Finance Committee on May 12th, 2015

[The Chair, Conservative, James Rajotte]

I call this meeting to order. This is meeting number 81 of the Standing Committee on Finance. Orders of the day are, pursuant to Standing Order 81(4), the study of the main estimates for 2015-16, votes 1 and 5 under the Canada Revenue Agency, referred to this committee on Tuesday, February 24, 2015.

We've very pleased to have with us this morning three officials from the Canada Revenue Agency.

We have Roch Huppé. Did I pronounce your name correctly?

[Roch Huppé, Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency]

Yes, you did.

[The Chair, Conservative, James Rajotte]

Monsieur Huppé is chief financial officer and assistant commissioner.

We also have Mr. Rick Stewart, who is assistant commissioner as well. Welcome back.

Finally, we have Mr. Ted Gallivan, deputy assistant commissioner. Welcome to the committee as well.

Mr. Huppé, I believe you have a presentation for the committee.

You can begin at any time please.

[Roch Huppé]

Thank you, Mr. Chair.

Good morning, and thank you for the opportunity to appear before the committee to present and to answer any questions that you may have on the Canada Revenue Agency's 2015-16 main estimates.

Mr. Chair, The Canada Revenue Agency is responsible for the administration of federal and certain provincial and territorial tax programs, as well as the delivery of a number of benefit payment programs. Each year, the CRA collects hundreds of billions of dollars of tax revenue for the governments of Canada, and distributes millions of benefit payments to Canadians.

In order to fulfill its mandate, the agency is seeking a total of $3.8 billion through these 2015-16 Main Estimates. Of this amount, $3 billion requires approval by Parliament, whereas the remaining $800 million represents statutory forecasts that are already approved under separate legislation.

The statutory items include children's special allowance payments, employee benefit plan costs, and the spending of revenues received through the conduct of CRA operations pursuant to section 60 of the Canada Revenue Agency Act for administered activities on behalf of the provinces and other government departments. Disbursements to the provinces under the softwood lumber agreement are also statutory, although the amount has fallen to $0 for 2015-2016 as I will explain next.

These main estimates represent a 1.5% net decrease of $56.4 million when compared with the 2014-15 main estimates authorities. The largest component is an $80 million reduction in the projected statutory disbursements to the provinces under the Softwood Lumber Products Export Charge Act, 2006. The CRA’s 2014-15 main estimates included an amount of $80 million as the forecast disbursements to the provinces. The Department of Finance revised the forecast to zero for 2015-16 based on changing prices and volumes in the Canada/United States lumber market.

Other changes to the agency budget include a $14 million adjustment associated with the implementation of efficiency measures in CRA operations introduced as part of the 2012 economic action plan. This amount represents the incremental change between the 2014-15 and 2015-16 fiscal years. Most of these measures can be categorized under two broad themes, namely: making it easier for Canadians and businesses to deal with their government, particularly through the provision of faster, more efficient online services, and modernizing and streamlining the CRA’s back office. Forecasted payments under the Children’s Special Allowances Act have also fallen by $9 million.

These measures are partially offset by new funding approved in a number of areas. First is $29.3 million for enhancements to non-audit compliance programs which will be used to implement and administer measures aimed at improving the fairness and integrity of the tax system, as well as strengthening tax compliance. Second is $14.1 million for the administration of tax measures affecting individuals and businesses as announced in the 2013 economic action plan, as well as the administration of the harmonized sales tax and harmonized sales tax credit in Prince Edward Island, that came into effect on April 1, 2013. Third is $4.6 million for the administration of tax measures announced in the 2014 economic action plan, primarily to develop online registration systems for charities and to strengthen compliance with goods and services tax/harmonized sales tax registration.

The incremental funding for tax measures announced in both the 2013 economic action plan and 2014 economic action plan will be used to introduce information technology system modifications, develop and implement business processes, develop forms, and update publications and information products related to these measures. Please note that announcements made in last month’s budget are not reflected in the main estimates.

