Finance Committee on Nov. 23rd, 2017

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Did you say you stopped processing?

[Frank Vermaeten]

Well, of those specific files. There were a lot of questions, and we did our due diligence to make sure that we are processing them properly, processing them according to the Income Tax Act and the 14-hour threshold. When somebody asks us questions and when my boss asks us questions, of course we look into it and make sure it's done properly. If it is done properly, we start processing again.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Did somebody ask you to review and freeze it temporarily because there was an issue that was cited?

[Frank Vermaeten]

My boss, the commissioner, asked me whether there was an issue, whether there were any problems in terms of how we were processing them. I do my due diligence and I immediately check to find out whether we are doing this properly. We do calls out to the field. It takes a little while. There's a temporary hold—

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I will interrupt you for a second here. One of the things that was put on notice by the chair was our expectations about data, and I'm just going to read it back: “...the data that will show what the applications are as best CRA can, and what the exceptions and rejections are as compared to two or three years back.”

I have one question. We've only looked at the front end of the DTC, which is the application process, but for those few who have been approved for the DTC, how long does it take them right now to get their refund? I've heard refunds can take up to 10, 20, or 30 weeks, depending on the individual case. There's the front end of people taking a long time and of some people being refused, and then there's the back end: once you are approved, the refund cheque takes much longer now to be received.

What is the timeline now?

[Frank Vermaeten]

There are two steps. The first step is the initial application to find out whether you're approved, and that usually takes between six and 10 weeks. We're within that range now, and it will fluctuate over the course of the year. Then there's the second part—

[Tom Kmiec, Conservative, Calgary Shepard, AB]

You're contradicting the commissioner. The commissioner said 10 weeks.

[Frank Vermaeten]

I said between six and 10 weeks. It's six to 10 weeks, and it will fluctuate throughout the year. There will be exceptions when, for example, we have follow-up with doctors or with the patient. It can take longer at times, but six to 10 weeks is our service standard.

Internally, we target eight weeks. Sometimes we do a little better and sometimes we do a little worse, but it's between six and 10 weeks. We're comfortable when it's between six and 10 weeks.

[The Chair, Liberal, Wayne Easter]

Finish your response.

You're way out of time, Tom, but go ahead, Mr. Vermaeten.

[Frank Vermaeten]

Then the second component is what's called the adjustment, the T1 adjustment, which we now do automatically if the individual asks. That's one of the improvements that we made to the application form. You can now put in a check, and we will automatically provide those refunds for as far back as 10 years.

How long that takes depends upon the complexity of those changes. If it's a simple adjustment, our standard for paper adjustments is eight weeks. We're a little bit over that right now; we're at about 10 weeks. As you get into the more complex ones, it can take longer, absolutely, and you're always going to find exceptions that take quite a while for a variety of reasons.

[The Chair, Liberal, Wayne Easter]

Thank you both for a fairly intense line of questioning.

Go ahead, Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

My thanks to the witnesses for joining us.

My questions will go to Mr. Gallivan first.

To put things into context, let me point out that the minister told us, on a number of occasions and in various ways, that KPMG was going to be brought to justice. I would therefore like to know now how many criminal prosecutions have been filed against KPMG or against one of its clients who participated in the Isle of Man scheme.

How many prosecutions have been launched?

[Ted Gallivan, Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency]

As you know, a criminal investigation can last a long time. It takes a number of years for this type of case to move up the ladder. As the minister and I have confirmed, we will keep pushing this file as much as we can, but our work is far from being over.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

You could also say that there have been none. That's not a problem.

Along the same lines, we know that, in terms of international tax evasion, one of the first matters the Minister of National Revenue had to tackle was the Panama Papers.

In this specific case, can you give us an idea of the number of cases that are subject to criminal prosecution?

[Ted Gallivan]

Yes. I agree that, in cases of international tax avoidance, criminal sanctions are necessary.

In terms of the Panama Papers, we can publicly confirm 123 audits under civil law. Furthermore, a number of our criminal investigations are being finalized. There are fewer than 10. We don't want to disclose the exact number, to avoid jeopardizing the investigations under way. Given the stage we are at, the public can expect a search to be made public in the coming months.

Internationally, however, no country is prepared to lay charges or convict anyone. Like other countries in the world, we started working on the Panama Papers well before they were covered in the media. That said, it takes time for a prison sentence to be announced.

Many of our criminal investigations are coming to fruition. The next stage will be the public confirmation of searches, which may take place in the coming months.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you. That was a good update.

In terms of the $25 billion, as you know, the Minister of National Revenue keeps mentioning this number so much that it came up on Infoman, which is a very popular show in Quebec. One would think this is the only thing she knows how to say. It is as if she learned the same answers and she keeps repeating them. She keeps talking about the $25 billion, and the $1 billion invested.

Actually, a lot of questions have been asked about the $25 billion. I, for one, would like to know what percentage of this amount is identified as international tax non-compliance. That's part of the agency's responsibilities.

[Ted Gallivan]

We are talking about $16 billion, less than two-thirds. Multinationals avoid tax through transfer pricing. Individuals also use overseas schemes with corporations or trusts. So the two-thirds is made up of multinationals and people with high income who use trusts and schemes like that.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Is it possible to forward this information to the Minister of National Revenue so that she can answer the questions?

[Ted Gallivan]

I think this information is public through our reports and our website. We are aware that Canadians have many concerns about the agency's efforts. That's one of the reasons we started to make public the details of criminal investigations at the stage of searches. We do this more and more frequently.

In addition, we try to focus on civil sanctions against professionals. That amounted to $44 million last year.

So it's not just $25 billion. Multinationals and people whose net worth is $30 million or more are also targeted, and so are those who enable that behaviour.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Mr. Chair, I will use the time that I have left to move a motion, as follows:

That, following the tabling of the report of the Auditor General of Canada of November 21, 2017, the Committee invite the Minister of National Revenue, the Honourable Diane Lebouthillier, to appear before the Committee regarding the Auditor General’s Report 2—Call Centres—Canada Revenue Agency.

[The Chair, Liberal, Wayne Easter]

Are you asking to deal with that motion now?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Yes, please.

[The Chair, Liberal, Wayne Easter]

It's your right, and you did give the 48 hours' notice.

Is everyone aware of the motion? We have copies. They're being distributed. I'll read it again. The motion by Mr. Dusseault is as follows:

That, following the tabling of the report of the Auditor General of Canada of November 21, 2017, the Committee invite the Minister of National Revenue, the Honourable Diane Lebouthillier, to appear before the Committee regarding the Auditor General’s Report 2—Call Centres—Canada Revenue Agency.

It's open for debate. Do you want to go ahead, Mr. Dusseault?

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

I will be very brief, out of respect for the witnesses.

I think everyone knows that the Auditor General has tabled a damning report on the Canada Revenue Agency. We do not have enough time in today's meeting to get to the bottom of things. I have tried to do it in a few short minutes, but this report deserves further study. The information it contains is extremely worrisome. More than half of the calls are blocked because there is no line available, and 30% of those who manage to talk to an agent would get the wrong information.

Our committee must look at this issue; it's part of its mandate. The minister will have to explain this specific issue for longer than the few minutes she has taken to do so today.

I hope I have my colleagues' support. I have not set a number of meetings or dates. We can determine when it works for us. I just want to make sure that our committee will be able to get to the bottom of this. Do I have my colleagues' support?

I will not dwell on the issue any longer. We can come back to the witnesses as soon as my motion is put to a vote.

[The Chair, Liberal, Wayne Easter]

Ms. O'Connell will be next. Who else wants on the list? Ms. O'Connell is number one.