Evidence of meeting #38 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cra.
A recording is available from Parliament.
Liberal
Scott Brison Liberal Kings—Hants, NS
What standards are in place to ensure these officials are qualified to make decisions on whether confidential information should be shared? Will the CRA require that these officials have a legal background?
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
We have a memorandum of understanding with the RCMP currently in place, and we're in the process of amending it. It deals with training, and who does what and how they can do it.
Conservative
The Chair Conservative James Rajotte
Thank you.
Thank you very much, Mr. Brison.
We'll go to Mr. Allen, please.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Thank you to our witnesses for being here.
I have a few questions. I'd like to talk to you about red tape and service provision, and some of the dollars that are being used on technology.
But I have one follow-up question for Mr. McCauley with respect to the tax gap that Mr. Brison brought up. I think it was not too long ago that the OECD was at the committee and said that this was virtually impossible to calculate. To your knowledge, have those yardsticks moved any further in the last year or so since that comment was made?
Assistant Commissioner, Canada Revenue Agency
No, in the sense that I think what the OECD and others have said is to calculate with a level of assurance that then could be used in terms of the practical administration of income tax and other taxes. There's a whole academic exercise that academic communities could carry on, and maybe for some purposes it has value, but I don't think that has shifted significantly from the OECD's perspective a year later.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Okay, thank you very much.
In the opening remarks, Mr. Huppé, you talked a bit about the $17 million as part of the multi-year project for the personal income tax processing system. I'd like to understand where you stand with respect to the business income tax processing system.
I have a couple of questions. Obviously, growth in online filing has increased significantly over the past couple of years. How do you see that trend in terms of percentage of returns that are being filed? Do you expect to see that trend continue as quickly as you have seen it in the past?
Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency
With the trend, we've seen a considerable increase since 2010, when we were at about 60% of returns being sent electronically. With the filing season that we just terminated, we're up near 81%. There's a drastic increase from that perspective. Last year we were around 77%. It's still a considerable increase even from last year.
I would say that yes, we're still anticipating an increase to that nearly 81%. Obviously, there's still room for growth there.
On the first part of the question, around the $17 million that I referred to for the redesign of the T1 system, the system for individuals, the agency actually received $251 million over a period of nine years to complete the redesign, and that's basically to ensure sustainability of that system. Obviously, it's a very important system. It was also pointed out in a previous OAG audit on large systems that the system would need to be looked at, so we received the funding for it.
The $17 million you're actually seeing is a cashflow variance from last year. Last year in the main estimates there was $23 million earmarked to be spent in 2013-14 in relation to that system. We have $40 million earmarked this year to be spent on the upgrade of that system. We still have a way to go, but we're in the initial stage of that redesign.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
The amount you're requesting for internal services is, I guess, around $832 million, which includes services like human resources, information technology, communications, and all that business. Are the investments that you need on an annual basis to keep your technology up to date included in there, or do you ask for special funds for those types of things?
There's a second part to that question. How has that transaction processing that you're doing now, with electronic filing, allowed you to refocus your resources on more value-added work, like the key audits, the offshore tax, and those types of things, as opposed to just transaction processing?
Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency
I'll answer the first part of the question and then ask my colleague to answer the latter portion of it.
The spend on the internal services is $831 million, and $353 million of that is in relation to our IT function. That said, the IT spend is not obviously all in relation to these investments. Some of the funding in relation to these investments is part of that $353 million. Other funding you would see in what we call the vote 5 or capital vote, obviously in our capital expenditures. You will see a lot of that investment made in our systems appearing there.
We've been spending approximately $100 million a year in the last few years on our investments in relation to the upgrades to these systems.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
On the impact on the value-add to the employees in terms of better value-added services, how have you seen that change?
Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency
As my colleague pointed out, we change our systems obviously to try to do our work in a quicker, more efficient manner. One of our systems, a compliance system redesign, was and is the system our auditors use to get the information they need. Some of the changes that have been made to that system in the last few years are to ensure that our auditors have one picture of the taxpayer, as opposed to going to many different systems.
This facilitates the way our auditors can do their work. They can get into the file faster, and it enables them to do more files.
Conservative
The Chair Conservative James Rajotte
I apologize, colleagues. I apologize, Mr. Allen.
We do have a vote in 30 minutes. I know that we've moved this meeting around probably four times, and I appreciate that, colleagues and officials, but I'd like some guidance from you in terms of what you would like to do at this point.
Mr. Allen has one minute left. We do have other members on the list.
Conservative
Conservative
The Chair Conservative James Rajotte
So, Mr. Allen and then two more rounds after that; Mr. Allen, and then two five-minute rounds.
Mr. Allen, you have one minute left.
Conservative
Mike Allen Conservative Tobique—Mactaquac, NB
Thank you, Mr. Chair.
I'll conclude with one last question. Obviously IT lets you do these tolerances. I get a lot of discussion from small businesses that call me with respect to how they get kicked out for special processing for HST and things of that nature. I understand that IT does some of that, but you've significantly reduced red tape, small business filings, and all those things over the last few years. Are you looking at the types of processing you do each month in these kick-outs to make sure you're not unfairly penalizing small businesses by holding up their returns?
Assistant Commissioner, Canada Revenue Agency
Yes, in the sense that we always look at the tolerances and thresholds. In fact, in budget 2014, there's a provision that's focused on small business and others to adjust the thresholds in terms of payment frequencies. We're always looking to adjust the system to fine-tune it, and part of that is listening closely to small businesses, to areas where maybe we can get it better. It's a never-ending effort.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Allen.
I've had a request for two seven-minute rounds. Do I have consent for two seven-minute rounds?
Conservative
