Public Accounts Committee on Nov. 17th, 2020

[Paul Rochon]

Our view is that the audit was posing a policy question. As I've indicated, as the deputy minister of finance, I think it's perfectly legitimate for the Auditor General to be evaluating our capacities and our ability to undertake analysis, but at the end of the day, I don't make those policy decisions. I provide advice to the minister.

Having said that, maybe I should just point out that I think it is important that that was a difference of opinion. It had no bearing on the audit per se. We fully complied with the audit and basically got on with our work.

[The Chair, Conservative, Kelly Block]

Thank you very much, Mr. Green. Your time is up.

We will now move to our five-minute round, starting with Mr. Webber.

[Len Webber, Conservative, Calgary Confederation, AB]

Thank you, Madam Chair. I hope to share some of my time with Mr. Lawrence if we have some time left over.

I have a couple of questions for Mr. Hamilton. Thank you for being here today.

I just want some clarification on your opening remarks. You said that in the past, efforts have been made to address non-compliance, including educating taxpayers about their GST and HST obligations. I'm curious to know what exactly you're doing to educate Canadian taxpayers about this.

[Bob Hamilton]

Thank you, Madam Chair.

It's a general issue for us in the tax administration to make sure that people understand what they're doing, as much as possible, with a fairly complicated tax system. We do try to educate and do outreach, and this is another area. The typical tools we would use are to try to make sure that there is adequate material on our website that explains what the obligations are, and what some of the rules and parameters that might affect the taxpayer are. We do use things like social media to get messages out to people, to understand how the tax system works and how it affects them.

We can use nudge letters. We'll send a letter to someone to basically indicate that this is an issue. It's not an enforcement letter, but a nudge to say that they might want to think about this. Those are the kinds of vehicles we use. We try to do as much as we can to be open with people and transparent about the rules.

[Len Webber, Conservative, Calgary Confederation, AB]

Thank you for that. Yes, I think that the majority of Canadians do not understand or even realize that they have to report this. I think we need to do a better job of communicating to Canadians.

In any event, very quickly.... Sorry, Mr. Lawrence, I have one more here.

Mr. Hamilton, you also said that your agency will expand its compliance actions by better leveraging third party data to identify and address non-compliance. I know that several years ago, the CRA ordered eBay to provide some financial data on its Canadian salaries to ensure that they were complying with their tax obligations. I'm just curious to know what the results of that were. Did you get what you required from eBay? What other companies have you contacted about compliance—companies such as Facebook or Kijiji or whatever?

I am curious. Are you getting a response back from these corporations?

[Bob Hamilton]

Perhaps I'll start with an answer to that, but I'll turn to Ted Gallivan, who's with me, on the specifics of individual organizations.

As I said, concerning this unnamed person requirement, where we request information from a third party, we do have to go through a court process to be able to do that. Sometimes we're successful; sometimes we're not. It's a useful tool for us to understand what's happening in a transaction. I would just note that other jurisdictions are using similar vehicles. I think there was a reference earlier to something that's happening in the U.S. It's something we're exploring, doing more of, and we have to make sure that we put the request in the right way.

I don't know if Ted wants to add something quickly to that point.

[Ted Gallivan, Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency]

I would say that the litigation is often driven by a desire to protect the privacy rights of the customer, so often we have quite good collaboration. Right now we're working with a cryptocurrency mining business, and the court process is driven by privacy and the privacy rights of the customer. I would just say that the litigation is not necessarily an attempt to obstruct the CRA.

[Len Webber, Conservative, Calgary Confederation, AB]

Thank you.

Mr. Lawrence, go ahead.

[The Chair, Conservative, Kelly Block]

Before you start, Mr. Lawrence, I'll just advise you that you have a little over a minute.

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

Perfect. I'll be quick.

I'd like to build on what my NDP colleague Mr. Green was talking about. I believe that there is a gap for small business owners, but when eliminating tax gaps, there are two ways of doing it. One is to raise taxes, and one is to lower taxes. To the deputy of Finance, would not one of the quick, easy fixes be to remove the GST for Canadian digital providers?

[Paul Rochon]

I think the issue really becomes a question of relative rates of taxation. You remove the GST on providers of digital movies, for example, but you pay the GST when you go to the cinema. Those are the types of issues that one would encounter when entering that type of discussion.

[The Chair, Conservative, Kelly Block]

Thank you very much.

We will now move to Mr. Fergus for five minutes.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you very much, Madam Chair.

First, I would like to thank all the witnesses who are here today. I want to thank them for the work they are doing for the Canadian people, particularly during this pandemic.

I have a question for the Canada Border Services Agency. Paragraph 3.65 of the 2019 spring report of the Office of the Auditor General of Canada reads as follows:

The Agency was unable to easily validate information on shipments, such as value, quantity, and type of product, because it did not require invoices for each transaction. Internationally, requiring e-invoicing is more prevalent as a way to improve compliance with sales tax obligations.

Does the agency have the legislative authority to require an invoice for every transaction? If it does, why has it not done so? Does it intend to do so in the near future?

[John Ossowski]

I want to thank the member for his question, Madam Chair.

I would say we've recognized for many years now that we needed to get better at the way we were accessing this type of data, and we launched, as I mentioned in my opening remarks, our new assessment and revenue management system several years ago. In a couple of years, hopefully a little bit faster, our new CARM system will allow us to have access to that transaction-level detail.

Until that point in time, we're still working with each of the courier companies to use their systems, as well as some piloting that we're doing on different approaches to look at things differently, to access that data and provide more assurance that we are collecting the right amount across all modes, postal mode, courier mode and the larger commercial transaction. We're making good progress on the system, and it will be a game-changer in terms of not only the courier companies looking at their data, at their accounts, but also for us to look at that and do sophisticated analytics about where we think the risks are and do further compliance work.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you, Mr. Ossowski.

Should we legislate to give you that authority?

[John Ossowski]

Certainly, a component of our e-commerce strategy will be to make it mandatory to provide advance data in the courier mode. That's currently a gap that we would look to have filled as we move forward.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

All right.

I have another question for you.

According to the Office of the Auditor General, in 2017-2018, the volume of shipments valued under $20 rose by 4 million over the previous year, a 33% increase. The agency didn't analyze the causes of that rise in non-taxable shipments. Why not?

[John Ossowski]

Yes, that was an interesting observation. I would just say, anecdotally, that certainly Amazon has had a huge impact on that type of transaction below $20. Year over year, the volumes are growing tremendously. The first six months of this fiscal year, compared to the first six months of last year, overall volumes are up 49%. A large proportion are these small items, cellphone cases, little things that people are buying.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

I've done it myself.

[John Ossowski]

Those types of things have increased dramatically in a pure volumetric sense. As I say, we haven't done any broad analysis. We're for more front-line operations than trying to administer the programs, not only for revenue collection but for safety and security, to make sure that contraband items don't get into the country.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

For our information, what was the increase in the volume of shipments valued between $20 and $2,500 in the same year?

[John Ossowski]

I would have to get back to the committee with that level of detail, but I am happy to do so.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Yes, please. That would be good.

[The Chair, Conservative, Kelly Block]

Thank you.

Thank you very much, Mr. Fergus. I know five minutes goes by very quickly.

[Greg Fergus, Liberal, Hull—Aylmer, QC]

Thank you, Madam Chair.