Finance Committee on Feb. 10th, 2009

Evidence of meeting #4 for Finance in the 40th Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was advertising.

A recording is available from Parliament.

On the agenda

Supplementary Estimates (B) 2008-2009: Vote 1b under CANADA REVENUE AGENCY and Votes 1b and 5b under FINANCE

MPs speaking

Also speaking

David Miller Corporate Services Branch, Department of Finance

Brian Ernewein General Director, Tax Policy Branch, Department of Finance

Paul Rochon Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance

Rob Stewart Director, Financial Sector Policy Branch, Department of Finance

Alfred LeBlanc Director, Federal-Provincial Relations and Social Policy Branch, Department of Finance

Jean-Michel Catta General Director, Consultations and Communications Branch, Department of Finance

Jim Haley Senior Advisor to the ADM, International Trade and Finance, Department of Finance

William Baker Commissioner and Chief Executive Officer, Canada Revenue Agency

James Ralston Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Filipe Dinis Director General, Resource Management Directorate, Finance and Administration Branch, Canada Revenue Agency

4:45 p.m.

Commissioner and Chief Executive Officer, Canada Revenue Agency

William Baker

It is easier for some companies to file their tax returns in foreign currency, for example, in US dollars, Euros or British pounds. The aim of this international trend is to facilitate business management. This will allow us to do everything we need to do in terms of tax administration, while respecting the currency used by the company.

4:45 p.m.

Bloc

Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC

Do you have a timeframe in mind for implementing this system?

4:45 p.m.

Commissioner and Chief Executive Officer, Canada Revenue Agency

William Baker

I believe the timeframe was 2008-2009.

4:45 p.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

James Ralston

I believe it's for the next tax year of the corporation that it will be implemented.

4:45 p.m.

Bloc

Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC

So you're looking at the next fiscal year.

4:45 p.m.

Commissioner and Chief Executive Officer, Canada Revenue Agency

William Baker

We've just checked and it's slated to start in 2009 for returns...

4:45 p.m.

Bloc

Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC

So then, you're talking about this fiscal year.

I have no further questions, Mr. Chair.

4:45 p.m.

Conservative

The Chair Conservative James Rajotte

You still have some time left.

4:45 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

How much time?

4:45 p.m.

Conservative

The Chair Conservative James Rajotte

Two minutes.

4:45 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

I'll use it then.

Good day, gentlemen. Since you are here, I'd like to take the opportunity to ask you for some information about gratuity workers. We are receiving a number of complaints from workers in certain regions, in Abitibi, and apparently in Montreal. Some gratuity workers are seeing a unilateral percentage of their tips taxed by the Canada Revenue Agency, over and above the standards in place.

I'd like to know if you determine the percentage of tips that will be taxed on the basis of a sectoral study targeting all of the businesses in each city? Or, do you decide what percentage of tips will be taxed, according to the type of business?

4:45 p.m.

Commissioner and Chief Executive Officer, Canada Revenue Agency

William Baker

No. Some time ago we established a policy whereby a certain percentage of tip earnings would be taxed. It is almost impossible to calculate the amount for each taxpayer working in the restaurant industry. I'm not sure how long ago it was, but some time ago, we decided that in order to simplify the system, to cut down on monitoring workers, it would be easier to come up with a percentage. This policy applies to all gratuity workers in Canada.

4:50 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

Do you apply the same percentage for each type of business.? For example, is there a specific percentage that applies to restaurant industry workers?

4:50 p.m.

Commissioner and Chief Executive Officer, Canada Revenue Agency

William Baker

I believe the policy applies only to the restaurant industry. I would need to verify that.

4:50 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

Some of the percentages that you want to apply to gratuity workers vary from 8 per cent to 30 per cent.

4:50 p.m.

Commissioner and Chief Executive Officer, Canada Revenue Agency

William Baker

That is in the case of restaurant workers.

We have tried to come up with a reasonable percentage. We are mindful that in some instances, the percentage may be lower, or higher.

4:50 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

Can you provide us with an explanation of the policy applied by the CRA?

4:50 p.m.

Commissioner and Chief Executive Officer, Canada Revenue Agency

William Baker

Of course, sir.

4:50 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

And you will provide that information to the committee clerk?

4:50 p.m.

Commissioner and Chief Executive Officer, Canada Revenue Agency

William Baker

Yes.

4:50 p.m.

Bloc

Robert Carrier Bloc Alfred-Pellan, QC

Thank you.

4:50 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

We'll go to Mr. Menzies, please.

4:50 p.m.

Conservative

Ted Menzies Conservative Macleod, AB

Thank you, Mr. Chair.

Thank you to our officials for appearing here today.

I have some perhaps very simplistic questions.

“Spending of revenues received through the conduct of its operations”--can you describe a bit what those operations are? Are they unique operations, or why weren't these in the original estimates?

4:50 p.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

James Ralston

The single biggest source of those revenues is the services we provide to the Canada Border Services Agency. We share a certain IT infrastructure, which we own and operate, and we charge them for that amount.

So they pay us. Effectively, we are just recovering our own expenses, and then our legislation gives us the right to re-utilize that funding.

That's one example; as I say, it's the biggest example. But there are others. They extend also to such things as the fees we would charge for giving advance tax rulings. That's a much smaller amount in total magnitude, but the principle is the same.

4:50 p.m.

Conservative

Ted Menzies Conservative Macleod, AB

Are these unexpected expenses?