There has to be a direct link between monies received and monies disbursed, including any interest that may be authorized.
vote netted revenue (revenus nets en vertu d’un crédit)
A lapsing parliamentary authority, provided through an appropriation act under the authority of section 29.1(2) of the Financial Administration Act, that allows a department to spend revenues it receives in a fiscal year through the conduct of its operations to offset related costs incurred in the same fiscal year. This authority is an alternative means of financing activities, which permits departments to finance program or activity costs, either in whole or in part, while any remainder is financed by appropriations.

© His Majesty the King in Right of Canada, represented by the President of the Treasury Board, 2017,
ISBN: 978-0-660-30514-1

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