Evidence of meeting #136 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was million.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Adelle Laniel  Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
Galen Countryman  Director General, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Brad Recker  Director, Fiscal Policy Division, Economic and Fiscal Policy Branch, Department of Finance
Rick Stewart  Assistant Deputy Minister, International Trade and Finance Branch, Department of Finance
Nicolas Moreau  Director, Funds Management Division, Financial Sector Policy Branch, Department of Finance
Leah Anderson  Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
Miodrag Jovanovic  Associate Assistant Deputy Minister, Tax Policy Branch, Department of Finance
Richard Botham  Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance
Kami Ramcharan  Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency
Geoff Trueman  Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
Ted Gallivan  Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency

10 a.m.

Liberal

The Chair Liberal Wayne Easter

Go ahead, Ms. Ramcharan, if you're able to answer that question. I know this is in the supplementary estimates (C), and we did get the letter just yesterday.

The floor is yours.

10 a.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

Maybe what I can do is just speak to the dollars you talked about, if money would be reallocated to that. We don't have any additional resources coming into the agency to help support that. However, as I mentioned, in two exercises just recently we looked at how can we shift resources to deal with high priority areas, and this would be one of those areas. The agency made a commitment to review those letters and they'll be doing that within the conjunction of the existing resources they have or additional resources we can find within the agency to support that. That commitment was made in November. I'm not exactly certain when we'll see the results of the review, because it is a manual process to go through all those forms and do that, but I know they're committed to doing it and revisiting it as well.

10:05 a.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Then there's sufficient flexibility within existing funding to go back and manually reassess all the rejected applications to ensure that Canadians entitled to that credit can receive it.

10:05 a.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

Would I say “sufficient”? I would say we will make a point of making sure that resources are made available. The agency has flexibilities to move from some areas into other areas in order to deal with it, recognizing that it's a one-time-only type of initiative that's going to happen. We aren't seeking any additional resources to undertake that work.

10:05 a.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Okay.

Yesterday's letter said that wait times still are outside the window you've set for a target. That suggests that there is still congestion and that credits are not being approved.

These credits are important. They are tied to many other supports. They're tied to the ability to continue to hold a disability savings plan, so people are worried about having to have their plans struck, to lose the matching grants that they've received, because they have been rejected for this credit. This is a very serious matter for thousands of Canadians and I hope we're able to address that.

How are we for time?

10:05 a.m.

Liberal

The Chair Liberal Wayne Easter

You're okay. You have two minutes.

Mr. Gallivan, did you want in on that?

10:05 a.m.

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

Yes. Just to the point, as my colleague mentioned, the agency has a specific reserve to deal with pressures that occur in the year that aren't planned for. It's that type of funding that will go to address this situation.

In terms of the timeliness, the agency is absolutely seized with the need to put attention to this. The challenge is to have trained employees. To put in employees who haven't had the appropriate training might help the timeliness problem but might bring us back to a quality issue.

The agency has the funds within the department to deal with the issue. It has been made a priority.

10:05 a.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

I've never understood why training and having adequately skilled and trained employees has been offered as an excuse for the debacle that has taken place. This credit was approved without any problem or any absence of trained employees right up until the letter was changed in May 2017. Why suddenly is an absence of trained employees an issue with this credit?

10:05 a.m.

Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency

Ted Gallivan

The challenge is to do the current work that's coming in—in other words, the normal monthly volume that has to be addressed—and in addition, redo the cases that need a second look. That increases the volume of cases per month, which creates a pressure to have additional resources with eyeballs on those types of funds.

10:05 a.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Okay.

I don't know if we have time to really get an answer on Phoenix. In terms of the dollar amount requested here to deal with the anticipated amount of difficulties around assessing returns with incorrectly prepared T4s and other problems associated with the Phoenix system, how was that figure derived and what confidence do we have, as this problem continues to snowball and expand on an exponential basis, that the resources are sufficient?

10:05 a.m.

Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency

Geoff Trueman

What we're trying to do is ensure we have sufficient capacity on the T1 processing side to deal with the amended T4s being issued to employees who find themselves with a Phoenix issue. Where the initial T4 from the employer is wrong and the amended T4 comes in after the fact, we want to make sure we're able to process that in a timely manner, very quickly for those employees, so that we can rectify certainly the tax situation for them at a minimum.

10:05 a.m.

Liberal

The Chair Liberal Wayne Easter

I think we'll have time later to come back to that, Pat. I understand that some MPs' T4s are wrong too. I got a call on mine, which was good. It's good to see we're affected the same way as everybody else.

