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The Canada Revenue Agency (CRA) touches the lives of every Canadian, not only by collecting taxes, but by administering benefit programs on behalf of federal, provincial, and territorial governments. We are the single largest funding source for government programs and services. Our performance as an organization is key to maintaining the high levels of confidence in the government, its programs and services, and ensures that individuals and businesses are able to meet their obligations.
As a demonstration of our commitment to service and accountability, in 2007-2008 the CRA introduced the Taxpayer Bill of Rights, a service complaints process, and Canada's first Taxpayers' Ombudsman has been appointed to respond to service concerns from the public. These steps will help maintain the high level of confidence that Canadians have in the CRA.
We made rogress in actioning commitments to reduce the compliance burden for small and medium sized business, as identified in the Report of the Canada Revenue Agency's Task Force on Small Business Issues, published in April 2007. The CRA is committed to implementing all of the initiatives identified in this report and sustaining the focus on burden reduction in the years to come.
As Minister of National Revenue, I am proud of what we have accomplished over the past year to improve the social and economic well-being of Canadians, and I am confident that we will continue with our high level of service, accountability, and compliance in order to protect Canada's revenue base.
The Canada Revenue Agency (CRA) is a national organization that has extensive contact with Canadian citizens and businesses. In 2007-2008, we continued to take full advantage of our legislative flexibility in order to deliver efficient programs and services and pursue partnership opportunities that result in overall savings to the public purse.
As Commissioner and Chief Executive Officer, I am accountable to the Minister of National Revenue for all program matters, and to our Board of Management for administrative matters. I am proud to report that we have once again demonstrated our capacity to achieve meaningful and measurable results for Canadians.
We finalized implementation of the Corporate Tax Administration for Ontario initiative, which will lead to a simpler and more efficient corporate tax system for businesses. We also continued to make progress in actioning commitments to reduce the compliance burden for small and medium sized business, as identified in the Report of the Canada Revenue Agency's Task Force on Small Business Issues, published in April 2007.
We maintained our focus on areas that have high rates of non-compliance, such as the underground economy, aggressive tax planning, and Goods and Services Tax/Harmonized Sales Tax (GST/HST). We have increased our audit work to counter aggressive tax planning and we conducted several specific pilot projects aimed at uncovering GST/HST fraud. In addition to the steps we are taking in the area of compliance, we are also improving service to make it simpler and easier for individuals and businesses to meet their tax obligations. In 2007-2008, we improved our electronic service offerings that allow us to more effectively deliver services, increase overall accessibility of tax information and provide more options for Canadians to interact with us.
In May of 2007, we introduced our new formalized service complaints resolution process that will provide individuals, businesses and benefit recipients an additional level of confidence in the way we handle service-related complaints. Concurrently, our Minister announced the new Taxpayer Bill of Rights and the creation of the Taxpayers' Ombudsman. We remain committed to providing taxpayers the means by which they can be heard and have their issues resolved. Our new service complaints resolution process will strengthen our ability to respond to service-related issues.
Our reputation as a world class tax administration is well earned and we are proud of our accomplishments over the past year. As we move forward, I remain confident in the dedication, knowledge and professionalism of our employees to deliver quality results that matter to Canadians.
This document has been prepared based on the reporting principles contained in the Guide for the Preparation of Part III of the 2007–2008 Estimates: Reports on Plans and Priorities and Departmental Performance Reports:
As the principal tax administrator for the Government of Canada, our primary responsibility is to protect Canada's revenue base. In 2007-2008, we collected almost $372 billion on behalf of the Government of Canada, the provinces (except Quebec), the territories, and certain First Nations governments.
Our Tax Services strategic outcome measures gauge taxpayers' behaviour in meeting their tax obligations. In 2007-2008, the majority of Canadian individuals, businesses, and employers continued to meet their filing obligations. The percentage of taxable incorporated businesses that filed on time, however, continued its slight downward decline from 86.4% to 85.8%. We cannot provide filing compliance information on GST/HST returns at this time as comprehensive data from our GST/HST systems is not available.
Our remittance compliance measures reflect the degree to which taxpayers paid all taxes owed on or prior to their payment deadline. Remittance compliance by individuals continued to be high, while the number of employers who forwarded at-source deductions improved by over a percentage point from last year to 89.2%, reversing the slight downward trend of the past few years in this segment. Timely remittance compliance by corporations, however, continues to need improvement.
