Finance Committee on May 7th, 2013

[Mark Perlman]

If it's the will of the committee, we can do that.

One thing I will add is that there are no reductions in the international audit program or the aggressive tax planning program in any of these reductions, and I think that's come out quite clearly.

[The Chair, Conservative, James Rajotte]

Thank you.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Mr. Chair, could I just ask, if he has supplementary information, that it be made available to the committee on this?

[The Chair, Conservative, James Rajotte]

Can you do that in your next round then? We're way over on this one.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Sure.

Thank you.

[The Chair, Conservative, James Rajotte]

We'll go to Ms. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

And I would like to thank the officials for coming.

Certainly, as you look towards doing your part in terms of the deficit reduction, you had the opportunity to look at how business had changed over time. As I look at how the people who I know file taxes, I look at legislation that has been put in place for accountants, in terms of how they file. Could you briefly talk a little bit about how things have changed and how that has provided an opportunity to refocus resources?

[Mark Perlman]

The way Canadians interact with this government is indeed changing in the way that you've described. Canadians are moving more into the electronic realm, and the CRA is changing to adapt with that as well. Over the last filing season we've noticed a tremendous increase in electronic filing overall. The point you were mentioning was the legislative change requiring tax preparers who file more than 10 returns to file electronically as opposed to on paper. This has made it much more efficient for the CRA to be able to do its business, and it has created savings.

We track these statistics as we go forward, and I can say that the CRA had actually a record day on April 30, which was the last day of the filing season, where over a million T1 returns were filed electronically. To date, about 80% of all personal returns that have been filed have been filed electronically. This is a tremendous increase in the electronic filing of returns overall.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Again, is it fair to say that if you have to mail out a paper copy...? We certainly have made them available, and then people have to return the paper copies. What happens to that paper copy when it hits the Canada Revenue Agency? I anticipate that you had numerous people inputting data. Can you talk a little about how that can have a dramatic impact in terms of how you have to staff?

[Mark Perlman]

Yes, absolutely. Actually, one of the statistics used by one of my colleagues who came to this committee previously—and I'll use the same statistic—is the cost of processing an electronic return versus a paper return.

When an electronic return is filed, it goes directly into our system. All of the checks and balances are there, and all of the security protocols are in place, but it doesn't require a manual intervention on the data entry point. When a paper return comes in, it has to go through the mail system. It has to go through our various mailrooms. It has to be opened, sorted, the paper and cheque separated—all of the elements.

When we did a rough costing of the direct costs associated with doing a paper return versus an electronic return, a paper return came out at about $3.50 to process. For an electronic return, it's about 80¢. That's an increase of about 75% in the cost of processing that return, which is a significant saving for the agency. All the way through, as the rate of our drive to electronic goes up, our costs go down, and we're able to focus on other things, such as enforcement.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Of course, we have a number of people here today who are from British Columbia, and I notice a significant change in the main estimates that relates to where B.C. has transitioned away from the HST. Can you talk a bit about that? Can you talk about how that transition has been done and where we're going to be? Are we complete with the transition?

[Mark Perlman]

Yes, the transition in regard to British Columbia is indeed complete.

Mr. Case will take over.

[Richard Case, Acting Deputy Assistant Commissioner and Agency Comptroller, Finance and Administration Branch, Canada Revenue Agency]

Yes. Obviously when the announcement was made, we ensured that we worked very closely with the Government of British Columbia to ensure a seamless transition back to their provincial sales tax. We've been implementing those changes over the last little while.

As of April 1, that transition was made. A number of provincial employees did join the agency, and they will be transitioning back to the Province of British Columbia as well over the coming year.

Thank you, Chair.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Ms. McLeod.

Mr. Brison, please.

[Scott Brison, Liberal, Kings—Hants, NS]

Thanks to both of you for joining us today. I commend you on your hard work at Revenue Canada. One of your former ministers, Elmer MacKay, when he was Minister of National Revenue, described his job as being like a cheerleader in a torture chamber.

[Voices]

Oh, oh!

[Scott Brison, Liberal, Kings—Hants, NS]

It's a tough job, and I commend you as public servants.

Here's my first question. This tax season, Canadians saw several cuts to front-line CRA services with the cancellation of TELEFILE, associated services for seniors, and the simplified return program, as well as an end to in-person counter service at 26 tax service offices across Canada.

Firstly, how are those cuts reflected in the main estimates? Secondly, what steps, if any, did CRA take to ensure that former TELEFILE clients were able to meet their filing obligations? What, if any, was the fiscal impact of those steps?

[Mark Perlman]

The areas you were mentioning, such as the counter services and TELEFILE, are areas where we as an agency noticed a steady decline in the uptake, or the number of Canadians who were using these services. As an example, out of the 25 million returns that were filed last year, only about 1% were filed using TELEFILE. For the counter services, only about 2.5% of all our contacts with Canadians were through our counters.

[Scott Brison, Liberal, Kings—Hants, NS]

Sure, but part of this is that seniors die at some point, so the number of seniors among your clients has to be declining. But for those seniors who are still alive, those services are quite important.

Have you considered the impact on them of these changes?

[Mark Perlman]

Let me start off by saying that we understand that not everyone is going to fit into a pattern of electronic interaction. As a result, we have left the door open for in-person service, through appointments if necessary.

[Scott Brison, Liberal, Kings—Hants, NS]

Well, the door isn't open at 26 tax service offices across Canada where in-person counter service has been eliminated. I agree with you: statistically—there's a demographic reality—seniors die. But they also live. And for those who are actually audacious enough to continue living, how are they going to be served by your agency if they don't have a computer?

[Mark Perlman]

As I was about to say, seniors still have the opportunity to use our telephone services and speak to our very well-informed service agents at our call centres. If their concerns aren't addressed, they can make an appointment for an in-person review.

[Scott Brison, Liberal, Kings—Hants, NS]

But there's been a cancellation of TELEFILE.

[Mark Perlman]

Of TELEFILE, yes, but our call centres are still very active, and they have strong hours over the tax season and throughout the year.

[Scott Brison, Liberal, Kings—Hants, NS]

Another change introduced last tax year was the decision to charge Canadians $25 if they get a tax professional's help to file a return.

How many Canadian taxpayers are likely to be affected by that change? What's the fiscal impact of that policy?

As well, have you considered the fact that some of those people who hire professionals are in fact seniors who may not be getting the service they'd previously received from your agency?