Evidence of meeting #7 for Public Accounts in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was debt.
12:35 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
There are persons, there are businesses, there is GST, there are corporations.
12:35 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Well, persons, corporations, or whatever--entities. Have you any idea how many entities owe you this debt?
12:35 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
About 3 million.
12:35 p.m.
Liberal
12:35 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
Between individuals, GST, corporate accounts, payroll....
12:35 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
Okay.
On page 239, paragraph 8.4 states that you collect on behalf of provinces except Quebec, and you pay to each province the total amount assessed. Have you had any corporate tax problems within that debt, or are you concentrating only on personal debts and nothing else?
12:35 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
Under the tax collection agreement signed between the provinces and the federal government, those provinces that did keep their corporate tax administration--Ontario, for example--manage their own, but for all the other ones, where we have tax collection agreements, especially on individuals because that's the most widespread one, the provinces are paid on the face value of the assessment. Penalties, interest, and costs of writeoff are actually absorbed by the federal Crown. So there is a process by which, every year, that cycle ends, and that sets the reconciliation of how much money will go on a monthly basis or be retroactively adjusted.
12:35 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
That doesn't go into your debt, does it? Suppose you assessed for $500 and you collected only $300; where is that $200 going?
12:35 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
In the writeoffs.
12:40 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
If we have an assessment, let's say, on a combined federal-provincial debt of $500, then we collect $300 of that, the province gets paid the face value, and we absorb the loss of $200 at the federal level.
12:40 p.m.
Liberal
Yasmin Ratansi Liberal Don Valley East, ON
My last question is this. You have an allowance for doubtful accounts of 26.1%. Is that an acceptable risk allowance? Is it a benchmark that is used?
The reason I ask this is that hospitals never say what their risk is. They say 10 debts are allowable. What is your benchmark for allowance for doubtful accounts, considering the size of this agency?
12:40 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
I'm going to turn the clock back to when the government decided to go full accrual accounting. Up until then the allowance for doubtful accounts was almost like a memo entry in our books, because the government was accounting on a cash basis. The allowance of doubtful accounts...I think the first one was done in 2002, and it was quite a challenge to start investing time and effort to evaluate the collectibility of those accounts. The OAG reviews that methodology every year, and they pass judgment on the accuracy of that estimate.
We don't have a long track record of managing the allowance for doubtful accounts in a very proactive manner. It's a question of priority for us, and we're devoting a lot of time and attention to making sure the value is accurate.
12:40 p.m.
Deputy Commissioner and Chief Operating Officer, Canada Revenue Agency
If I may clarify regarding the example you used of $500 owed to the agency, we pay the province the value of the assessment under the tax collection agreement. They get the $500 right away. Of course, if they only pay $300 initially, the first order of business is to establish an account receivable for that taxpayer and use whatever tools we have at our disposal. We try to reduce or eliminate the $200. Sometimes interest and penalties may accrue and those payments are paid to the federal government.
The essential deal in place with the provinces is that we will administer your taxes for you free of charge and we will pay you on the basis of assessment. That's not a bad deal for provinces, because at the end of the day the overriding philosophy is that the country and the economy are best served if we have a single tax administration to reduce the compliance burden.
12:40 p.m.
Liberal
The Chair Liberal Shawn Murphy
I'm sorry, you're over five minutes, Madame Ratansi.
Mr. Williams, five minutes.
12:40 p.m.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
Thank you, Mr. Chairman.
My first comment is that having written off all the debt and cleaned up your files during a time of uninterrupted economic expansion.... We see tax debt going up all the time. This I find quite disconcerting, because when the economy hits the tank, I don't know what kind of shape you're going to be in, but I know your collectibles are going to go straight up. Do you have a plan to deal with that, yes or no?
12:40 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
We do not always have control over why people don't pay.
12:40 p.m.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
No, I said, do you have a plan to deal with it when you go into a recession, yes or no?
12:40 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
Specifically a recession?
12:40 p.m.
Assistant Commissioner, Taxpayer Services and Debt Management Branch, Canada Revenue Agency
It's one of the factors that come into play. We have plans--
12:40 p.m.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
If the economy turns down and receivables go up, do you have a plan to deal with it?
June 6th, 2006 / 12:40 p.m.
Deputy Commissioner and Chief Operating Officer, Canada Revenue Agency
Our plan, Mr. Chair, is designed to improve the overall performance of the collections program regardless of economic plight.
12:40 p.m.
Conservative
John Williams Conservative Edmonton—St. Albert, AB
I take that as a no.
I'm quite concerned about things such as this. You've mentioned that younger debt is easier to collect than older debt, yet half your debt is old debt. The reason it gets to be old debt is that you didn't collect it when it was a young debt. Why didn't you collect it when it was a young debt?