Finance Committee on Dec. 1st, 2011

[Mark Adler, Conservative, York Centre, ON]

Thank you, Mr. Chair.

I want to thank the witnesses for appearing here today before our committee. We always have to be nice to the CRA.

My question is this. Historically, T1 personal income tax has always contributed the lion's share of revenues. Could you just give me an indication of the trend line of T1 revenue and the direction it's going? Then I'll follow up with a supplementary question.

[Filipe Dinis]

Mr. Chair, while I don't have the specifics, I can tell you that the T1 system brings in about $154 billion. The number of tax filers has been increasing over time. We do have those volumetrics. As I said earlier, the agency has historically realigned resources internally to deal with that workload increase, but we have seen a steady growth in the number of income tax returns we process.

[Mark Adler, Conservative, York Centre, ON]

Do you anticipate, given the demographic change that this country will be undergoing in the decades to come, with the baby boomers retiring and all of that, that we're going to see a decrease in T1 revenue possibly?

[Filipe Dinis]

Mr. Chair, it's very hard for me to project that, but if I were to respond I believe that the growth will continue—albeit based on the trend we've seen up to date.

[Mark Adler, Conservative, York Centre, ON]

In terms of consumption tax, and again going back to the demographic changes that we're going to be undergoing, do you anticipate more of a reliance on consumption taxes as we move forward, or will T1 and corporate taxation still contribute enough money to the federal coffers?

[Filipe Dinis]

That, Mr. Chair, is something to which I really am not in a position to respond. I know my colleagues at the Department of Finance are more involved in forecasting the projections from the various tax aspects. I'm not in a position at this point to respond. My colleagues at the Department of Finance may have more insight into it.

[Mark Adler, Conservative, York Centre, ON]

Could you then talk to me a bit about the following. You indicated it was some 60% or so are filing online and that in the U.S. it seems to be about 20% higher. Why is that? How do we compare with other jurisdictions, other than the U.S.?

[Filipe Dinis]

Mr. Chair, the U.S. has taken steps over the last 10 years or so to make progress along those lines. It has explored various tools, one of which is making software packages more readily available, and making it mandatory for certain taxpayers or tax preparers to use software. So there have been several measures put in place to get to the 83%. I must say it has also taken, as I understand, approximately eight to ten years to get to where it is now. However, we believe that we in Canada are very well positioned over the next few years to make similar progress.

[Mark Adler, Conservative, York Centre, ON]

Okay.

Do I have a minute?

[The Chair, Conservative, James Rajotte]

You have one and a half minutes.

[Mark Adler, Conservative, York Centre, ON]

In terms of letting people know that this option is available, I'm assuming that most people will have accountants or go to H&R Block or whatever, and therefore that this is all taken care of and made known to them. But for those who file their taxes on their own—and there are a lot of people, I assume, who do—is there some kind of advertising or public relations campaign under way to advise these people that they can file electronically and that these options are available to them?

[Filipe Dinis]

Absolutely, there is, Mr. Chair. The funding we're requesting today for advertising is definitely geared towards creating awareness of the tax credits that are available, which some Canadian citizens may not be taking advantage of and should be. It's about creating that awareness, but also creating awareness of a tool that we have in CRA that is available to all Canadians. I would encourage every member to visit the CRA's “My Account”. There has been a great take-up rate through that mechanism. It is also an opportunity to encourage Canadian citizens to access their own personal information related to their tax situation.

The objective of the funding we seek is also to create awareness of our objective to provide more and more information to the Canadian public and make it available 24/7 at their convenience by electronic means. That's more or less the package.

[The Chair, Conservative, James Rajotte]

Thank you.

We should have time for four more colleagues. We'll keep it tight as to the time.

We'll go to Mr. Julian, and then to Mr. Marston, please.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

I'd also like to thank Mr. Marston.

I have just a few questions, and you probably won't have the answers with you today. I'd like to know how many auditors take care of businesses and how many take care of individual taxpayers. I'd also like to know what percentage of corporate tax returns and what percentage of personal tax returns are audited. I'd appreciate it if you could provide us with that information.

My second question is about the total amount allocated to advertising. You are requesting an additional million dollars. But what is the total amount that the Canada Revenue Agency puts into advertising?

Then I'll turn it over to Mr. Marston.

[Filipe Dinis]

Mr. Chair, to answer the first question, we can indeed provide the committee with the information that you requested.

As for advertising, I simply want to confirm that the agency does not receive a specific amount for advertising. The advertising budget is managed by the Privy Council. So the agency, like other departments, makes its requests to obtain funds.

For 2011-2012, the advertising campaign will cost about $7.5 million. Of that amount, $6.5 million has already been approved by Parliament. We are asking for an additional million dollars. This is the total amount that we expect to need for this year's campaign.

[The Chair, Conservative, James Rajotte]

Mr. Marston, you have about three minutes.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Sticking with the electronic filing for a moment, I have two questions. What would you say is the percentage of filing done personally by individuals as opposed to filings that go through corporations such as H&R Block?

That leads to my next question, which is, what is the quality of the filings to CRA resulting from the use of private packages that one might buy at Best Buy, or wherever?

[Filipe Dinis]

Mr. Chair, on the first question I commit to come back with a more specific number, but I understand that it may be that anywhere between 60% and 70% of the files that are returned to us are filed through a third party. I think it is in that range, but I will confirm it.

Secondly, in terms of the quality of the packages that are sold by third parties, what I can tell you is that there is a certification process that they need to follow. So the packages you're referring to are packages that are sold after certification by the CRA.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Great. I'm glad to hear that.

You're talking about changes to your IT services, some of which are 30 years behind. I'm glad to hear that.

I worked at Bell Canada and I transferred from the old boards with plugs to the new technology. Once we got used to it, it was really a tremendous change. I can understand your wanting to do it. In fact, you'll probably increase the rate of people filing just by having that.

I think you mentioned that you have 9,000 auditors. Do you foresee this technological change diminishing the number of these auditors?

[Filipe Dinis]

Mr. Chair, the objective of these re-engineering efforts, whether on the T1 or the business side—which also touches on the audit function—is not to have fewer auditors; the objective is to become more efficient. We're hoping that if we can leverage this upgrade in the technology, whether it's on the personal side or the business side, it will facilitate, improve, and enable our auditors to focus on the high risk areas. That is the objective of these re-engineering efforts.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Do I have a minute?

[The Chair, Conservative, James Rajotte]

You have a minute still.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Oh, great. I'm surprised, I was expecting to run—

[The Chair, Conservative, James Rajotte]

You're a very efficient man.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Do you have an estimation of the cost associated with implementing the small business hiring tax credit, and do you have any idea of the uptake of it, that is, the number of small businesses that might take advantage of it?