Public Accounts Committee on March 20th, 2017

[Bob Hamilton]

It's from the date received, I believe.

[Mireille Laroche]

It's from the stamp date on the objection. It's not the date received. It's the date when it was put in the mail by Canada Post.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Okay, so if I submit an objection, it's 180 days from the date when I put it in the mailbox.

[Bob Hamilton]

The key thing is that it is not when it's assigned.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Right. That's what we were looking for.

On that theme, what percentage of objections are sent in by paper through Canada Post versus online?

[Mireille Laroche]

Thirty-five per cent are sent electronically, so the rest are either by fax or by mail.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Okay, so the 180 days start when I hit the submit button on my objection.

We rank quite low compared to other countries and their processes. I'm hoping you can comment on that. Again, I recognize that you have only been.... Your get-out-of-jail card today is that you have been on the job only seven months. Actually, I should use the jail reference, not as...anyway.

In terms of the processes in other countries, can you comment on why we rank so low and how you are striving to get us better?

[Bob Hamilton]

Just to be clear, my goal is not to use the get-out-of-jail card. I've been here for seven months, but I've spent a long career in the tax system, so while I may not know all of the intricacies of CRA, I feel that I can speak for the agency.

On the issue of what other jurisdictions are doing, such as the U.K. and the U.S., the U.K. is one that caught my eye. Their performance seems to be much better. I had the opportunity to meet my U.K. colleague last month, and we've started a process where we can go and learn from them. I don't know yet how much of it is that they are measuring different things, but certainly to the extent that they have some best practices that we can incorporate, or they have found a way to do things on a more timely basis, we are going to uncover those.

It's part of a broader effort to get best practices from places like Citizenship and Immigration, which had a big backlog. How did they do it? What did they do? Mireille has been talking to counterparts in other agencies and governments that have had backlogs about the best way to attack this. We will be uncovering some of those international best practices and incorporating them into our plan.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

That's good to hear. Hopefully that falls along the theme of the customer service aspect, too, because it seems that a large part of this report is based on a lack of customer service from your agency. Again, we heard my colleague read some emails. These are probably pretty stressful situations for families, not only in his riding but across the country.

Does looking at the processes in other countries and agencies extend to ensuring that there is none of the malicious aggression from the phone agents that appears to be a bit of a theme, as we've been hearing?

[Bob Hamilton]

I would just caution that while there may be some examples where somebody does an inappropriate thing, I think the vast majority of what we do.... We are able to deal with a number of cases, 24 million calls a year, and a lot of good is going on there. But we are looking at other jurisdictions—

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

We recognize that probably we are not hearing about the good people, we are hearing from a lot of the people who are upset.

[Bob Hamilton]

As I said, I get reaction too, and the people who have a negative perception are more likely to let me know. There is a lot of good that's going on out there. I just feel that I need to say this. But we are looking at what other jurisdictions are doing.

One example that has come to my attention in the first few months is Sweden. They underwent an exercise and really transformed themselves from having a very negative perception by the population to having a positive one. I don't know everything there is to know about that, but that's an example where they did some things that worked positively for them, and there may be some things they tried that we can do and that would help us.

Again, we are definitely raising awareness of this issue within the agency right now, making sure that everybody approaches whatever issue they are working on for the agency with a service culture in mind.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Jeneroux.

On that, is there any system of grading? Do we have any kind of standard that says, you know what, in the G7 we're in the top three or the bottom two, or anything such as that?

[Bob Hamilton]

I can certainly go back to the agency and see if there's more, but one thing I am aware of is that periodically the OECD does a study on tax administration. I think it's every two years, and one is coming out. It looks at all the aspects of tax administration, such as how to collect your debts, the service, and it presents what countries are doing. It's one of the most comprehensive views that I know of that compares different jurisdictions. Going across a wide variety of countries there's a bit of difficulty in making direct comparisons, but it provides us an example of where we might be doing better.

We're actually using that and we will be using other pieces of information to try to ensure that we are a world-class tax and benefit administration. That has been one of the things I've been emphasizing for the agency since I came on board.

How do we ensure that we are that? One of the ways is to look around at countries through these kinds of studies to see who's doing what and how people are doing.

We had a sample of that in the appeals study, which saw that, in timeliness, we didn't fare very well. However, there are broader studies that look at other aspects of tax administration and we'll be paying attention to those too.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

We'll go to Mr. Chen, please.

[Shaun Chen, Liberal, Scarborough North, ON]

Thank you very much.