Macro-indicators related to reporting compliance indicate that, on the whole, income reported to the CRA tracks favourably against external and internal benchmarks, contributing to our assessment that the majority of taxpayers report complete and accurate information on their tax returns.
Our Tax Services strategic outcome measures, along with our overall positive performance against our expected results, lend support to our assessment that we promoted compliance with taxpayer obligations and that Canada's revenue base was protected.
In addition to our role as tax administrator, we are the delivery agent for various income-based benefits, credits, and other services that contribute directly to the economic and social well-being of Canadians. In 2007-2008, we issued 99.99% of these payments on time. We also leveraged our infrastructure to administer additional benefits, one-time payment programs, and other services on behalf of provinces, territories, and other federal departments. The results we achieved in 2007-2008 allow us to conclude that we met our benefit strategic outcome – namely, that eligible families and individuals receive timely and correct benefit payments.
The CRA is empowered with a unique governance regime that designates distinct responsibilities and accountabilities to our Minister, Board of Management, and Commissioner. In 2007-2008, the Treasury Board of Canada Secretariat's (TBS) assessment of the CRA's management performance (by means of their Management Accountability Framework) produced positive results. To complement the TBS framework and to support the Board in its oversight responsibilities, the Board of Management Oversight Framework was developed in 2007-2008 and the results were positive. The results of these two assessments provide Canadians with the assurance that management excellence is being achieved in the CRA.
We use qualitative and quantitative indicators to determine the results we achieved in terms of our strategic outcomes and expected results. Survey results, statistical sampling, and operational data support our assessments.
We also rate our strategic results and those of our program activities in terms of whether the targets identified in our Corporate Business Plan 2007-2008 to 2009-2010 were met, mostly met, or not met. The “Results Rating” table below defines these terms.
In conjunction with the performance results ratings, we also assign each indicator a data quality rating. For additional information on our Data Quality Ratings, see Section IV: Other Items of Interest.
The Program Activity Architecture depicted below, identifies our program activities (PAs) and demonstrates how they link to our strategic outcomes. This framework is based on the Management, Resources and Results Structure established by the Treasury Board of Canada Secretariat on April 1, 2005.
Program activities are groups of related activities that are designed and managed to meet a specific public need, and that are often treated as a budgetary unit. Each program activity is articulated to reflect how we allocate and manage our resources in order to achieve intended results.
The CRA's mandate reflects the broad role that the Agency plays in the lives of Canadians. The CRA contributes to two of the Government of Canada's Strategic Outcomes: Federal organizations that support all Government of Canada outcomes and Income Security and Employment for Canadians.
Total Spending[Footnote 1]
The “Agency Priorities” table identifies the strategic objectives of the CRA. These objectives are discussed in the section 1.5.6 on entitled “Summary of Agency Performance”. Additional details concerning sub-activity achievements related to these strategic objectives are provided in Section II: Analysis of Program Activities by Strategic Outcome, beginning on .
Virtually all public goods and services that enhance the quality of life of Canadians are funded by taxes. As Canada's principal tax administrator, the CRA plays a pivotal role in ensuring that Canada's revenue base is protected.
Canada's tax system is based on voluntary compliance and self-assessment, which, we believe, is the most cost-effective way to administer taxes. Taxpayers are expected to determine their own liability under the law and then pay the correct amount of tax, without our intervention. This means that taxpayers are required to do the following:
People find it easier to participate in Canada's tax regime when the system is accessible, service is timely, and tax information is accurate. In turn, this promotes voluntary compliance and helps prevent compliant taxpayers from slipping into unintentional non-compliance. Our service improvement initiatives are intended to enable Canadians to self-assess and file their tax returns easily.
Over the past fiscal year, the CRA continued its focus on non-compliance that threatens to erode Canada's revenue base. This included areas in which our 2004 Compliance Review identified as key priority risk areas. As indicated in our Corporate Business Plan 2007-2008 to 2009-2010, these areas are aggressive tax planning, the underground economy (UE), GST/HST high-risk compliance, non-filers/non-registrants, and remittance non-compliance (collections).
The CRA is committed to administering a tax system that is fair and just. Consequently, when taxpayers disagree with us, we provide them with the opportunity for redress. The availability of such a dispute resolution process is central in safeguarding taxpayers' trust and confidence in the integrity of Canada's tax regime. We provide taxpayers with avenues for resolution when differences arise regarding tax liability or if there are complaints regarding our services.
