Finance Committee on Nov. 23rd, 2017

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Pursuant to Standing Order 81(5), the committee will deal with supplementary estimates (B) 2017-18, vote 1b under Canada Revenue Agency.

Appearing today is the Minister of National Revenue, the Honourable Diane Lebouthillier.

As well, from the Canada Revenue Agency, we have Mr. Hamilton, commissioner; Ms. Janique Caron, acting assistant commissioner; Mr. Ted Gallivan, assistant commissioner at the international, large business, and investigations branch; and Mr. Frank Vermaeten, assistant commissioner at the assessment, benefit, and service branch.

Welcome, all.

I know that both the minister and the commissioner have remarks. Before we get to that, we have a request for a supplementary project budget for our pre-budget consultations. This is normal in the pre-budget consultation process. It will end up being about the same amount of money as we have spent in previous years. The request is before you. It's for an additional $29,900. Do we have a mover for that?

It is moved by Mr. Fergus.

(Motion agreed to [See Minutes of Proceedings])

As it states on the sheet, that is for the witnesses who have come forward.

I have just one other thing before I get to your point of order, Tom.

I want to recognize 43 students from École nationale d'administration publique, who are here with Mr. Rémy Trudel, a professor and former member of the Quebec National Assembly. They are here to see how things operate.

Thank you all.

There was a call for a point of order. The floor is yours, Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Chair, I don't want to take up much time, because we rarely get ministers before the committee.

At the end of one of the meetings leading up to this one, you said you were giving notice to officials that we have a problem with data. I am just following up on that. You stated that right now, as chair, you expected the chief commissioner of the CRA to be here, and I think we've met that. You also expected the chief commissioner to bring with him data that would show, as best as CRA can, what the applications, exceptions, and rejections are, as compared to two or three years back. You also said that you expected the time frames on applications, and the turnarounds on those applications over the past five-year period on the disability tax credit as it relates to diabetes.

I am just following up on that, Mr. Chair, just making sure the witnesses know that you expect that information. There was no debate, so I take that as a notice of the committee to the witnesses.

[The Chair, Liberal, Wayne Easter]

Yes. The clerk sent that information to the CRA. As we proceed, we'll see what information the commissioner and the minister can provide us with.

Thank you for that. That notice was given.

We'll start, then. Madam Minister, the floor is yours.

[Diane Lebouthillier, Liberal, Minister of National Revenue]

Mr. Chair, I appreciate the opportunity to participate in the committee's study of supplementary estimates (B).

I am joined by Commissioner Bob Hamilton, who will speak to you more about this and other topics following my remarks.

I’d also like to introduce three senior officials from the Canada Revenue Agency: Janique Caron, Acting Assistant Commissioner, Finance and Administration Branch; Ted Gallivan, Assistant Commissioner, International, Large Business and Investigations Branch; and Frank Vermaeten, Assistant Commissioner, Assessment, Benefit and Service Branch.

I would like to start by providing members with an overview of some recent achievements following the second year of my mandate as Minister of National Revenue.

First, the Government is steadfast in its efforts to crack down on tax evasion and combat tax avoidance. We will increasingly identify aggressive tax planning schemes that are not in the spirit of the Income Tax Act.

The Government has invested nearly $1 billion in Budgets 2016 and 2017 to address this complex problem that is taking resources away from the services that improve the standard of living of all Canadians.

The Agency’s auditors now have access to more and better refined information, which helps them to focus on the individuals and corporations that actively seek to avoid paying their fair share of taxes.

Second, we have strengthened our partnerships and cooperation with international governments. The results speak for themselves: The Agency is currently conducting more than 990 audits related to offshore financial structures. It is investigating more than 42 corporations and individuals with offshore accounts. The Agency has also imposed $44 million in penalties on promoters and tax preparers.

Third, regarding our work to improve support for indigenous peoples and people living in remote communities, the Agency is working hard to keep the government's promise. It is increasing its outreach efforts to make these individuals aware of the benefits available to them, and reducing the challenges associated with filing their tax returns.

This past October, in Yellowknife, I announced the Agency’s Northern Consultations Action Plan. This plan outlines actions over the next two years to improve the Agency’s services for northern residents.

My main objective is to improve the client experience for Canadians who access tax services. Canadians communicate with us in good faith. They are important clients, not just taxpayers. They deserve to receive quality services in a timely manner. In order to improve the customer experience, here are some of the latest service improvements from the Agency.