Coming from an education background, I want to focus on the fourth theme that the commissioner brought up, which is learning from objections and appeal decisions.

Mr. Hamilton outlined the 166,000 outstanding objections, 55% of which are group files that concern such disputes as tax avoidance arrangements, such as gifting tax arrangements.

I came across an article from a CTV news report in 2014 that talks about the thousands of Canadians who have fallen victim to tax schemes run by promoters who encourage them to donate. Oftentimes these programs are sold in such a way that they lead Canadians to believe that they're doing something good, to help buy medicines, for example, for people in poor countries.

The article states, “It's all cloaked in philanthropy, but to date, nearly six billion dollars worth of these donations have been denied by Canada Revenue officials.” It goes on to say that according to the CRA, “to date, not a single gifting tax shelter audited has been found to comply with the Income Tax Act.”

While some of the donors might have taken a calculated risk in participating in those programs, it strikes me that a lot of Canadians are participating because they've been duped. They've been told that they're doing something good for those in need.

I recognize and respect the Auditor General's report in that it focuses on how to resolve objections in a timely manner, but I really want to make the connection here.

We're talking about learning from objections and appeal decisions. Is there room for improvement? Can we not do a better job at educating Canadians on schemes such as this that then result in objections and appeals? Rather than, as you said, oftentimes having lead cases go through the courts, which can take year after year after year, clogging up our processes and the resources that your department has, can we nip it in the bud? Can we not do a better job before all this happens, to educate Canadians so that they don't fall for schemes that ultimately we know, based on past experience, will not work?

[Bob Hamilton]

I definitely think there's room for improvement on that front. You're right in terms of the people who participate in these schemes, some knowingly, some perhaps not understanding exactly what is going on. What can we do to make sure that people are better educated about how the tax system works?

That's why I was talking earlier about having conversations with taxpayers, be it in an audit situation or just more generally in the information that we put out, and can we do a better job of communicating what's out there, how the tax system works, what people should be thinking of and aware of?

It's not that we have never done anything on this front, but I think it's an area where hopefully we can find ways to do better, because it is an unfortunate use of resources at some point when something such as this happens.

Mireille might help me on this one, but my memory suggests that the ombudsman did some work on this donor front, or am I wrong?

[Mireille Laroche]

I think you're right.

[Bob Hamilton]

It was a “donor beware” exercise that the taxpayers' ombudsman undertook.

I would offer that as an example of some things that can be done. I don't know if you have anything to add.

[Shaun Chen, Liberal, Scarborough North, ON]

What has been done?

[Mireille Laroche]

The agency over the years has published and issued a number of communiqués to try to educate taxpayers. One of the things that the taxpayers' ombudsman did in 2014 was examine what we've done and provide some recommendations of how we can discourage promoters from using these arrangements, from selling them; but also from a taxpayer's perspective, how we can discourage them so they can actually recognize when it's too good to be true and not get involved.

Since then there have been efforts to try to improve this, but as the commissioner said, there's probably more that can be done. There have been legislative changes that have changed the incentives for promoters, whereby when you are involved in such a scheme, even when you are in the objection phase, you still have to pay 50% of what you owe. That was one thing that discouraged people from participating, so that helped from the other side of the equation in terms of how they are promoted and sold to Canadians. That's fairly recent.

[The Chair, Conservative, Kevin Sorenson]

Thank you, Mr. Chen. We're over already.

We're back to Mr. Christopherson, please.

[David Christopherson, NDP, Hamilton Centre, ON]

I wanted to pick up on where my colleagues were on the 65%, but before I go there I do want to revisit the comparison information that we had. In our research background, it states, “In an international benchmarking study reported in 2011”—a bit old now, but it still shows the trend—“by the United Kingdom’s tax authority (HM Revenue and Customs), data from 2009 showed that among seven countries studied” the average amount of time to resolve objections was 70 days; and in the case of Canada it was 276 days.

I know you answered a question regarding this once, but I wanted to push a little harder to get a little more detail or maybe an example. If it was 70 days and we were maybe at 100 or 85, somewhere in the ballpark, then obviously there would be some minor adjustments to be made that would get you closer to where the other countries are. But in this case it's so vast—70 days, 276 days. There must be one or two big pieces out of all the changes you're going to make that are going to tackle that. It just seems to me there has to be, given the distance between 70 days and 276 days. Can you give me a couple of examples of changes we're going to make that are going to change these eye-popping numbers?

[Bob Hamilton]

At the end of my answer you're still going to be a bit unsatisfied, so I'll commit to give you—