In addition, legislated taxpayer relief provisions have permitted the CRA, in certain situations, to be more flexible and responsive to taxpayers' circumstances when it would be unreasonable or unfair to penalize them. Our aim is to ensure that all taxpayers have access to timely and impartial redress, as discussed in our section on Appeals (see PA5 on ).
On May 28, 2007, the Minister of National Revenue announced two new redress initiatives, a Taxpayer Bill of Rights and a Taxpayers' Ombudsman. We take every opportunity possible to inform taxpayers of their rights and we are committed to responding promptly to enquiries from the office of the Taxpayers' Ombudsman.
We believe that such improvements to Canada's tax redress regime increases taxpayers' confidence in the CRA's tax administration and enhances our capacity to protect Canada's revenue base, which is a benefit to all Canadians.
We use our strategic outcome measures to gauge the compliance behaviour of Canadian taxpayers. Using data from internal and external sources as a baseline of compliance information, we group these indicators into the following four broad categories of taxpayer obligations to help us measure and assess our results against our Tax Services strategic outcome.
To facilitate further analysis of compliance behaviour, we partition the Canadian taxpayer population into the following types: individuals, self-employed individuals, corporations, GST/HST registrants, and employers. Also included are macro-indicators, which we use to evaluate reporting compliance trends.
Our Indicators[Footnote 1]
Random Audits – Small and Medium Unincorporated Business Filers[Footnote 2]
Businesses that collected GST/HST[Footnote 1]
Our measure of taxpayers' filing compliance indicates that filing compliance with Canada's tax laws continued to be high in 2007-2008. While we do not have a registration compliance rate for 2007-2008, trend data for registration compliance over the past number of years, coupled with the results from our Non-Registrant area, provides us with a sufficient level of confidence that there remains a high level of registration compliance by Canadian businesses. Our estimates of non-compliance in reporting for 2007-2008, which provide the foundation for our overall assessment, indicate that, for the majority of Canadians, the incidence and magnitude of this non-compliance is relatively low, though financially significant. Although we recognize that improvements continue to be needed in the area of remittance compliance, we believe that our debt management research will help to inform our future strategies implemented through our IRC project, to manage our tax debt inventory, and to promote remittance compliance.
Each year we provide benefits, credits, and other related services that assist families and children, low-and moderate-income households, and persons with disabilities. The flexibility of our core systems allows us to administer and deliver programs on behalf of federal, provincial, and territorial governments.
We also provide data exchange and data transfer services to an increasing number of government clients. These services support other federal government departments as well as Canada's provinces and territories to simplify the administration of their income-tested benefit and payment programs.
We believe, when individuals fully understand what they need to do to meet eligibility requirements, that they will comply with benefit obligations. Consequently, we provide benefit recipients with information, tools, and services that are accessible through a variety of channels: our telephone service, proactive outreach efforts, and Web sites that provide information and allow benefit recipients to do transactions online.
During 2007-2008, the number of visits to our Web site pages increased, as it has in past years. The positive reception of our new online service—Apply for child benefits—as evidenced by the high take-up rate, supports our assertion that the use of electronic services aids in the efficient and effective delivery of our programs and services.
To ensure a high compliance rate among benefit recipients, we are systematically implementing elements of a long-term benefits-specific compliance strategy, which is based on education, facilitated compliance, and the maintenance of a credible enforcement presence.
Our activities in validation and controls are wide ranging in scope. We validate marital status, children in care, addresses, and income information to maintain the integrity of benefit and credit programs. The information provided to recipients during validation reviews helps to inform and educate individuals about their eligibility and entitlement requirements. Although overall compliance is high, we continue to identify and address areas of concern.
To enable future assessment of compliance trends, benchmarks are established through specific validation projects. The consistent review and comparison with the base data allows timely recognition of changes and the prompt introduction of strategies, as required, to address them.
Achievement: In 2007-2008, we successfully increased the number of programs and services that we delivered on behalf of other government clients from 72 to 77, which increased our contribution to government economic efficiency.
We measure our progress toward accomplishing our strategic outcome with three major indicators: payment timeliness, payment accuracy, and the number of services delivered on behalf of federal, provincial, and territorial governments.