The Agency has introduced enhanced electronic processes for filing tax returns, such as information auto-fill. This secure service allows Canadians to automatically fill in parts of their income tax and benefit returns with information that the CRA has available at the time of filing the return.

Last year, more than 86% of Canadians filed their taxes electronically, almost 750,000 more than the year before.

In 2017, the Agency has taken steps to improve and modernize its call centre services. We have hired more agents and we have increased self-serve options, leaving more time for agents to provide the answers to more complex questions.

The Agency is also in the process of upgrading its call queue technology, and enhancing its training programs to ensure our clients receive the quality service they deserve.

While I am proud of these accomplishments, I fully recognize that there is still work to be done. This week's Auditor General's report was clear, and I accepted all of his recommendations regarding our call centres.

In our first Budget, our government invested $50 million over four years to improve the range of services we provide to the public. Starting this year, our clients will begin seeing the results of these investments.

Rest assured, we are listening to Canadians.

We know we must explain the Agency’s actions as clearly as possible so that its intentions are not misinterpreted.

We are seeking advice from Canadians to ensure that the Government’s programs and services are tailored to fit those who need them. We encourage Canadians to enter into a dialogue with the Agency to share their concerns.

Today, I also announced that we have re-instated the Disability Advisory Committee. This committee will be made up of 12 members with different backgrounds; they will work with the Agency in order to come up with recommendations so that it can administer disability benefits in a more fair, more transparent and more accessible manner.

Outreach and consultation are key, and the Agency will continue to work with Canadians to ensure their views are incorporated into the decisions it makes.

Mr. Chair, I will now yield the floor to Commissioner Hamilton, who will speak to the Supplementary Estimates (B) and other matters of interest to the committee.

I thank you for inviting me to speak with you today.

[The Chair, Liberal, Wayne Easter]

Thank you, Madam Minister.

Commissioner Hamilton, I should point out before you start that normally at committee we try to narrow the focus to the supplementary estimates themselves, but at the meeting today the minister has said that she's most open to dealing with not only the estimates. There's been the Auditor General's report, which she has mentioned in her remarks, and members may have other issues on their minds. In terms of my chairing, we won't be just dealing with the narrow focus of the supplementary estimates. It'll be open to basically whatever is on your mind.

Commissioner Hamilton, the floor is yours.

[Bob Hamilton, Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency]

Thank you, Mr. Chair.

Thank you for the invitation to present the agency's 2017-18 supplementary estimates (B) and for the opportunity to address questions, as you say, that could come from a number of different sources, but as foreshadowed would include the eligibility requirements for the disability tax credit.

Through the supplementary estimates, the agency is seeking an increase of $44.9 million in its voted authorities for the following items.

First, the Agency is requesting $43.9 million to implement and administer various measures to continue its efforts to crack down on tax evasion and aggressive tax planning as announced in Budget 2017.

This includes new funding for GST measures aimed at preventing tax evasion and improving tax compliance to increase the number of audits of high-risk businesses. It also includes hiring additional auditors to review electronic funds transfers and to increase the number of large business and income audit teams to eight this fiscal year and up to 16 next fiscal year, targeting additional high-risk taxpayers, including multinationals. It includes as well the expansion of our business intelligence activities.

The $43.9 million we are requesting represents the first of five years under the proposed 2017 budget funding to crack down on tax evasion and aggressive tax planning.

The second item for which the Agency is seeking incremental funding is $1 million related to the Government advertising campaign on the new Canada Caregiver Credit.

The objectives of this campaign are to generate awareness of the new credit and to increase the number of eligible Canadians who claim it on their income tax returns. The campaign will also promote content on the Canada.ca website, which provides information about taxes and benefits.

Following the approval of these supplementary estimates, the agency's revised 2017-18 authorities will total $4.4 billion.

In summary, the resources sought through these estimates will allow the agency to continue to deliver on its mission to administer tax, benefits, and related programs, and to ensure compliance on behalf of governments across Canada.

Mr. Chair, I do thank the Committee for the opportunity to provide information about the administration of the Disability Tax Credit.

I'm very open to responding to questions that follow.

