Public Accounts Committee on June 8th, 2021

[Bob Hamilton]

Perhaps, Madam Chair, I'll take a first cut at that.

You're right. Something that we consider as we look at people who owe money is what their situation is and what the situation is relative to the pandemic that's around us.

What we've tried to emphasize for all of our compliance collections people is that we need to be empathetic. Yes, to the extent that people got benefits they weren't eligible for, we need to take action, but we need to take that action with sensitivity, and what we call at the agency “people first”. Let's understand the situation. Let's make sure there is good communication.

You referenced at the beginning some confusion over whether the income threshold was gross or net. The government has acknowledged that. We at the CRA have said that our communication was not perfect in the early days, and so there have been actions taken with regard to that. More broadly, there would be people, for one reason or another, who mistakenly got benefits to which they weren't entitled, and we are trying to work our way through all of that as we get all the tax information.

People can be assured that as an organization we're trying to be as empathetic as we can to the person's situation vis-à-vis the pandemic or the economic consequences they suffered.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you.

Sorry, Chair; were you going to—

[The Chair, Conservative, Kelly Block]

I was just going to let you know that you have one minute left.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Okay. I'll use the one minute to address Mr. Sabia.

I understand that you had the budget and the pandemic, and there's no shortage of work. I want to acknowledge that before making these comments.

Having these documents come in late has really pushed back our work as a committee. We will likely have to schedule another meeting to review these documents. We could have gotten this all done.

This is part of a pattern. I've received incorrect responses on basic questions, such as whether there's GST charged on the carbon tax, which is something a first-year accounting student knows, but in your department, your assistant deputy couldn't tell me the right answer.

I would push upon you, Mr. Sabia, that we need better from you, my friend.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Lawrence.

We will now go to Ms. Yip for five minutes.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Thank you, Chair.

I would like to follow up on Mr. Lawrence's comment about his constituent. I also have a constituent who did not qualify for the CERB amount.

Mr. Hamilton, you talked about being empathetic. If the CRA was incorrect in giving the advice and allowing for these constituents to receive the funds, why can we not reverse that decision and allow them not to pay back the amounts?

[Bob Hamilton]

Madam Chair, I think it would be inappropriate in this forum to talk about specific taxpayer issues, and there are lots of different circumstances and situations out there. What I was referring to is that overall we do need to look at it case by case to determine what we think is fair and reasonable and where there is more of a systemic issue, and I talked about the gross versus net that we saw on the CERB. Then we can take actions that are more broadly based, but we just have to look at every situation.

This is not unknown to us, even outside of a pandemic. We have to take that look and determine how the situation transpired and what the appropriate action is in that situation. We do have taxpayer relief programs. As Mr. Gallivan referenced, we have payment plans that we can agree to with the taxpayer. There are a number of different vehicles to try to handle these situations, and what we are emphasizing is to just take actions that are appropriate in the context of the pandemic that everybody has been going through.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Should they have to go through a payment plan if they were given erroneous information? I'm not talking about one specific constituent; it's a number of cases.

[Bob Hamilton]

I already referenced, Madam Chair, the gross versus net issue, on which the government did take action to basically allow access to people whose gross income was greater than $5,000, but not their net income.

That was kind of a systemic issue. If you go down into individual cases, we really have to look at the facts of those situations and try to take an appropriate compliance position or collection position. I would emphasize that we are doing our best to be sensitive and empathetic in those situations, but there are many different cases and circumstances out there that we need to assess.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

Looking at the 273 full-time employees working on the delinquent filer compliance, I see that there was a return on investment of more than 100:1. That was fantastic.

What has happened to those 273 full-time employees? Is this program still being maintained? Will this group continue to work on compliance once the wage subsidy programs are over?

[Bob Hamilton]

Yes, and I'll leave a bit of space if Mr. Gallivan wants to add.

That program is an ongoing program that looks at delinquent filers to understand why they didn't file and tries to work with them to get them to file. It has had a fairly sizable return, so we have no thought of discontinuing that program. It will continue beyond the pandemic.

In fact, part of our response to the Auditor General's report is to look at that program to see if we're doing it as efficiently as possible and if there is room within our risk assessment to do it in a better way. Sometimes you can get high returns initially when you start something like that, but of course those returns diminish as you take care of some of the easy cases and move on to the more difficult ones.

