Finance Committee on Dec. 12th, 2024

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Minister, respectfully, when this tax trick ends is when tax season starts. There might be a lot more questions afterwards.

How are you going to handle that?

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

I'm confident that we have all the necessary mechanisms and a competent team in place.

As for the tax holiday coming up over the next two months, all the details are available on the website. Again, the teams we assigned to answer questions from businesses didn't receive as many calls as we expected, which tells me that the information is quite clear.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Minister, respectfully, there are small businesses reaching out. They're saying that the policy is very confusing. In fact, they don't know, with Lego sets, which ones are included and which ones aren't.

How do you answer for that?

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

Once again, the agency has a service that can answer any question these people may have. I therefore encourage them to call our experts for more information if they feel that what's available on the website is not enough. The service is there.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Can you answer what the difference is? Why are some toys included and some are not?

This is a policy set by your government. Is that correct?

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

Indeed, this is a policy set by our government.

As for administering taxes, I think that all the details are available on the website. Professionals are also on hand to answer more specific questions.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

Minister, as we've heard at this committee, more than $4 billion in writeoffs were given to large corporations and fraudsters. Will you grant the same type of latitude to these small businesses that will most likely make mistakes during this confusing and complex GST tax trick change that your government has implemented?

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

There's no connection between the two.

Once we reach the point of a debt writeoff, a very thorough process has already taken place, and often several years of collection efforts as well.

All businesses have to deal with the Canada Revenue Agency. I'm confident that the agency's team is trained to answer their questions according to their situation, and to set up things like repayment agreements adapted to their ability to repay. We are capable of showing compassion and flexibility in recovering funds.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

The Prime Minister used the finance minister to blow through the $40-billion deficit guardrail that she had set in the previous budget. According to the PBO, it's already over by $6 billion.

Now that he's done with her, he may replace her with the de facto finance minister, carbon tax Carney.

I have just a simple question for you. Wouldn't you agree that the Prime Minister's having done this is absolutely disgusting? That's how we all feel.

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

I flatly reject the premise of your question. I don't really think it's a question you should be asking me as the Minister of National Revenue, or as a minister of the government.

[Jasraj Singh Hallan, Conservative, Calgary Forest Lawn, AB]

It's clear that no one wants to stand up for the finance minister.

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

Everyone is ready to stand beside the Minister of Finance. Our entire team is very supportive of the Prime Minister and the Minister of Finance. I have no doubt about that.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Hallan.

Now we will go to MP Sorbara for the next five minutes.

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

Thank you, Chair.

Welcome, everyone.

Minister, I'd like to start by saying thank you to the CRA and all Canada Revenue Agency employees who, during the global pandemic, delivered, at an accelerated and never-before-seen pace, a number of programs to Canadian families and to Canadian individuals and businesses.

For example, Commissioner Hamilton, I'm looking at the Canada emergency wage subsidy. It had three and a half million applications and 460,000 unique approved applicants, and it delivered over $100 billion to Canadian businesses and supported over five million workers. That was delivered in record time by the CRA. It allowed us to recover and come out of the global pandemic faster than almost any other country in the world.

We all know the human consequences or costs during the pandemic, but we also know that the Government of Canada and the Canada Revenue Agency employees were there, working hard—tirelessly, I would say—at the time. I was a parliamentary secretary for the agency at the time.

I wanted to say thank you to the CRA and to all of its employees.

When we look back at history, in decades or in a few short years, we know this will be a textbook case of the efficiency of delivering government services and benefits to Canadians in their time of need. We were there for Canadians; we had their backs, as we always do.

We will be coming up to tax filing season in a few months.

This is for Commissioner Hamilton and the minister.

We've automated a number of benefits. What I mean by that is, once Canadians file their taxes, they automatically receive the benefits. I want to get a comment, Minister, on how important that is to our ability to reduce poverty levels, especially with the Canada workers benefit, and deliver those benefits to Canadians.

Commissioner Hamilton, do we have a rough idea of how many benefits and credits Canadians receive through filing their taxes?

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

Thank you for thanking the agency's team, a team which you were a member of, incidentally. I think the team did an outstanding job, even during the COVID-19 pandemic.

As we've shown, supporting the most vulnerable Canadians is one of our government's priorities.

One of the programs that I'm most proud of is the Canada child benefit. I remember that it was one of our first decisions. We decided to put all of the money for benefits and credits for children and families in the same bucket, and we put additional money in it. It is being distributed with a wage-based approach. This is why the agency is now responsible for it with this wage-based approach, as are many other benefits.

One effort that is very interesting is the community volunteer income tax program, in which volunteers do taxes for people who need assistance. This is another program that we can be very proud of. In the end, the volunteers in this program allow these vulnerable people to get up to $2 billion in benefits. I'm just talking about this program.

The commissioner may be able to give you more details.

[Bob Hamilton]

Thank you, Minister.

Thank you for the kind words. I know that all of the agency employees appreciate the kudos that we get from time to time for how we delivered during that very, very stressful time. As we've moved into the compliance end of things, maybe some of the halo has come off a bit, but we're very proud of what we were able to do.

On your question, yes, the automation of benefits is part of a move at the CRA. We're trying to make it easier for people to get the benefits. You do have to file a tax return, so how do we make it as simple as possible? It could be automatic; you don't have to do anything. Like we just do with the carbon rebate for small businesses, they don't have to file anything; we just send that out. We can't do that in every case, but we're doing that where we can.