I have one question on this Phoenix system that may be related to policy, and you may not be able to answer.

Public servants were overpaid and underpaid, so it is going to affect them in one of the taxation years fairly severely. Is there an analysis being made to tax them on the basis that they should have been paid at rather than...? In fact, I know one individual who is $45,000 behind. That $45,000, I understand will come in this taxation year, which puts that individual substantially in a higher tax bracket.

Are there going to be calculations made to have the taxation levels on the year that they should have been received? That's a complicated area, I know, but what is going to happen there?

10:10 a.m.

Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency

Geoff Trueman

The ability to produce a correct amended T4 will allow the employee to be taxed on the correct amount of income in the correct year. When an amended T4 is issued to reflect what should have been the accurate pay level in the year, that will ensure the taxation takes place on what should have been the employee's pay.

10:10 a.m.

Liberal

The Chair Liberal Wayne Easter

Thank you.

Mr. Julian.

10:10 a.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

Thanks for being here.

I'm going to follow up on Mr. Kelly's comments around the disability tax credit, because it is very important. We've certainly been hearing about it in our ridings. You may have mentioned this, but I wanted to come back to it. How many forms are being reviewed across the country?

10:10 a.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

I'm sorry, I don't wave the information with regard to how many forms are being reviewed.

10:10 a.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

Are we talking about hundreds, thousands, tens of thousands?

10:10 a.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

We generally receive 250,000 forms in a given year. Depending on how far back we go where we're looking at reviewing those that have been rejected, it would be hard to say exactly what number that looks like.

I haven't seen in any of the material that I've received that exact number of the ones we're reviewing right now. We do receive 250,000 requests in a given year for the credit.

10:10 a.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

Normally what's the rejection rate?

10:10 a.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

The rejection rate is quite low. What we've seen in terms of the number of cases allowed versus the disallowed percentage in 2016-2017 is 14% in terms of those rejections. That's of the total number of cases of 266. That would relate to all of the requests coming in. It wouldn't just relate to a very specific groups of people, it would be everyone.

10:10 a.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

For 2017-2018, what has the rejection rate been?

10:10 a.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

I don't have 2017-2018 in my stats.

10:10 a.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

That's really the question that Mr. Kelly was getting at as well: how much higher was the rejection rate? It's not available in the materials, but that tells us, and the number of forms being reviewed tells us, the size and scope of the problem.

All of us have had constituents who have come forward who are concerned about this or have received rejections. I've never seen a figure cited as to the number of rejections over and above the normal rejection rate. If you could provide that to the committee, that would be very helpful for our work here, around the supplementary estimates as well, and also for work in the House of Commons. We need to know how many were rejected who shouldn't have been.

The other question related to that is how many Canadians have been asked to pay back their RDSPs. I have a woman in the city of Burnaby who is undergoing chemotherapy. She has a disabled son, and she is under enormous stress. She has asked for her son to be reappraised, and then he was rejected after many years of being accepted for the DTC. Of course, now they're being asked to pay back out of the registered disabilities savings plan money that they've saved up through his childhood and youth. It's incredibly stressful.

I'd be interested in knowing how many Canadians have been asked to pay back funds with their RDSPs being wrapped up, despite the fact that they previously qualified. They are no longer qualified, given the changed criteria from May until earlier this year.

Do you have any idea how many people have been asked to pay back the funds, basically wrap up their RDSPs?

10:15 a.m.

Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency

Kami Ramcharan

I don't have an answer specifically to your question because it's a program that's not run through the agency but through Employment and Social Development Canada. They would probably be better positioned to say how people are being included or disallowed in that system. But coming back to the point of what you said, just because an application initially is disallowed doesn't mean that a taxpayer client doesn't have the right to come back and provide additional information. It could have been disallowed by virtue of the fact that it didn't have enough information and more information was needed. We really encourage people whose claims have been disallowed to come back to us and have a bit of a conversation to figure out why it was disallowed and what additional information might be required from that perspective.

10:15 a.m.

NDP

Peter Julian NDP New Westminster—Burnaby, BC

Moving on to Phoenix, how many CRA staff have been impacted by Phoenix in terms of overpayments, underpayments, and how many staff basically have repayment orders? One of the things we've heard from a lot of public servants is that they were overpaid and that instead of having to pay back that overpayment they're being asked to pay back the gross amount. It is of course very stressful for somebody to have to pay back money they never received in the first place. Within the agency, how many staff do you believe have been impacted, and how many staff are being asked to pay back amounts that were far beyond what they actually received?