Our administration and delivery of timely and accurate benefit programs and services provides a key service to Canadians each year. Our work as a national agency benefits both our government clients and the citizens they serve: governments enjoy lower administration costs and more effective compliance; citizens receive more comprehensive and better-integrated benefits and services that are simpler for them to use.
To ensure that the CRA's tax and benefit services have the guidance, infrastructure, and resources needed for successful delivery, our interrelated human resources, information technology, and other management strategies must be fully integrated. During 2007-2008, we made key investments in our infrastructure to enhance our effectiveness. We were also active in modernizing our service delivery to take advantage of emerging technology while continuing to develop a knowledgeable, professional, and values-driven workforce.
The CRA is empowered with a unique governance regime that designates distinct responsibilities and accountabilities to our Minister, Board of Management, and Commissioner/Chief Executive Officer. In 2007-2008, our management performance was assessed through two means: the Management Accountability Framework (MAF) assessment conducted by the Treasury Board of Canada Secretariat (TBS), and the Board of Management Oversight Framework (BoMOF) assessment conducted by the Board. These two separate assessments ensured that several indicators falling under the legislated authorities of the Board, and not assessed by TBS, were addressed.
The 2007-2008 TBS MAF assessment contained positive results. Of the eleven indicators against which the CRA was assessed, we received three “strong” ratings and eight “acceptable” ratings. Although the CRA was found to be at or above the federal public sector norm for all of the indicators against which we were assessed, TBS identified two areas in which we could strengthen management practices: our corporate performance framework, and financial management and control. We are committed to addressing these areas in the coming year.
As an important element in both the MAF and BoMOF assessments, TBS and the Board each consider risk management to be key to the sound overall administration of the CRA. In March 2006, our Enterprise Risk Management Policy was established to ensure risk management is applied in a consistent and systematic manner at the corporate, operational, and project levels.
Our Corporate Risk Inventory 2007, which is a snapshot of the CRA's risk status, was one of the sources used in establishing our 2007-2010 Corporate Audit and Evaluation Plan. The CRA Corporate Risk Inventory 2007 was also a key tool used by senior management during its 2007-2008 strategic planning deliberations and related decision-making.
Two of these top risks—non-compliance with tax legislation and growth in debt—are discussed in the CRA Annual Report to Parliament: http://www.cra-arc.gc.ca/gncy/nnnl/menu-eng.html. Results achieved in 2007-2008 related to our top information technology risks are discussed below.
The CRA collects and processes large amounts of data. Our information technology infrastructure must support the achievement of our strategic outcomes, the confidentiality of taxpayer information, and meet Canadians' expectations for electronic services.
Our information technology infrastructure is currently housed in data centres, where we maintain all critical tax and benefits data, applications, and electronic services delivered by the CRA to Canadians. Our national network and distributed technology infrastructure connects all sites and supports our workforce. During 2007-2008, the following steps were taken to ensure our primary service channels are secure and reflect the high standards of the Government of Canada:
In addition, to enable us to maintain our capacity to meet the expectations of Canadians, we put in place a strategy to assess our software and to identify those applications that are not sustainable for the long-term. Steps such as these are critical to ensuring that we meet our current and future compliance and service delivery needs in a timely and effective manner.
The confidence Canadians have in the CRA's integrity is fundamental to our success in administering tax and benefit programs. Since 2000, we have conducted an annual survey to assess Canadians views towards the CRA and their satisfaction with specific program aspects. Our 2007 Annual Corporate Survey reveals that we have been successful over the past year in maintaining a positive public image. The number of Canadians that rate our overall performance as “excellent” or “good” has increased three percentage points over 2006. Canadians' satisfaction with their most recent service experience, however, has marginally decreased. As in past years, negative attitudes continue to be linked to general perceptions about the CRA, about the federal government as a whole, and about taxation in general, rather than to any specific service-related difficulties encountered.
Achievement: In 2007-2008, we promoted our brand promise: Contributing to the well-being of Canadians and the efficiency of government by delivering world-class tax and benefit administration that is responsive, effective and trusted.
We began to implement our branding strategy along a number of fronts: raising employee awareness; introducing a consistent visual identity for the organization; and developing an internal governance structure to further implementation efforts.
