Finance Committee on June 21st, 2006

[Rick Dykstra, Conservative, St. Catharines, ON]

Yes. “Rendering consistent, predictable decisions. Consistent decision-making is critical to a just, defensible application of tax laws and regulations.”

[Everett Colby]

If you want specifics, I'm not sure if I can provide them, due to the confidentiality and privacy laws we're now all subject to.

Our firm has offices across Canada, and we compare notes on what people are experiencing from an audit perspective. We see this a lot when it comes to the rather contentious issue of employee versus self-employed--independent contractors. It's not a clearly defined decision to be made. When given a similar set of circumstances, you would expect that the decision would be similar no matter where you were. But in comparing our own cases that we have dealt with in different jurisdictions, we have seen, based on similar circumstances, that we're getting different decisions in Calgary, Toronto, Halifax, and Montreal. So there's a lack of consistency there.

[Rick Dykstra, Conservative, St. Catharines, ON]

One of the points you make with respect to number two is that there has been some consistency there. You've probably had a chance to review some of the Auditor General's recommendations. You point out--she did as well in her report when she was here on Monday to follow up on her December 2002 report--that the issue of personnel needs to be worked through. There seems to be an inconsistency that they're slowly working on, but from your perspective, how has it improved over the years, is there potential, and how would they improve?

[Everett Colby]

That's a somewhat difficult question to answer, because there are many different levels at which personnel operate.

I can say from personal experience that service from the front-line people when you call the 1-800 number is worse than it was before. But from a district manager level on up, it has perhaps become better, in that these people are actually now willing to speak with you if you request that the issue be elevated. Combine that with these advisory committees, where there has actually been open communication and sharing of ideas, and it's been quite refreshing. Whether we actually believe they're listening to everything we say might be a different story, but at least it allows for that communication and sharing of ideas.

There's another element I'd like to bring out on that consistency. This is something we are seeing more and more of. I'm not sure if it's a personnel issue or a practice issue, but people need this kind of reliability on the decisions. We're finding now that issues of objections and appeals that used to take three or four months, and then the taxpayer could move on, are now taking 18 and 24 months. It doesn't put the taxpayer in a position where they can even really comply with the current year, because it depends on the decision rendered on a previous appeal. So from an internal point of view, I don't know whether that's a personnel problem or a policy problem.

[Rick Dykstra, Conservative, St. Catharines, ON]

In your fourth recommendation you say, “the CRA's approach to risk management ought to better reflect that in the real world, honest mistakes can and do happen”. It's a good recommendation for all of us, regardless of what industry we're in. How would you implement that type of recommendation?

[Everett Colby]

My understanding is that they have attempted to develop a culture where these are not power brokers. When an auditor goes to a client they should treat them with respect; they're either a business person or an individual. Unfortunately, in an organization as large as CRA with the many staff they have, promoting that culture has not yet filtered all the way through.

I'm not extremely familiar with their own internal communication strategies, how they are trying to enforce them, or whether people's annual reviews and so forth are based in part on feedback provided in that regard. I would suggest that if your business model is based on client-driven service, you should be assessing what those people are doing, and not standing for anything less than the best. We're not getting that on a consistent basis at this point.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. Dykstra.

Mr. Christopherson is next for five minutes, sir.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

As you know, the formal purpose of this committee hearing is to follow a statutory requirement to do a review of the act. So straight out, do you have any actual recommendations per se that apply to the act itself that you'd recommend we look at for making changes?

[Everett Colby]

Absolutely.

[David Christopherson, NDP, Hamilton Centre, ON]

Okay, you'll be the first.

[Everett Colby]

There is an intent, both stated and implied, that CRA sees itself as becoming the sole tax-collecting authority for all forms of tax, over whatever period—five years or ten. I would suggest that this government limit the ability to do that, which I believe is allowed under the act.

When we have inconsistent decision-making now and not a complete level playing field with respect to the taxpayer and everything else, the thought of having an auditor come in to try to assess me on my property tax, my sales tax, my GST, my income tax, and whatever other tax there may be down the road.... That person cannot have expertise in all of those areas. I think it will actually be like the NHL expanding: you're going to water down the talent. You're therefore going to lose the effectiveness of some really good auditors who are GST experts, because they're going to waste time dealing with such things as sales tax or income tax, in areas where they don't have expertise.

[David Christopherson, NDP, Hamilton Centre, ON]

What I'll do is maybe leave it to the analyst to bring forward where that recommendation would actually apply in here—unless you have a hard recommendation to make, with actual language, which I'm not sensing you have.

[Carole Presseault, Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada]

No, we don't.

