Evidence of meeting #123 for Public Accounts in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cra.
A video is available from Parliament.
Calgary Rocky Ridge, CPC
Okay. Thank you.
I completely agree with Mr. Christopherson that fundamental fairness is critical to the system being able to function. Canadians need to believe they are being treated fairly by the agency, or they will not feel compelled to comply with the law. It is incredibly important.
The other thing that's perhaps equally important is for the agency to be accurate in its work. The agency is not a for-profit corporation or enterprise whose goal is to simply collect as much as it can; the goal is to collect exactly the correct amount that a taxpayer owes—not more, not less.
My first question, then, is about accuracy. Note that the majority of those who file objections find that the objection is sustained, either wholly or in part, in favour of the taxpayer. What percentage of overall reviews or audits are objected to? You said 60% are in favour of the taxpayer. I just want that quick answer, if you have it.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
I don't know that particular percentage. I remember the 60%, which came up in the context of the Auditor General's report, but in terms of audits that go to objection, I don't have that figure off the top of my head.
Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
We can get that. I think the key point would be that it varies tremendously from payroll audits and regular filers, which is down at 5% or 10%, to multinationals, where close to 100% take us to court.
Calgary Rocky Ridge, CPC
Okay. Thank you.
On the issue of fairness and consistency, I'm certain that it's going to be quite troubling to any Canadian tax filer who reads this report to know that there are inconsistent applications of penalties and delay is actually a function of the agency itself not responding on a timely basis or of it losing information or not executing its own functions properly in any way. That's a really troubling revelation through this report.
I'd like to know what is happening right now to make sure that if you screw up as an agency, Canadian taxpayers are not going to be penalized when you make a mistake.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
That's a very good point. Can I just come back to where you started?
Yes, fairness is very, very important. We talked about returns on investment, but it is about fairly applying the tax. That's what we need to do at CRA. You're absolutely right when you say that it's not to get as much as one possibly could or as little as one could, but to get the right amount for the right circumstance. That's obviously key for us. We're trying to put in place systems across the whole organization, across the diverse set of taxpayers, that take us there.
On the issue of where we can waive penalties and interest and where that may have been inconsistent, that is something we need to take a careful look at, and we are; we've agreed in the Auditor General's report.
I would say that one of the things it's a symptom of, or a potential symptom of, is something that we are trying to address within the agency, and that is our operation sometimes in silos. Because it's a big place, we can find ourselves from time to time operating in one silo that isn't as connected as it needs to be with others.
That's been something that I've been pushing since the time I've been here. We're making progress, but you can see that it happens sometimes that a silo-type approach gives us the wrong results. We are very serious about trying to make sure that we have a better-integrated approach across the agency. That's what we're trying to do with our chief service officer. That's what we're trying to do through some of our work with clients.
Calgary Rocky Ridge, CPC
Commissioner, if I may repeat the question, I asked what you are doing right now to ensure that a Canadian will not be penalized when you have made the mistake.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
What we are doing right now, Mr. Chair, is analyzing the cases that we know about where that might have happened, understanding them and making sure that we are communicating with our people that these are the rules. We'll look at whether we have the right policies and procedures—
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
—and we are in the process of fixing that.
Calgary Rocky Ridge, CPC
Okay. Your answer there was phrased in a way such that you doubted that this happens—that this may happen—and the Auditor General said that it does happen.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
No, I didn't mean to imply that it may.... I accept the fact that it has happened and that we need to be on top of it. I'm just saying that I, or we as an agency, need to look at the cases in which it did happen to understand them and figure out how we can fix them.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
No, I'm not disputing that it can happen.
Conservative
The Chair Conservative Kevin Sorenson
Just on that, we're looking for remedies. We take the action plan and your response and we build on that, but I think Mr. Kelly's question is a fair one.
Right now, what can we do so that we can see a difference right now? What about an amendment to the Taxpayer Bill of Rights to have interest, etc., automatically waived when the CRA fails to meet the set time limits? Would you support something like that? If money is owed to CRA but CRA isn't meeting time limits, what about if that interest is waived across the board? If it works the other way, such that there's actually a penalty in some regard so that CRA feels the crunch, would you accept something like that?
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
Mr. Chair, I'm not really in a position to accept or reject particular ideas right now. We could take a look at them and then see what we can do. That's the process we're in at the moment, but as you know, we operate in a fairly complicated space and we need to make sure that we understand the full implications of anything we might change.
I'm happy to take more of a look at it—we are looking at it—but I know that Ted was looking to jump in with a response that's maybe a little bit more tangible.
Conservative
The Chair Conservative Kevin Sorenson
We're pretty well out of time.
I looked up the Taxpayer Bill of Rights. There are 16 points to it. I so much appreciated Mr. Arya giving us an example, because we've all had those types of examples. I've had shoeboxes of paperwork brought into my constituency office so our staff could pore through this before it went to CRA. Then you get the calls of timelines not being met.
