Evidence of meeting #194 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was taxpayers.
A video is available from Parliament.
9:30 a.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
I have nothing. Honestly, I don't know anything about the circumstances of that.
9:30 a.m.
Banff—Airdrie, CPC
I guess it's really unfortunate that the minister chose not to stay for longer than half an hour because, apparently, she would be the one who could address this. Here she is not being accountable. It's another example of why this is a problem. You can't tell us anything about this. There was a review that was put in place. You can't tell us anything about what happened. You can't tell us anything about it or what it recommended. You have no idea. The minister who should be responsible to answer this is no longer here. This is really quite unfortunate.
9:30 a.m.
Liberal
9:30 a.m.
Banff—Airdrie, CPC
I have done that a number of times, but I don't get any answers there either, Mr. Chair.
9:30 a.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
The only thing I can commit to is to go back and see if there is anything that I can learn, but I would expect that the Minister of Finance would—
9:30 a.m.
Banff—Airdrie, CPC
I would sure appreciate that, if you could. Sorry to interrupt, but if you could, that would be great. If you could provide any information that you can about this review and what took place and what recommendations were given by the agency as a result, to the committee through the clerk, that would be appreciated.
9:30 a.m.
Liberal
The Chair Liberal Wayne Easter
Mr. Hamilton could provide them to the clerk.
Mr. Gallivan, did you have something you wanted to add in this whole series?
9:30 a.m.
Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
I think this issue has been raised before, and we did take a look back. I think the review you're referring to is the review conducted by the Department of Finance on proposed legislative change, so that would be within the purview of the Department of Finance.
To answer your question specifically, no, that wasn't the crackdown. If you look at the OAG report, at exhibit 7.2, when they say they're finding an additional $3.4 billion a year, that isn't in the small and medium enterprise space. That's with multinationals, GST, large, underground economy, etc., so to answer the question, the extra $3.4 billion they're finding per year is not in the space that you're concerned about.
9:30 a.m.
London North Centre, Lib.
Thank you very much, Mr. Chair.
Thank you to the officials for being here today.
First of all, we keep hearing that the minister didn't stay, that she wasn't here long enough. I think if my colleagues had their way we would be here until Christmas questioning the minister. The minister did not “run for the hills”, as my colleague opposite said. She was here. She answered questions and then went to a cabinet meeting. I think you could do worse in life, Mr. Chair. If anyone wants an example of a minister running for the hills, I would remind my colleagues of Julian Fantino, but I know they don't want to go down that road. Let's be honest with ourselves.
9:30 a.m.
A voice
Down that hallway....
9:30 a.m.
London North Centre, Lib.
Down that hallway, that's very good.
Turning to the officials, in looking at the Auditor General's report, we do see that there are some problems, which I hope will be worked on. First of all, the Auditor General reports that there has been inconsistent time given to taxpayers to respond to requests for information when audits take place. Particularly, there are differences between those earning employment income versus large businesses. What is the response of the CRA going forward on this? How will this problem be addressed?
9:30 a.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
As we touched on elements of this earlier, I think our response is both to recognize the different circumstances of an individual with employment income, relative to a small business and relative to a large business. As my colleague indicated, we may need different rules in place to get to the right result in all of those cases.
However, we do take the point that the Auditor General raised that maybe we need to review our guidance, our rules and our operating procedures, at the top end, in terms of the multinationals offshore. Should we have better rules to give us more strength to compel information to come forward earlier? Then at the low end, as I said, for people on employment income and regular-type taxpayers, we need to make sure that we are opening up the opportunity, if there's special circumstances or if people call us, that we're showing the flexibility to extend the rule where it's necessary. Essentially, we think that the Auditor General raised a valid point that we are going to look at and try to solve, within the context of all the different taxpayers that we deal with.
9:35 a.m.
London North Centre, Lib.
Thank you very much.
If I can follow that up with a question on audit completion times, variations when it comes to particular regions and other issues. I did want to ask a question about international and large businesses, regarding how audits completed in some regions are done much quicker than others. In fact, there's a discrepancy of about 150 days from one region, in the best-case scenario, to another region, in the worst-case scenario.
Could you tell me how the CRA plans to respond to that problem?
9:35 a.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
Another area that we've committed to look at are the regional discrepancies. As we look at it, I guess the only thing that I would say is that we do need to keep in mind that the regions can have different workloads that they work on. You might have different sectors at play there that might require more or less time. When you compare across regions, we do need to think about the differences in that region, so in some cases at the CRA, we will take a workload and put it in a particular region, which could have an impact on their statistics.
