Finance Committee on May 5th, 2016

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Without offence, I will say that it's hard to hear you refer to this document, to the credibility of the actions, when I'm questioning a statement of how taxpayers are treated. Let's be very careful here. If a determination of treatment is about hours and legal success, could you not argue that someone who has paid KPMG $100,000, who can afford lawyers, would receive a more favourable treatment? The average Canadian, like someone in my riding, say, a single mother, might owe CRA $1,200, and they have their Trillium and HST garnished.

If the determination is based on hours in court or accountant fees, how would the average Canadian fare, who cannot afford a $100,000 fee to KPMG? How is that fair treatment across the board for all taxpayers? To your earlier statement about Madam Henderson working on a file for several months, in my constituency it takes nine to 12 months just to receive a response to an appeal.

We can communicate with CRA only by fax. May I have your phone numbers or email addresses so that my constituents can start negotiating settlements?

[Andrew Treusch]

It's useful for members of Parliament to be aware of the recourse available to all Canadians. It's all about fairness.

The Canada Revenue Agency has an independent ombudsman for service complaints, who reports directly to the minister. If your constituents have service complaints, I encourage you to send them there. We have a dedicated complaint resolution program available to all members of Parliament for addressing constituent complaints.

A taxpayer in financial hardship has the ability to be considered for financial relief. This is available to all Canadians. A taxpayer who disagrees with an assessment has a right to an appeal. We have thousands of appeal cases. They have a right to be heard. An appeal can overturn an agency decision if it's in the interests of the taxpayer and in accordance with the law.

Finally, on debt collection, as I saw in today's newspapers, we've been emphasizing that, if a taxpayer has a debt beyond their means to pay, they should please come talk to us. We're happy to work out a resolution. This is available to all taxpayers.

We encourage taxpayers all the time through our promotions to take advantage of the benefits, the exemptions, the credits, the deductions that are available to Canadians.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

How do we get in touch with CRA on behalf of taxpayers who cannot afford to pay their debt? Whom do we contact? Do they have to fax it in? That's the process that CRA has set up.

[Ted Gallivan]

Taxpayers with a debt would be assigned a collection officer, and they would have a direct phone number for that officer.

[Andrew Treusch]

We field about 23 million calls through our contact centres. I'm very proud of our employee service at the contact centres. This government has recently invested significantly. We had been struggling with call volumes, and I'm pleased that this will give us the ability to be more responsive.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

I sincerely hope that it does improve with this commitment of funding because I have been told that, once someone actually gets through to a live person, it's quite helpful, but the problem is that they don't have the access to the live person. We don't have the teams to contact. The average person can't afford $100,000 for a KPMG representative to negotiate settlements over months when their appeals actually take nine to 12 months just to get a response.

My last question, because I know I'm running out of time, is that I'm wondering if KPMG itself has been issued any type of fine or penalty for the Isle of Man.

[The Chair, Liberal, Wayne Easter]

I think Mr. Gallivan wanted to answer on the original point as well about getting to CRA, and Mr. Treusch on your second question.

Mr. Gallivan.

[Ted Gallivan]

Thank you, Mr. Chair.

Just briefly, at any given time like today, we have 230 high-end cases that are before the courts with large dollar values at stake. However, each year we give 400,000 Canadians taxpayer relief. We resolve over 90,000 tax appeals, where a distinct part of the agency reviews, for free, taxpayers' representations and makes adjustments where it sees fit, so the numbers of ordinary Canadians being served by the agency greatly exceeds the quantum.

In terms of access, I talked about executives needing to be accessible, not just to KPMG and high-end accountants but to all taxpayers. In that same interview I talked about how I, personally, as a senior executive, reviewed all minister mail. If a taxpayer writes to the national revenue minister or the commissioner, somebody at my level actually approves the response, and we don't do so blindly.

I think an important message is that it's not just the large firms that have access to CRA executives but it's the CFIB, boards of trade, accounting firms, bookkeeping firms, and through these other programs I mentioned, the CRA reaches out to help ordinary Canadians.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

Mr. Treusch.

[Andrew Treusch]

Thank you. I'll be very brief, Mr. Chair.

Just for balance, I would draw your attention to the volunteer tax preparation program, where Canada Revenue Agency, with a community group of some 16,000 volunteers, help low-income Canadians and new immigrants prepare their tax returns for free. Over 600,000 Canadians are supported by this volunteer program. CRA employees volunteer their own time to support this program. Again, we're very pleased to see the government's recent investment so that we can further expand the volunteer program.