Maybe one other question is that in some ways the OAG is asking you to set these time limits and to make them very clear, but if there are other parts of the bill of rights that aren't being met, I wonder what good timelines are if the whole principle of the bill of rights isn't being met.
Anyway, our time is up.
Conservative
The Chair Conservative Kevin Sorenson
Yes. That wasn't the conclusion. I still have Mr. Sarai. Go ahead, Mr. Sarai.
Randeep Sarai Surrey Centre, Lib.
Thank you, Chair.
This question is for the commissioner, but perhaps the Auditor General's office might want to take heed if it hasn't been looked at in this round.
My riding is Surrey Centre. I'm from British Columbia, from Vancouver, where high home prices are a huge factor. A lot of media reports have been focusing on offshore money coming in and homes worth millions and millions of dollars being bought by students, housewives, etc., with no significant taxable income.
I see you've been doing a lot of audits on a lot of the larger corporations, the multinationals. However, a study done by the provincial government a few years back showed almost $1 billion a month coming into the country just in residential real estate in the Lower Mainland. That wasn't even commercial. It wasn't outside of greater Vancouver. It was simply residential real estate. I think it was over $10,890,000,000 a month that was coming in—astronomical numbers.
Has the CRA office looked into net worth audits or audits of that nature, and how many have they done? Have they recovered any funds from those audits?
I'm not saying in a stereotypical manner that anyone bringing in offshore money is bad; it's those who are not reporting their incomes and not legally bringing in those funds that I'm particularly concerned about.
Commissioner of Revenue and Chief Executive Officer, Canada Revenue Agency
Mr. Chair, I will ask Ted to elaborate. As he mentioned earlier, this is one of the areas where we are focusing additional effort. It's real estate transactions in Vancouver in this particular case.
I would say that it's part of.... We talked about fairness and how we try to make the tax system resonate as being fair for others. We are looking at places where there are risks. Part of what we're doing with the additional people we hire, the additional analytic tools and data, is a better job of assessing risk. We think that through those sophisticated techniques, we will be able to focus on the areas where our energy can be best deployed for the good of all Canadians. They can see that this is a fairer tax system, one that is focused on risks.
We are focusing additional effort in that area. Indeed, we publish on our website statistics about what we're doing—and not just in Vancouver, but in Toronto—as a result of our real estate audits.
I'll let Ted explain briefly the point that you raised.
Assistant Commissioner, International, Large Business and Investigations Branch, Canada Revenue Agency
On the real estate, again, to go back to the ROI and some of the discussion here, we've looked at thousands of files. I think we're well north of $200 million in identified tax through these projects. I think part of the thinking was about the fairness of the regime and the concern of Canadians about some tax non-compliance helping fuel the situation.
We stepped up our resources in that space. That ROI may not be as high as if we'd made the investment in another sector of the economy, but we thought it was important for other reasons to send a message of deterrence.
I would also mention that some referrals to criminal investigations are coming out of that work, and some focus on developers. It's been a broad-based focus at the agency. It includes one neighbourhood in B.C. where we looked at every single home and owner of the home and did exactly what you said in net worth assessment. If it is the case of a student, is that a tax compliance situation or not? That idea of coverage of neighbourhoods where the average home is worth more than $3 million is exactly what we're trying to do.
All of that is reported on our public website. To get back to the point of fairness, we are trying to report to the public.
I'd like to come back to the question of taxpayer relief and the question of inconsistency. There are two important points of clarification. The first is that we're talking about proactive relief. Any Canadian today, if they feel there's a CRA delay, can request taxpayer relief. That will be given consideration. If the agency does cause delays, we'll be accountable and we'll consider a taxpayer relief situation. What we're talking about in the OAG audit is proactive relief. When you have a human auditor assigned to you and an audit goes on for 100 to 200 hours, it is the procedure of the agency to proactively consider that request and not wait for the taxpayer to ask for it.
Where the OAG has pause is when it's a five-minute interaction, an automated letter, a smaller-touch situation. That's where we have to get better at putting the client at the focus, thinking, “Could we, or should we, do it there?” We hadn't done it on the low-touch interactions. We had done it on the high-touch interactions.
Conservative
The Chair Conservative Kevin Sorenson
Thank you, Mr. Gallivan, for that clarity.
You have more time, Mr. Sarai. Go ahead.
Surrey Centre, Lib.
Thank you.
With regard to penalties and interest, there seems to be a discrepancy in terms of some officers giving more interest and penalties and other officers giving less weight. I'm surprised no consistent methodology or guidelines are given to officers so that everyone has the same. For example, is it a delay due to processing of the audit itself? Is it based on medical issues? Are there certain economic drivers at the time?
What are those guidelines? If we do have them, then why are they not being applied evenly across the board?