I have to say that as a national association we have 65,000 members, many on both sides of the income tax equation, many of them auditors at CRA. We have thousands and thousands of members, as we have thousands and thousands of practitioners, so for a national association it's sort of talking out of both sides of our mouths or staying comfortably on the fence.

One thing these hearings have allowed—and we're really pleased to be able to participate in them—is that the five-year review has been important to members on both sides and important to us as a professional association. Some of the questions you've posed are really important and applicable to the legislation. It is a good opportunity for us to engage our members in discussion and to look at their mandate and see whether in fact they're doing what they're setting out to do.

I look at it as a further method of accountability, if you wish.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you.

We had a presentation from the Canadian Federation of Independent Business. Mr. Colby, you've already touched on this, so you may just be expanding on it, but in their report they gave us...well, they gave us a lot of information, but two bits I want to refer to.

For one thing, they referred to how business owners viewed this service, from what it used to be to what it is. When they did it for 2001, they found that 5% thought the service was better; 59% said the same; 11% thought it was worse; and 25% didn't know. In 2004, it actually looks better, from the review point of view, in that 11% felt the service was better; 62% the same; 13% worse; but only 14% didn't know. So the gain went into those who thought it was better and a little bit to those who thought it was about the same.

Then they did another one. It was the same question, and the same two years, but it refers to tax practitioners, which would be you, of course. What I'm asking is whether this matches up with what you think, just to see whether we have consistency here.

In 2001, they showed that among tax practitioners—this was interviewing you, folks—11% thought it was better; 49% the same; 38% thought it was worse; 2% didn't know. In 2004, it went to 27% who thought it was better; then, down marginally by two points, 47% the same; but only 25%—not that this is a great number, but it's better than 38%—thought it was worse, so the number of those who think it's bad is getting smaller, and we're going in the right direction; and a marginal number didn't know.

Does that reflect what you think your members might say?

[Carole Presseault]

Actually, we used that data when we questioned. We held a number of focus groups with our members, our tax practitioners, and again, I have to talk about that questioning of the membership. It does coincide. There are a lot of complaints; because it is the taxman, there are a lot of complaints. But there are a few key messages that came out of those discussions. CRA is out there—there's a lot of outreach—and members feel very appreciative that they are talking with them and trying to seek their views on how to improve services. So that may be on that side.

I'm not saying all is well—and Mr. Colby has that front-line experience—but I'm saying yes, that would pretty much compare with what we heard through these focus groups.

[The Chair, Conservative, Brian Pallister]

Thank you.

I have three members in the next six minutes who would like to ask questions. My basic math skills tell me that's two minutes each.

Mr. Pacetti, to begin.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman.

Hello, Mr. Colby and Ms. Presseault.

I have a quick question. I have to state that I'm a CGA. I have a lot of dealings with the CRA, and I have my own personal opinion.

I want to understand who you're representing when you say there are 65,000 members. I understand there are a lot of CGAs who do work for Revenue Canada and that there are a lot who are tax practitioners. What percentage are we talking about, and who are we speaking for?

We also had the CFIB, and they were talking to accountants. I'm wondering if you also spoke to the CFIB. This is to try to put into perspective how many of your members are actually involved in some of the comments that were in your brief. I know it's a tough question.

I have my own personal opinion about CRA. I'm not sure if everybody does, but....

[Everett Colby]

We only have two minutes. I'll try to answer in the 30 seconds that we have left.

It depends on the question. There are some questions that would be industry-related. As far as personnel are concerned, there are a lot of CGAs and other professionals employed by CRA. That's been a positive thing with the changeover; it has allowed them to retain more professional talent.

So when we say things may not all be rosy, it's not necessarily from the skill level of the individuals, it may be more from a procedural level within the organization, in offering them improved training and so forth. Our comments, in many respects, are representing a vast majority of the membership.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

When you had the questionnaire, did it say, do you work for CRA, or are you a tax practitioner, and what are your problems? How do you get a feeling for what's going on out there? With 65,000 members, that's a pretty big membership group.

I know it's a tough question.

[The Chair, Conservative, Brian Pallister]

His time has elapsed--

[Carole Presseault]

Well, how do I answer? I hope we've run out of time. That is a big question.

[Everett Colby]

To give an example, we have a discussion list in Ontario that has over 1,000 members on it, most of whom are practitioners. So when I actually see the question and I say go forth and get feedback and then they come back, I can only assume it's a representative sample of the membership.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you.

[The Chair, Conservative, Brian Pallister]

We'll continue with a brief question from Monsieur Bouchard, s'il vous plaît.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chairman.

I would like to come back to the subject I raised earlier. Would it not be advisable to recommend improving or simplifying the entire income tax return process? That could have been part of your presentation. I would like to hear your opinion on that.