However, we are in the process of making sure that the program is as effective as it can be going forward.

[Jean Yip, Liberal, Scarborough—Agincourt, ON]

There was an action plan that was completed on April 1 of this year to apply business intelligence for phase 2 post-payment audits. Could you elaborate on what plans were completed?

[Bob Hamilton]

I'll go right to Ted for that answer.

[Ted Gallivan]

We basically learned about likely mistakes or discrepancies from our initial audits and fed that into our file selection algorithms. Once we sampled a few people who made a mistake, we were looking for everybody else who might have made the same mistake.

[The Chair, Conservative, Kelly Block]

Thank you very much, Ms. Yip.

We will now move to our next round of questioning.

Mr. Berthold, go ahead for six minutes.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

My apologies, Madam Chair; I'll jump forward, if that's okay.

[The Chair, Conservative, Kelly Block]

Please go ahead, Mr. Lawrence.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much.

Mr. Hamilton, I want to actually give you a compliment.

The person-first strategy is fantastic. I hope you take that seriously, because there are many people struggling out there. There are very few Canadians who don't want to pay their taxes, but there are perhaps many Canadians who can't pay their taxes, so I do appreciate that comment.

My first question is for the Deputy Auditor General, Mr. Hayes.

Regarding all the documents the AG reviewed, other than the package that Mr. Sabia says we're still waiting on, and that you saw, have we received them? Have you reviewed the two packages?

If you have any comments, that would be great.

[Andrew Hayes, Deputy Auditor General, Office of the Auditor General]

We did do a comparison of the information we have in our audit files and the materials that have been provided. As Mr. Sabia noted, [Technical difficulty—Editor] that we did not see in the finance area that I suspect will probably be coming later this week. It's difficult for us on the finance side to be 100% certain, given the redactions and the information that wasn't disclosed. However, we are confident that we received all the information we asked for during the audit.

We also received on the CRA side the information we needed for our audit. There was a large volume of information provided, but we had other information in our files in addition to that, because of the interviews we had with witnesses and that sort of thing.

I would say that once you see the remaining information come from the Department of Finance, you likely will have at least a good package compared to what we have.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

On the interviews, Mr. Hayes, is that information you normally provide our committee with, or is that something just for the AG's use, and you compile it and put findings in your report?

[Andrew Hayes]

These would be interviews conducted during our audits that form part of our working papers. In those cases, we interview officials in the departments about the information that we've received. We get further detailed explanations through the interviews. Those interview notes reside in our files.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

You're confident that there's nothing in those notes that we haven't seen that we need to see.

[Andrew Hayes]

I will turn to Mr. Le Goff to provide confirmation there, but from the discussion we had before this hearing, as an audit team we were confident that we'd received the information and that you have received information that is consistent with what we have received.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

No, that's fine, Mr. Hayes. That's great. I appreciate it. Thank you for your responses.

Mr. Hamilton, I'll go back to you, if I could. I'm on page 279. I could be at this committee for hours and hours, and I'm only on three pages here, but I suspect, Mr. Hamilton, you wouldn't enjoy it as much.

I see here on the top of page 279, and I'll quote, “Nudge CERB recipient taxpayers by informing them how much tax they could be owed on their benefits.”

I have two questions with that. One thing that I observed early on and throughout is that the taxability of the CERB benefit was not very well published. In fact, initially the government said it wasn't. Then it was. To this day, I don't think the government does a great job of communicating what source withholdings are in general and with respect to the CERB.

Can you tell me about the communications programs you did to tell people what they would owe on their taxes?

[Bob Hamilton]

Certainly, and I might just add in Max to put some fine details on the communications plan. That issue is important to us: Whatever the benefit is, is it going to be taxed, or not? We face that question on an ongoing basis. It was important in this context.

We actually feel that it was clear for us once the program started. There may or may not have been debates before, but it was going to be taxable. We did try to communicate that to make it clear, because we knew that if people didn't think it was taxable and then it became taxable, i t would lead to issues in the next filing season, so we did try to communicate that well so that people understood it.

Maybe I'll open the door briefly for Max to talk about any of the key elements that he'd like to flag on how we did that.