Evidence of meeting #139 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Kami Ramcharan  Chief Financial Officer and Assistant Commissioner, Finance and Administration Branch, Canada Revenue Agency
Frank Vermaeten  Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency
Ted Gallivan  Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
Adelle Laniel  Chief Financial Officer, Financial Management Directorate, Corporate Services Branch, Department of Finance
Nicholas Leswick  Assistant Deputy Minister, Economic and Fiscal Policy Branch, Department of Finance
Nicolas Moreau  Director, Funds Management Division, Financial Sector Policy Branch, Department of Finance
Roger Charland  Director General, Social Policy, Federal-Provincial Relations and Social Policy Branch, Department of Finance
Rick Stewart  Assistant Deputy Minister, International Trade and Finance Branch, Department of Finance
Richard Botham  Assistant Deputy Minister, Economic Development and Corporate Finance Branch, Department of Finance

4:30 p.m.

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

Ted Gallivan

My colleague who has carriage of that file briefed recently that there's been progress since the OAG was here. The action plan that the CRA set up in the wake of the OAG audit is coming across, but I don't have the exact number to that.

4:30 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

I've spoken to tax preparers across Canada, and the number that seems to keep coming up is about 18 months. I'm curious as to whether that's getting better or worse and if you have the ability to determine the exact number.

On the disability tax credit—this is probably a question for Mr. Vermaeten—do you know the current length of time it takes to have a disability tax credit application assessed?

4:30 p.m.

Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency

Frank Vermaeten

Currently, it takes between six and eight weeks.

4:30 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

There was a commitment made to review all of the DTC applications that were declined between May and, roughly, December, when the clarification letter reverted back to the earlier one from before May 2. Have all of those assessments been done? What is the backlog currently?

4:30 p.m.

Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency

Frank Vermaeten

The large majority of those have been done. There's only a handful for which we're still waiting for the reply from the medical practitioner. We have undertaken that review.

4:30 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

How many of them were there?

4:30 p.m.

Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency

Frank Vermaeten

There were a little over 2,200; I think 2,267.

4:30 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Okay.

How many were reversed on re-examination?

4:30 p.m.

Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency

Frank Vermaeten

We don't have finalized results and we'd like to run those by the disability advisory committee. We plan to do that at the next meeting. We'd like to have them look at it and then make that information public.

What I can tell you is that when you look at the acceptance rate pre-May 2017 versus post-May 2017, after we'd done the review, the acceptance rates are virtually identical. I believe the review has been very successful.

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

So you have the data but you're not prepared to share it with this committee?

4:35 p.m.

Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency

Frank Vermaeten

We haven't finalized the data. I'd like to finalize the data, because if we release preliminary data and we're still waiting for some then that's going to create confusion when we release the final ones.

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

The reassessment of the disability applications is not quite complete then?

4:35 p.m.

Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency

Frank Vermaeten

It's not quite complete. Yes. We're waiting for a handful of them. We've sent letters to the medical practitioners we're trying to get some additional information from.

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Okay.

Quickly, on the audit, one of the concerns that have been raised with me by professional tax preparers across Canada is the issue of quality of audits. I've heard this from different regions of the country, from all kinds of different preparers, and some who even identify as strident supporters of the governing party. They tell me that the quality of audits is deteriorating and that this is causing the backlog in appeals. The comment from one accountant was that they'd had more audits of their own clients in the last year than in the previous 30 years combined. With almost all of them, the agency is wrong in a matter of law and a matter of fact. It's a question of then having to go through the appeal, which takes a long time and is extremely upsetting to the taxpayer.

With these types of criticism, what would be your comment on that?

4:35 p.m.

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

Ted Gallivan

I think I'll go to the crux of the matter, which is the difference between an accounting opinion, a legal opinion, and a litigation opinion. The agency, particularly in the branch that I lead, is working to get litigation eyes on files before we issue proposal letters to taxpayers. I think there is some truth that a legal opinion isn't the same as a litigation opinion and with the multinationals, my work—

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Accountants are complaining about, in many cases, fairly routine stuff.

4:35 p.m.

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

Ted Gallivan

In that area, we have implemented a standardized, national, quality assurance process in which all audits are subject to quality review. We have a fairly high rate of quality review. For new auditors, it nears 100% and for experienced auditors it's at 20% or 30%. That is real-time quality assurance. This does take place before we reassess a taxpayer. There are quality controls built in.

It is true that we have some issues with respect to litigation and the difference of evidence, but our statistics in terms of change rates and appeal rates don't show an upward trend with respect to small and medium-sized business and eroding quality.

4:35 p.m.

Conservative

Pat Kelly Conservative Calgary Rocky Ridge, AB

Thank you.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

We'll have to leave it there. We're well over time.

Mr. Dusseault.

4:35 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Thank you, Mr. Chair.

My first question is rather technical. The interim estimates mention a total of $822 million, but vote 1 mentions the “authority to enter into commitments not exceeding $3,565,865,062 in the fiscal year for the purposes of this vote.”

I'd like to know which of the two amounts we, the parliamentarians, will be voting on: is it $822 million or $3,565,865,062?

4:35 p.m.

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

Kami Ramcharan

The amount you'll be voting on is the interim estimates, which is the $822 million, which represents roughly one-quarter of our needs. We will come back, I think, in mid-April, when the main estimates are tabled, and that's when we'll be able to talk about the broader envelope that we have for the agency.

4:35 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

Okay, that's good to know.

But in the budget, it's a question of the authority to enter into commitments not exceeding $3.5 billion. I'll take your word for it.

I would now like to touch on another topic.

You may have seen the numbers in the response to a question on the Order Paper asked by my colleague Mr. Caron that recently circulated in the House of Commons. What caught my attention most was the decrease in the criminal investigations program budget from 2010 to the present and the decrease in the number of full-time equivalent employees assigned to the program.

Furthermore, we are constantly hearing the minister say that the efforts are continuing and increasing, and that the process is even more efficient.

How do you explain the cuts to the criminal investigations program in recent years?

March 26th, 2018 / 4:40 p.m.

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

Ted Gallivan

There haven't been any funding cuts. The budget is stable.

It turns out that the agency made the strategic choice in 2013 to reduce the number of offices and to focus on highly sophisticated schemes, overseas schemes and the practices of financial professionals, and to no longer go after convenience store owners or the average person. We are targeting more serious cases of non-compliance. For that, we needed auditors with more experience and more skills, which is more expensive. So with the same budget, we now have a smaller number of investigators, but they have much more experience.

This same strategic decision explains the drop in the number of cases. We went from one or two files overseas to 40. These files are much more complex, so we assign many more auditors to them. There are exchanges at the international level.

For the criminal investigations program, we chose to have fewer auditors, but they are more experienced, and we are focusing on more sophisticated files.

This doesn't mean that we are moving away from other areas of non-compliance, but we are taking a civil audit approach with them. If the owner of a convenience store sells lottery tickets but doesn't pay the tax, we ask the owner to pay the tax, but we no longer initiate criminal proceedings in this situation. We are pursuing people who have very sophisticated accounting strategies.

4:40 p.m.

NDP

Pierre-Luc Dusseault NDP Sherbrooke, QC

So you are doing civil audits, rather than engaging in criminal proceedings.

4:40 p.m.

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

Ted Gallivan

That's right.