The Federal Accountability Action Plan brought forward thirteen specific measures to help strengthen accountability and increase transparency and oversight in government operations. Consequently, we developed a three-year Chief Executive Officer (CEO)/Chief Financial Officer (CFO) certification process during 2007-2008 that involves the identification, documentation, and testing of internal controls. The information generated will allow our CEO or CFO to answer specific Parliamentary questions related to the management of the CRA, such as the effectiveness of our internal controls.
We also continued to build our capacity for assessing and reporting on internal controls over financial reporting. In this regard, we released the first Report on the CRA's Controls relating to the Corporation Income Tax Program. This report provides assurance to provincial and territorial governments of the reliability of CRA's financial reporting.
Our Capital Investment Project Management reporting process was created to provide the Board with quarterly reports on major project delivery performance, including scheduling, cost, and scope. This provides assurance that risks have been identified and appropriate mitigation strategies have been applied to safeguard the CRA's assets and reputation.
Keeping taxpayer information secure is also key to maintaining the trust of taxpayers. All negotiations of new information exchange agreements with partners include a review of the recipient organization's security policies and processes. In addition, the recipient organization must agree to perform a regular internal audit review of the use, communication, retention, and disposition of the taxpayer information in question, and to report its findings to the CRA.
We constantly remind our employees of their responsibilities to protect such information; in 2007-2008, we provided 457 security awareness sessions to a total of 10,048 employees. In addition, we undertook the following initiatives this past year to prevent our employees from inappropriate access to protected information.
As with all federal departments and agencies, the CRA is subject to the provisions of the Access to Information Act and the Privacy Act. These Acts give Canadians the right to access information that is under the control of a government institution within legislated timeframes.
In October 2006, a significant step was taken by the federal and Ontario governments to increase the harmonization of the tax systems in Canada, reduce compliance costs for businesses, and reduce administration costs for governments with the signing of the agreement to transfer the administration of Ontario corporate tax to the CRA. This agreement will save Ontario businesses up to $100 million annually in reduced compliance costs.
To deliver our tax and benefits programs, we require a diverse and adaptable workforce with strong leadership and superior technical expertise. In June 2007, the Clerk of the Privy Council introduced his 2007-2008 Public Service Renewal Action Plan (PSRAP), which identified key priorities for ensuring the federal Public Service meets future challenges. Our human resources agenda is well positioned to respond to the needs of our business while being aligned with the PSRAP.
This past year, we developed the first annual Canada Revenue Agency Workforce Plan (AWP), which integrates workforce and business planning through such steps as increasing the mobility of work to benefit from employees' knowledge and experience and meet our business needs, promoting employee movement across various business lines, and building an effective and strategic recruitment approach.
Attracting new and excellent talent will help ensure that we can continue to respond to the evolving needs of Canadians. In 2007-2008, we set a target of recruiting 165 indeterminate post-secondary graduates. We surpassed this goal by appointing 249 post-secondary graduates to indeterminate positions, through initiatives such as our Auditor and Aboriginal Tax Officer Apprenticeship programs.
We must continue to invest in our employees to ensure that they have the necessary skills and competencies. We achieved our 90% target for putting in place learning plans for our indeterminate employees. This result is a significant increase from 67% achieved in 2006-2007.
Leadership development is essential for the effective management of the CRA. In 2007-2008, approximately 150 employees participated in our corporate management development programs. We also expanded delivery of our Management and Leadership Program courses and, as a result, over 2,600 participants attended learning events.
For any organization, relationships between the employer and its employees must remain positive for business goals to be met. On December 3, 2007, an historic milestone was achieved when the CRA signed a new collective agreement with the Public Service Alliance of Canada that was negotiated before the expiration of the former collective agreement. A key component of this agreement was the pay negotiation for our Services and Programs (SP) group, which replaced 16 former occupational groups for approximately 25,000 employees.
Our staffing-related Pre-Qualification Process (PQP), which involves standardized assessments, is a critical part of building our organizational capacity. In 2007-2008, we made PQP mandatory for our internal selections process, resulting in an increase of 8% in the cumulative average time to staff (compared to 2006-2007). Our intention is to reduce the average staffing time.
During the past year, we delivered on our management priorities through our strong performance, timely and responsive decision-making, a fully accountable senior management culture, and improved planning and reporting, thereby contributing to the effective governance of the CRA. Based on our achievements this past year related to our priorities, as well as the steps we took to strengthen our management infrastructure, we believe that we effectively responded to the CRA's strategic outcomes for both the administration of Canada's tax laws and the delivery of benefits.