Finance Committee on Dec. 3rd, 2014

[Ted Gallivan]

That specific measure I referred to would have increased the number of auditors by 186. That's correct.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you.

There's a number of items that there's a fair amount of misinformation out there on. One of them is the voluntary disclosure program. It's administered by CRA and promotes compliance with Canada's tax laws. So Canadians take advantage of this program if they've not been entirely truthful on their tax returns and it is relevant in cases of both domestic and international non-compliance. Can you explain a little bit on how this program works, what we've seen in the increase in the per cent of compliance, and why Canadians are availing themselves of this program? Obviously, it's a program that we've seen expanded use in and increased revenue collected by Canada Revenue Agency.

[Ted Gallivan]

Briefly, a voluntary disclosure program is a means for taxpayers to come forth and correct their tax affairs without being subject to the extra penalties associated with CRA finding them out and then assessing the amounts. From 2008-09 until today overall voluntary disclosures are up roughly 80%. However, international voluntary disclosures, that subset, is up 400%. At the same time there have been a number of tightening measures and increased emphasis in the offshore space and also we have taken greater efforts to communicate new measures such as the electronic funds transfer mechanism that's coming into force January 1, 2015, mentioning that to encourage and incite taxpayers to correct their tax affairs proactively before we come knocking on their door with an audit.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Along with the voluntary disclosure program, we have the offshore tax informant program. It should allow us to gain valuable information on the international tax cheats and tax evasion schemes.

Do you have a percentage or a real number for the files we have been able to complete because of this program?

[Ted Gallivan]

It's a relatively new program that has had 1,500 phone calls and 170 written submissions, many of which are very promising and at the contracting stage. So this program appears to be meeting its intent.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

That's excellent.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Keddy.

Mr. Dubourg, you have seven minutes. Go ahead.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

Thank you, Mr. Chair.

Now, it is my turn to welcome you, gentlemen. I'm very glad you are here to answer our questions. Let's start out general.

I know that the CRA's tax system is self-assessment-based. In the media, we often hear about how difficult it is for people to understand letters from your agency. What's more, I believe some cuts were made in relation to client services.

What is the CRA doing to support the self-assessment system and encourage taxpayers to file their income tax returns so they can comply with the Income Tax Act as easily as possible?

[Ted Gallivan]

We focus our efforts on two areas.

The first is e-services. Depending on the service, about 70% to 80% of Canadian taxpayers currently use our online services. We've invested heavily in that component. The second revolves around reducing the administrative burden, in other words, reducing the red tape to make voluntary filing easier.

Those are the two areas that the agency is focusing on, eliminating obstacles and making it easier to file documents online.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

Thank you.

Under one of the votes, you are seeking approval for $26.7 million in additional funding. The money is for enhancements to non-audit compliance programs and the information reporting of tax avoidance transactions.

What programs will be funded? And what specific enhancements will be made to those programs?

[Ted Gallivan]

We will use some of that money to step up our efforts in the construction industry. I don't want to single any companies out, but there are cheque cashing services such as Money Mart. There are also gift cards. And a lot of people use those methods to avoid paying taxes. This funding will allow us to expand our focus on these services. We will be able to collect a lot more information and follow up on it.

Our focus is on the underground economy. I just listed three examples of specific industries. We expect these measures to generate an additional $700 million.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

The vote refers to non-audit compliance programs, and you just mentioned the construction industry. But the auditors assigned to the underground economy target those areas, do they not?

[Ted Gallivan]

Obviously, there is no need to perform a tax audit on an individual who does not file a return. It is simply a matter of identifying the individual and working with them so that they file a return.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

In terms of complaints or tips you receive from sources, I understand that you can't reveal the identity of taxpayers who are being or have been audited. Recently, however, have you received a lot of tips about charities? Many of them have complained about that, especially environmental groups, which we hear a lot about these days. Has the number of complaints gone up? And where does that information come from, if you can tell us that?

[Ted Gallivan]

That is a good question. I would like to get back to the committee with an accurate answer to that.

I can tell you that we receive 30,000 complaints a year. The number of complaints has remained constant, but I am not sure whether the percentage of charity-related complaints has changed. I can, however, get back to the committee with that information.

[The Chair, Conservative, James Rajotte]

Mr. Dubourg, you have three minutes remaining.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

Thank you, Mr. Chair.

Go ahead, Mr. Stewart.

[Rick Stewart]

I may be able to add something to that.

We have measured or taken stock of the number of formal complaints concerning political activities of charities that we have received since 2008-09. They range between 20 and 159 complaints of some sort. I do not have information that breaks down the nature of those complaints, just the fact that we received complaints.

What I would say is that we receive information from a variety of sources all the time in support of our compliance activity. We receive information internally,

from departments through their programs and activities.

We also receive information through our own monitoring of media reports and web postings—that sort of thing—and self-declarations by charities on their annual information returns.

As part of our general activity, setting aside whether it's a political activity allegation, we look at all of this information. That's not to say that we then proceed and pursue discrete actions in all of those cases. It's incumbent upon us, I think, as responsible regulators to at least look at information that is brought to our attention to determine whether or not there is an issue. The existence of a complaint does not necessarily imply that there will be some kind of follow-up CRA action.

[The Chair, Conservative, James Rajotte]

Mr. Dubourg, you have the floor.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

Thank you, Mr. Chair.

Not that long ago—about two weeks ago, I believe—the minister referred to an underground economy advisory committee. But such a task force has been around since 2004 or 2005. What more will the new committee do in terms of the CRA's efforts? We already know which industries are involved as well as what is going on. We've even got an evaluation. What more will the committee bring to the table?

[Ted Gallivan]

All of our efforts have been focused on those who provide services to the people in the underground economy, and we will continue to focus on that. The new dimension is that we'll be able to go after the other half of the equation, consumers who might be tempted by the underground economy. To target consumers, we need third parties. We have mobilized those third parties, so we can educate consumers about the importance of not participating in the underground economy.

[Emmanuel Dubourg, Liberal, Bourassa, QC]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Dubourg.

We'll go to Mr. Allen, please.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you very much, Mr. Chair.

Thank you to our witnesses for being here.

I want to follow up with a few questions with respect to the intergovernmental agreement and FATCA.

I think, Mr. Huppé, you talked about $2.4 million to implement the intergovernmental agreement with the U.S.

Then, Mr. Stewart, you talked about $15 million allocated over the next few years to enable the implementation of FATCA.

Just how do the $2.4 million and the $15 million work in the estimates?

[Roch Huppé]

In the estimates process, the $2.4 million is what we're seeking to bring in for 2014-15 expenses related to this. So yes, it's included in that $15 million.