Finance Committee on March 26th, 2018

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

My next question will allow us to come back to what was said earlier.

In terms of your recovery targets, the 2018 budget talks about a possible $184 million. In fact, this is the target amount for the 2017-18 to 2022-23 fiscal years. So it's well below the $25 billion mark. I imagine that everyone around this table remembers the $25 billion the minister mentioned. It's the amount that still needs to be recovered. But we are far from that amount, even considering the amounts you mentioned earlier. We talked about a $360 million target for the past year. We have recovered $500 million, and we are recovering $1.1 billion for the fiscal year ending March 31. There may be more, but we are still very far from $25 billion. I don't understand why the minister continues to talk about $25 billion.

Would you be able to share with us the breakdown of that $25 billion? Where does the amount come from? When will it be recovered?

[Ted Gallivan]

Before the recent investments, we still had a core program. Our program has 10,000 auditors.

When the minister talks about $12.5 billion a year, so $25 billion over two years, it's relative to the overall program. These are the core resources and dedicated resources that were allocated in the 2016 and 2017 budgets. When we talk about $12.5 billion a year, or $25 billion over two years, it's the overall effort of previously existing resources and new resources.

When we say $500 million a year or $1.1 billion a year, that's the additional contribution of supplementary resources; this adds to the totality of the results.

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

So these are additional amounts.

[The Chair, Liberal, Wayne Easter]

We're over your time, Pierre. Sorry.

Go ahead, Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

You have four minutes so that we can get one on from each side, Francesco.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Last week, my constituency office held one voluntary tax clinic for constituents, and I'm glad to say that I think we did 65 tax returns for individuals under a certain income. How widely has that been adopted, not in just MP's offices, but across the country? I think it's a fabulous program for many folks who maybe don't want to do the touch-tone dialling. What resources are being put in place? The feedback that we got was phenomenal from a lot of these individuals who came into the office.

[Frank Vermaeten]

It's great to hear that you're having some success.

The CVIT program is a very popular program. It's really been increasing over the last several years. We particularly welcomed the resources in budget 2018. That allowed us, again, to double the size of the resources, and that, in turn, will really increase the kind of support that we can give to volunteers across the country. Our goal is to double the size of that program within the next five years. We have hundreds of thousands of people using that program. As you know, it's for low-income people and low-income families, usually with fairly simple tax situations. They're the kind of people who often need personalized help, and I think the program is really doing that, so we're pretty proud of that.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

It is an excellent program. I'm happy to announce that we're doing another three days of it. I think we have another 60-odd folks coming in to receive assistance in filing their taxes. I think that's one of those good-news stories that you don't hear reported about the CRA. You don't hear that we're putting the funds in and making the proper investments for the CRA to do that. This is something that I think we should be applauded for.

You brought up the number of $1.1 billion. My understanding is that there was a target of $1 billion and that we've surpassed that through three quarters of the year. Can you just clarify that and provide minor details?

[Ted Gallivan]

The expectation was to identify $1.1 billion in additional tax owing, and we had met that as of December 31 or the third quarter. We're quite confident of exceeding that.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Would you say that part and parcel of that ability to collect those revenues, which would, obviously, be put into the programs that we cherish, was our providing the proper resources to the CRA over the last number of years to undertake that?

[Ted Gallivan]

Yes. To go back to the question about tracking the exact dollars that are collected, I would also emphasize that the deterrent impact of that increased effort is likely one of the factors that's influencing the 7.5% increase in corporate tax. On an annualized basis, that represents roughly $10 billion in additional tax. If you look at personal income tax, non-residents tax, and corporate tax, they're all well above GDP growth. The tax agency can't take credit for all of that, but there's a positive upward trend. It's true that we understand that if you give us a dollar, we'll generate a certain dollar in billings, but how we spend that and how we target it is also very important.

The OECD is doing work around country-by-country reporting and CRS. These are two global efforts to get greater transparency for multinationals and individuals, and we're seeing a global lift from both of those two segments ahead of those measures. These are sophisticated people, and they're starting to pay the tax they owe in the first instance.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

In terms of customer service.... We have a lot of small businesses in Canada and a lot of small businesses in the area that I represent in the region. What controls does the CRA have in place so that we don't become overzealous, if I can use that term, in terms of auditors or tax collectors auditing the mom-and-pop businesses in the riding, but actually help them with their compliance instead of going in there with a different sort of attitude?

[Ted Gallivan]

First, the resources that we've received have been targeted. A lot of the money included business intelligence IT systems to target the highest risk, and for us, the highest risk correlates with dollars. If you look at the $12.5-billion annual overall result, two-thirds of it is coming from ultra-high-net-worth individuals and multinationals. We disproportionately cover people with large dollars.

In terms of the rest of the taxpayers, the assignment of the file is done by somebody different from the person who actually conducts the audit. There's an expert there who understands that there's risk, that we're not wasting the taxpayer's time, and that we're not wasting our time. There are written procedures and guidance in there. There are supervisory reviews at various steps in the audit process. Then there is an IT system that causes regional quality assurance to take place. There's a headquarters level above that, and then it goes back to the appeals process. One of the key action plans from the agency around the appeals situation is to close the feedback loop. We get regular reports in the audit function from the appeals function that say, “It's this office, that office, that taxpayer, or that situation that you seem to be getting wrong” because we're reversing it. One of the outcomes of the OAG review is to tighten that feedback loop.

[The Chair, Liberal, Wayne Easter]

We'll have to cut you off there.

Mr. Albas.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Thank you to each one of our witnesses for the work you do for Canadians.

What I would like to do is just briefly ask, in the interim estimates or in any of the documents that are here today, whether there any increased monies to review the excise stamp that's used for tobacco.

[Kami Ramcharan]

It would be very hard to pick out a piece of the program associated with that, but that's not money that we've received additional. If we have any efforts under way right now, they have been ongoing for a number of years. It would be no different. It's not money that we would have received additional.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

At a different committee, I asked the Minister of Health whether or not she's raised concerns about the stamp with the Minister of National Revenue. That's an area where in our own committee we've heard that those stamps are being used on contraband tobacco, Baggies. If CRA is serious about tackling that issue and fulfilling its functions given to it under law, there should be a review of that program.

Second, just in regard to Mr. Kelly's questions in regard to audits and, obviously, to appeals, it's my understanding that CRA either has sought to boost or has already boosted its audit function by about 50%. Is that correct?

[Ted Gallivan]

No.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Of the auditors you had previously, there was a marked increase, though, in the number of auditors. Either you're attempting to hire or you've already hired them.

[Ted Gallivan]

Fifty per cent, even for an individual program, seems to be very high. Even in the coverage of multinationals, for example, we have roughly 2,200 employees. We've hired 150 additional, but that doesn't get anywhere near 50%, so I would—

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay, then there must have been a specific department. Was there a department that specifically saw a larger uptake recently?

[Ted Gallivan]

The most significant uptakes have been in offshore. The offshore area, since 2007, when we really didn't have an offshore area, has grown dramatically. The area of individuals with money in countries that are typically seen as tax havens has seen dramatic growth.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Again, are those experienced auditors you're bringing in from other positions from other parts of the agency, or are these new positions that will be completely staffed by new hires?

[Ted Gallivan]

The vast majority are being staffed by people who did small and medium enterprises. They move up, and so they graduate. We have attempted external hiring, because we're very open to bringing in professionals mid-career, but we have not been terribly successful. I would say that the vast majority, 80% to 90%-plus, have been internal promotions. We remain open to bringing in talented people from outside; we just haven't had a lot of success recently.