All of that to say, we are concerned about consistency. We want to make sure that we leave room for people to make judgments about how to best proceed, but that has to be done within a framework that tries to get the maximum amount of consistency across the country. I would just caution to say that consistency doesn't mean necessarily that each region has exactly the same number because they might be dealing with different circumstances.
The point is taken and we've committed to do a review of what we see regionally to see if there's something that we need to fix up.
Sorry. Did you have another question?
9:35 a.m.
London North Centre, Lib.
I do. As you know, a key finding in the report was that CRA waived interest and penalties for some taxpayers, but didn't for others. Why was that the case and what will be done to address this?
9:35 a.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
In that case, there is one thing that's important to recognize and I will ask Ted to comment on this one. There are two ways that we provide relief. People can request it of the CRA and we look at that. The other is proactive relief, where we look and we see whether we took too much time. Some particular situations occur where we think proactively that we want to provide that relief.
Again, that is an area where we've committed, within the response to the Auditor General, to look at our rules, for example, what constitutes an undue delay, where we might think that we took too long, so that we take a compensatory action for the taxpayer.
The Auditor General's report mentions that we may not be consistent in how we apply that across the board. We may not have clear enough guidelines for our employees. That's an area that we're looking at to see if there is some improvement, but I will ask Ted to comment in this space as well.
9:35 a.m.
Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
We totally understand that, when a human auditor is assigned to your file, there's a greater likelihood of an agency delay. We proactively consider taxpayer relief in those cases. When it's a more automated interaction, like a system generated letter, we hadn't turned our mind to how to do that because the incidence was much lower. However, as the OAG pointed out, in the interest of fairness and even if there's not a human being assigned, we should turn our minds to how we might offer proactive relief when there are delays on that side. We've committed to take a look at that.
9:35 a.m.
NDP
Pierre-Luc Dusseault NDP Sherbrooke, QC
Thank you, Mr. Chair.
I'd like to look at the second part of the report, which was the subject of my last two questions for the minister, that is to say, managing and reporting on results, two extremely deficient areas within the Canada Revenue Agency.
My impression is that the Minister of National Revenue had three figures imprinted on her memory: $1 billion, $25 billion and 78 convictions. The people at her office asked her to remember the figures 1, 25 and 78, and she has constantly repeated them: we've invested $1 billion, we're going to recover $25 billion, and we've obtained 78 convictions to date. She has repeated the figures learned by rote.
We realize from the Auditor General's report that those figures may mislead some people because they're not really true. The methodology used to arrive at those figures isn't that good, particularly regarding the $25 billion figure, which is problematic. That was the subject of my first question.
However, given the time I have left, I'd like to talk about convictions first. Earlier the minister told us that $1 billion had been invested in the plan and that it was working. I asked her questions about offshore tax evasion.
If the plan's working, how many convictions have there been for offshore tax evasion in the past three years, since the Liberals came to power?
9:40 a.m.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
I'll give you part of the answer, and then I'll ask Mr. Gallivan to give you the rest.
With respect to the first part of the question, I think the methodology used to calculate the revenues we can recover is correct, but the Auditor General noted one point. It's right to say that these are the revenues we'll recover as a result of our audits, but other variables must be considered. We have to take into consideration notices of objection that may be filed, legal proceedings that may be instituted and potential problems that may be involved in recovering certain amounts of tax.
So we've committed to conducting a study simply to supplement the information and perhaps to present slightly different figures that cover all the steps. However, it's true that we use revenues generated from audits for the Department of Finance and the Treasury Board. That's valid and important, but it's interesting to see that other steps have to be considered. Perhaps that'll give you a better idea of the total revenues generated from audits and after consideration of the other steps.
I'm going to turn the floor over to Mr. Gallivan.
9:40 a.m.
Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
You asked a question about convictions. I think that can be explained in large part by the fact that you have to wait for the right time. In 2012, the agency decided to focus on more delicate cases. I'm not talking about cases involving offshore activities, but rather more serious cases. In the meantime, the average penalty on conviction increased from $130,000 to $1.6 million. Penalties on conviction last year were almost 10 times more than previously.
More recently, we decided to put the emphasis on overseas activities, and we're now focusing on 50 open cases. These aren't old cases. We're at the search warrant stage, for example. We've issued news releases to announce that, in several of those cases, and even in cases related to the Panama Papers, we're already at the search stage. However, we're not currently talking about convictions for overseas activities because it's not yet time for that. These are cases that take five, six or seven years to complete.
So, as regards the status of those cases, we're more likely talking about 50 ongoing cases. They represent nearly one third of our current volume, which wasn't previously the case. Consequently, we have 50 mature cases currently under investigation.
9:40 a.m.
Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
It's not zero.