Also, what we're doing through the CVITP program the minister talked about and other efforts is trying to make sure that people are aware that these benefits are out there. If they file their return, as you know, they'll become eligible for them. I say this because there are people—a falling number of people—who don't know about these benefits. They don't know to file their return so that they can get access to these benefits. We are making a big effort at raising awareness to make sure that people do file to get these benefits.

You asked a number about quantum. We issue over $50 billion of benefits per year. I think that's over 150 million payments, so it's a big business. That's an area where the agency has grown over the last couple of decades from just dabbling in benefits to now having a number of them—in the hundreds federally—and we also administer them for the provinces.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Sorbara.

That is the time.

Now we go to MP Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Minister, I'm going to ask you the same question I asked you before, along with another question. You can answer them both at the same time.

The question I asked you before is this: Are you considering using your power to appoint an investigator external to the Canada Revenue Agency to shed light on what's going on?

My other question is on a different topic.

I'm very sensitive to the illegal and immoral use of tax havens. In my opinion, the agency's accomplishments in this area, when information gets leaked, falls far short of what European countries, the Internal Revenue Service, in other words, the U.S. tax administration, or even Revenu Québec are doing. While it's definitely a complex issue, one of the problems, in my opinion, has to do with legal proceedings. The agency wins in the lower courts, where judges specialize in financial matters. However, the people planning or resorting to fraud schemes appeal the decision and the case gets brought before judges who have not specialized in the field. Since these judges lack the necessary subject-matter skills, they become plagued with doubt and rule in favour of the person being prosecuted. As a result, we fail to fight the use of these schemes the way we should.

Is the agency, or are you, considering any solutions to resolve this issue of legal cases being appealed, to give you a better chance of winning?

In short, my first question concerns the possibility of appointing an external investigator, and the second question concerns higher courts.

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

To answer your first question, I'll tell you quite candidly that I don't feel a need to appoint an external investigator because I'm kept informed through our many efforts. I don't think the ombudsman or the Auditor General sees a need for that either.

Obviously, since we don't publicly disclose all the efforts we make to combat fraud schemes, tax evasion, tax avoidance and so on, people may think that we're making less of an effort than we actually are.

Again, I'm quite confident that we're putting in a lot of effort. Our teams are specialized, and they keep getting more specialized. No one can deny that fraudsters are very creative people who never miss a trick. That's why we have joined forces with international groups.

In fact, the commissioner heads an international table of the OECD on these kinds of international finance issues. Not very long ago, back a month or a month and a half from now, the Canada Revenue Agency hosted the J5 summit. We are very active, even internationally, to learn about best practices and share information as new fraud schemes emerge. I am sufficiently confident that our team is highly competent and active nationally and internationally.

As for your question about higher courts, I am unable to give you a precise answer.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Now it's over to MP Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Minister.

Do you have an estimate of how much money is lost annually to Canada's treasury due to offshore tax havens?

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

If it's lost, I believe by definition we wouldn't have any details. As I was saying, however, we are working extremely hard with our partners here in Canada, including federal organizations and private financial institutions, as well as partner countries abroad.

Perhaps the commissioner would like to add some comments.

[Bob Hamilton]

Perhaps I'll add one point.

As the minister indicated, it can, quite often, be difficult to know how much you're not getting, but we have estimates of that. We produce a document on the tax gap, which looks at a number of areas of the tax system and how much we are collecting relative to what we think we should be. Now, there's a methodology and people can debate that, but we try to estimate it.

I don't have the number you're specifically looking for at my fingertips, but I'd be happy to send to the committee our document on that, which we repeat every few years. I would say that it's an estimate based on a methodology, but we do try then use it to help direct or influence our compliance efforts and where we want to direct our efforts.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you. I appreciate receiving that number.

This is according to an October article by CBC News:

At the height of this year's tax season, [CRA] discovered that hackers had obtained confidential data used by...H&R Block Canada.

[The hackers] used the company's confidential credentials to get unauthorized access into hundreds of Canadians' personal CRA accounts, change direct deposit information, submit false returns and pocket [millions of dollars] in bogus refunds

the crisis prompted the CRA to contact the office of the Revenue Minister

the public was never alerted to the scheme.

Why was the public not alerted about this breach, and what is being done to improve transparency and prevent future cyber-attacks like this?

[Marie-Claude Bibeau, Liberal, Compton—Stanstead, QC]

First of all, the information that allowed the fraudsters to break into people's accounts was obtained outside the Canada Revenue Agency system. In other words, it wasn't the agency's system that was hacked. The confidential information of certain individuals was obtained outside the agency's system, and it wasn't one hacker who entered the system, but rather a host of small incidents.

The first thing that the agency does in situations like this is to let the individual involved know. Their account is frozen, they are informed, and we perform all the necessary searches to track down the hacker. We also try to figure out the extent of the breach of confidential information, whether the breach was more generalized or limited to the agency. We work both to help the individual and to locate the fraudster.

Why wasn't this information made public, as was before in other situations? This situation involved specific cases, not a general risk to the public, so we didn't think it was relevant to disclose the information publicly. However, every Canadian concerned was immediately notified and their account was frozen.