In closing, the resources sought through these estimates will allow the agency to continue to deliver on its mandate to Canadians by ensuring that taxpayers meet their obligations, Canada’s revenue base is protected, and eligible families and individuals receive timely and correct benefit payments.

Mr. Chair, at this time, my colleagues and I will be pleased to respond to any questions you may have.

[The Chair, Conservative, James Rajotte]

Thank you very much for the presentation.

We will start with Mr. Dionne Labelle, who has six minutes.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Thank you, Mr. Chair.

Good morning, gentlemen.

I see that there is a decrease of $56.4 million in the budget. I am looking at your table and I see that the “returns compliance”, according to last year's and this year's main estimates, has been reduced by $9 million.

Can you justify that decrease?

[Roch Huppé]

That $9-million decrease has to do with the Children's Special Allowances Act.

This is a legislated item. Each year we estimate how much of these benefit payments will have to go out. Basically, this is an adjustment to this benefit payment. Based on the number of children out there who are in the care of foster parents, we estimate the amount of benefits that will need to be paid out. As I said, this is legislative in nature.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

You mention an amount of $29.3 million for non-audit compliance programs. What does that amount include?

[Roch Huppé]

This amount was given to us for different reasons. One was to do a little bit of what we already do, for example, to ensure that we tackle non-compliance, non-filers, and excessive contributions to RRSPs. Basically, we receive funding to do a little bit more of what we've done with regard to non-filer activities, to make sure we identify the folks who are not filing.

Ted, do you have anything to add on these programs?

[Ted Gallivan, Deputy Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency]

It would be a matter of consistency, so we're looking at non-registrants, or people who are filing corporate income tax returns or personal income tax returns but not filing GST. They're filing a T2 and they're not filing a GST return. It's not an audit. It's basically looking at our programs to see if that individual or business is filing consistently across the programs, and if they're not, we contact them and obtain the information.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Could you tell us how much those additional amounts could mean in income taxes? Have you estimated how much money that could bring in?

[Roch Huppé]

We have received funding for three years. The $29-million amount is for 2015-2016. That money was allocated to the agency in 2014-2015. It was not included in the main estimates because it was announced in the budget and accepted through this year's supplementary estimates. That is why there is a difference between last year's amount and this year's amount. The agency has received about $99 million over a three-year period to generate those funds. It's a matter of approximately $600 million in additional revenue on the federal level.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

You are talking about $29 million. That seems like a good investment to me.

[Roch Huppé]

With the $100 million.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

With the $100 million. Okay.

I would like to talk about the online informer program you have implemented. According to the latest information, there have been 1,700 disclosures, and 110 cases have been opened. To date, what has been the cost of that measure and how much money has it brought in? How much money did you collect thanks to the informer program?

[Ted Gallivan]

According to the updated figures, we have received nearly 2,000 calls, 522 of which are specific disclosures. Of those, 200 are in writing.

When we implemented this project, we said that payments would be made to whistleblowers only once the audit had been carried out. So far, we have about a dozen signed contracts with whistleblowers. We are getting started on the audits, and it may take several years before a fixed contribution is established. The audit process can take up to a year, especially in these circumstances.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

So you have a dozen open cases with whistleblowers who could help collect money from a dozen individuals who have evaded taxes?

[The Chair, Conservative, James Rajotte]

Mr. Dionne Labelle, you have one minute left.

[Ted Gallivan]

I deliberately said it was about 12 to protect—

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

How much money are we talking about?

[Ted Gallivan]

To protect the confidentiality of whistleblowers, I deliberately used a vague number. The exact figure is around 12, but we cannot reveal it because those whistleblowers could be targeted.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

Okay, but how much money will you recover?

[Ted Gallivan]

Under the program, the minimum amount is $100,000 in taxes.

[Pierre Dionne Labelle, NDP, Rivière-du-Nord, QC]

How much money could you possibly recover from those 12, 13 or 15 individuals?

[Ted Gallivan]

The amount would be about $1 million. We cannot have a specific figure before the audit is completed. The 12-odd cases alone could help us recover several million dollars.