The disability tax credit, or DTC, is a non-refundable tax credit that provides tax relief for people living with disabilities or the family members who support them. The CRA remains committed to ensuring that all Canadians receive all the credits and tax benefits to which they are entitled, including the disability tax credit. The CRA is also responsible for ensuring that this non-refundable tax credit is administered fairly and in accordance with the Income Tax Act. Canadians expect the agency to do its due diligence to ensure that the individuals who receive benefits and credits, including the DTC, meet the requirements set out in the act.

Last year some 770,000 Canadians claimed the credit. The corresponding tax relief provided by the DTC as a result was more than $1.3 billion in 2016-17.

I'm happy to provide information year by year in writing after this meeting. Suffice it to say that we've seen the value and number of credits go up year over year.

As the minister mentioned in her opening remarks, the agency is reinstating the disability advisory committee to ensure that the views of a broad range of stakeholders are considered in the agency's decision-making process. Their perspectives will inform the CRA about how to present information in the DTC application so that it is clear to all applicants.

The CRA has a long history of consulting with Canadians and stakeholders on administering taxes and benefits in general and the DTC in particular. We use the feedback from these consultations to improve the way we administer the program and communicate any changes to Canadians through our outreach efforts.

For example, the agency’s web pages on the DTC feature easy-to-understand videos that outline various scenarios for individuals to determine whether they qualify for the DTC.

Through solid communications, both by listening and explaining, we continue to strive to improve the administration of our tax and benefits system in a manner that is fair and consistent with the relevant legislation. This is part of our broader objective to ensure that Canadians have trust and confidence in the administration of our programs and services.

At this time I would be pleased to answer any questions the committee members may have.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Commissioner.

We'll start a series of questions. I raised questions with you in a note from the clerk, and we'll get to those in a bit. As we mostly do with ministers, we'll go to five-minute rounds instead of the usual seven minutes for the first four questioners.

We'll start with Ms. Sidhu.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you, Chair. I'm sharing my time with Michael.

My question is to Minister Lebouthillier.

Minister, as chair of the all-party diabetes caucus, in the last few weeks I have heard concerns from Canadians and stakeholders regarding access to the disability tax credit for type 1 diabetics. I appreciate the time you and your parliamentary secretary took to meet with me to discuss the situation and allow me to share the concerns I have heard from stakeholders and other people.

Can you tell us what both you and your agency are doing to address these concerns?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Thank you for your question. I would also like to thank you for taking the time to meet with me. I know that you are a dedicated advocate for Canadians living with diabetes as well as for your constituents in Brampton South. My English isn't so good, so please accept my apologies, as I will continue in French.

First, I would like to point out that we have met with people from Diabetes Canada, Diabetes Quebec, and the Juvenile Diabetes Research Foundation to find out their concerns and to understand their points of view. After those meetings, I came to the conclusion that the agency clearly needs a mechanism to gather advice on these matters.

That is why, today, I announced the return of the Disability Advisory Committee. A committee of that kind had been established in 2004, but it was abolished by the Conservatives as soon as they came to power in 2006. These are the same Conservatives who now claim to be rushing to the defence of the most vulnerable.

The advisory committee will work collaboratively with the agency and will bring together major stakeholders in the field to make sure that all measures targeting persons with disabilities, including the Disability Tax Credit, are administered fairly under the provisions of the Income Tax Act.

The committee will advise the CRA on the specific needs and expectations of persons living with disabilities, will review and provide feedback on the CRA's administrative practices, in order to provide greater transparency and greater access to credits, and will make recommendations on how the agency can enhance the quality of the services we provide to persons with disabilities.

I understand completely that living with a disability can have consequences for those involved, their families and their surroundings. That is why I am committed to ensuring that the agency will administer measures for those with disabilities in a fair, transparent and accessible manner.

In the last two financial years, the number of those accepted has increased by 20%. We have worked to simplify the forms. We are working with specialized nurse practitioners who are able to fill in the forms for people living in areas where access to a doctor is more difficult. The agency has also hired nurses for the programs for persons with disabilities.

I invite the commissioner to complete my answer.

[Sonia Sidhu, Liberal, Brampton South, ON]

Thank you, Minister.

I'll pass it over to Michael.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair, and thank you to the minister.

I was very happy to see that you included the indigenous peoples in your opening comments and that you made reference to remote communities. I represent the Northwest Territories, as you know, and I was very happy to see you come and visit us. I think we had some good discussions there.