[The Chair, Liberal, Wayne Easter]

Now we have Mr. Liepert for a five-minute round.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

Thank you for being here, sir, and thanks to your team. We'll see if we can maybe get back to the reason why you're here.

I also want to make a couple of comments briefly at the outset to support what my colleague said in his initial comments in response to what our chair opened the meeting with.

My particular constituency office receives a fair number of calls from constituents who are dealing with issues with the CRA. I must say that I don't think I can recall one particular concern by citizens on this particular issue, so, Mr. Chair, I can only attribute that to the fact that we have far fewer listeners and viewers of the CBC in Alberta than they do in Prince Edward Island.

[The Chair, Liberal, Wayne Easter]

That may be, but I can tell you I've had lots of calls on this issue.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

I wanted to talk a little bit about some of the dollar numbers that have been thrown around, and I'll just quickly walk through them. Correct me if I'm wrong, but I just want to confirm some of these numbers.

It's my understanding that in 2015 the previous government committed approximately $15 million, and the return on that is somewhere in the range of $1.5 billion.

[Andrew Treusch]

I fully agree with the last part, that the return on actions from budget 2013 was $1.57 billion. In my remarks, I mentioned that was actually three times larger than the estimate we had at the front. I would love to say that return on investment was on a $15-million investment, but that would not be an accurate portrayal. It was largely a result of the rebuilding of our approach to audit, and in particular, under the leadership of people like Ted Gallivan, our new integrated risk assessment system to audits. This is a system within the agency that is used in our approach to large companies, those over $250 million in revenue, and it's based on a math algorithm with 200 variables.

In other words, we have gotten better and better, through business intelligence, in where we focus our audit assets, and that came into effect right around that time, so that, along with the tools, produced the kind of revenue gain you referred to, sir.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

One of our responsibilities is to ensure the budgetary dollars that the government is putting forward are well used. We have just had an incredible increase in the amount that's been provided to the CRA—at a time when we're running a $30-billion deficit, I might add.

At what point do the diminishing returns start to show? I heard you say that these additional dollars will allow you to do something like a 12-fold increase in examinations. It's one thing to examine something and spend a lot of time and money doing it, but it's another thing to examine something that's going to lead to these increased dollars.

I'm sure you're not going to suggest that you don't want the money or you don't need the money, but is this an appropriate amount? It seems to us—to me—to be an awful lot of money.

[Andrew Treusch]

It's an excellent question. In the recent budget, $440 million was invested in the agency over five years to increase our ability to tackle tax evasion and tax avoidance. We are committed to returning to the government, to the crown, $2.6 billion in revenue. That's the proposition.

Sir, your question about return on investment is an excellent one. Within the agency this is a key factor in where we mobilize our audit activity and resources. We calculate that, and insofar as there is a diminishing rate of return, it's probably not an area for greater activity.

[Ted Gallivan]

Just quickly, consistent with some of the feedback you may be receiving, these budgeted dollars are targeted in specific areas. There were dollars specifically for the promoters of tax schemes. There were dollars specifically to focus on people participating in aggressive tax planning. There were dollars to embed legal experts in our criminal investigations program.

Some of the money was to focus on those stubborn areas where the ROI might be lower, but the fairness of the regime is called into question if we don't police them appropriately.

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

How do you come up with the $2.6 billion or $2.8 billion or whatever?

[Ted Gallivan]

We took our current yield, and we cut it in half. In other words, we took our current average yield, and to be conservative in a mathematical sense, we cut it in half.

[The Chair, Liberal, Wayne Easter]

Thank you, Ron. I know you'd like that conservative number.

Mr. MacKinnon.

[Steven MacKinnon, Liberal, Gatineau, QC]

Thank you, Mr. Chair.

Thank you all for being here. Welcome to the committee.

My mother spent her whole career at what used to be known as Revenue Canada. It would no doubt please her to know that her son was in the midst of questioning the agency's commissioner and top managers.

Ms. O'Connell's question really taps into how Canadians feel about the way the CRA treats them as taxpayers.

My questions are a bit more high level, though. Canada is one of the countries that does not make its estimated tax gap public, is that right?

[Andrew Treusch]

Sir, I'm not entirely sure what you mean by “tax record”.

[Steven MacKinnon, Liberal, Gatineau, QC]

I'm referring to the tax gap.