Maybe you could expand more and tell us how the agency can ensure that the aboriginal communities have equal access to the many benefits that are being administered by CRA.

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

The government is determined to renew the nation-to-nation relationship with indigenous peoples, and to ensure that they receive the benefits and the credits to which they are entitled.

I have met with a number of indigenous communities to discuss problems with access to the agency's services, and I will continue to do so. I come from a remote area myself. So I know full well what it means to be a long way from Ottawa. As the proverb says, “out of sight, out of mind”.

The Canada Revenue Agency has published its communication materials in a number of indigenous languages. We are working in partnership with Service Canada. The agency has visited 698 indigenous communities across the country in order to provide them with information about the benefits.

Although the agency has made a lot of progress, there is still work to be done and we are going to do it in collaboration with indigenous communities and with our partners in the regions.

[The Chair, Liberal, Wayne Easter]

Thank you.

I'm sorry, but you're out of time. You're a little over time, Michael.

Go ahead, Mr. Kelly.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

This committee has heard that processing times for the disability tax credit have gone from approximately three to four weeks to over 40 weeks before the first questionnaire is sent to an applicant's physician.

What are the current processing times for a disability tax credit application and what has caused the delay?

[The Chair, Liberal, Wayne Easter]

Madam Minister or Mr. Commissioner, whoever wants to, please respond.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Go ahead, Madam Minister, please.

[Bob Hamilton]

I can take that question.

To broaden beyond disability credit claims for one second, we are experiencing an increase in processing times in a number of places across the agency in assessments/reassessments for a variety of reasons, one of which is a transition that we undertook in November of last year to realign our business with the way that things have evolved for electronic—

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

What is the current wait time for a disability tax credit?

[Bob Hamilton]

We aim to process them within eight weeks—those are the statistics I have—but the current time could be higher, up to 10 weeks or so.

I haven't heard the 40-week number. I'm happy to go back and check. I haven't heard anything that long—

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

We were told 40 at committee.

Are disability tax credit applications in fact frozen? That was the testimony we heard. Is there a hold on that particular tax credit application right now?

[Bob Hamilton]

They are not frozen. As I indicated, though, we are experiencing some processing delays. We are trying to get those processed as fast as we can. That goes broader than the credit. We have invested more money to try to get us through this period as we transition, and we are expecting service level rates to return to normal in the coming weeks.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay.

Madam Minister, your mandate letter from the Prime Minister charges you to ensure that the CRA is more client-focused and that you'll proactively contact Canadians about the tax credits to which they're entitled.

On Tuesday the Auditor General released a report that found two-thirds of calls are not answered by your agency and that of those that are answered, a full 30% of people who contact the call centres are given incorrect information. How are you able to proactively contact Canadians and how are you able to proactively ensure that Canadians get the tax credits they're entitled to when they usually can't reach your agency, and then are given incorrect information when they do get through?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

As I mentioned, I am aware of the Auditor General's report and I accept all the recommendations it contains.

Right from our first budget, we decided to invest $50 million over four years, specifically to work on hiring staff in the call centres.

I can also tell you that, unlike your government, which, when Kerry-Lynne Findlay was the minister, made cuts to the Canada Revenue Agency, we have made investments in it, such as setting up a new telephone platform in order to better meet the needs of the customers who call the Canada Revenue Agency. The telephone system is 20 years old and it is out of date.

The cuts that you made also affected employee training and support. So we are working on training, because it is important to continue to provide training and support, so that Canadians can receive the best information possible.

We must also respond to the standards and needs of Canadians, not establish standards that meet only the needs of the Canada Revenue Agency.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

So it was not until the Auditor General's report of this Tuesday that you became aware of the seriousness of the service problems at the CRA? When did you become aware that there were such serious problems at the CRA with service?

[Diane Lebouthillier, Liberal, Gaspésie—Les-Îles-de-la-Madeleine, QC]

Not at all. I am very pleased to be able to tell you that, in the last two years, I have visited the vast majority of Canada Revenue Agency offices. I went to see the call centres, I met with the employees who work there, and I listened to telephone calls.

Starting last year, we established our action plan so that we could meet the needs of Canadians. In my two years of work in the field, I have come to realize the extent to which the cuts that your government had made had weakened, and dismantled, brick by brick, the services provided to Canadians by the Canada Revenue Agency in the call centres. You should be ashamed of what happened.