The answer is: (a) and (b): Discussions to discontinue reporting losses from GST fraud as a separate item in the Public Accounts, except when public servants were involved, occurred in 1994 or 1995, when the former departments of Revenue Canada Taxation and Revenue Canada Customs and Excise merged into a single department. The change in practice was motivated by a need to adopt a consistent approach, given that the practices for reporting losses in the two former departments had differed. Unfortunately, the period for retention of general records is 6 years, as per Records Disposition Authority 86/100, and there are no remaining records of any relevant discussions leading up to the decision, nor of approvals given. For this reason we cannot be more precise with respect to the persons involved and the timing of discussions and decisions leading up to the change in reporting practice. The earliest documentation that we have concerns our response to questions raised by the Treasury Board Secretariat in 1996. At that time, a policy interpretation to support the changed reporting practice was provided to Treasury Board Secretariat officials and confirmed in writing.
(c): Prior to the administrative consolidation, that is merger, of the former departments of Revenue Canada Taxation and Revenue Canada Customs and Excise, the two respective departments had different practices with respect to the reporting in the Public Accounts of losses of revenue due to fraud.
At the time of the merger, reporting requirements were reconsidered. Based on the Treasury Board Secretariat, TBS, policy reporting requirements, Revenue Canada officials arrived at what they considered an appropriate interpretation of the policy that could be applied to all taxes and duties, including the GST. As noted above, there are no records going back to that time. Revenue Canada’s explanation provided to TBS officials in 1996 reflects the reasons for continuing the changed Public Accounts reporting practices.
Revenue Canada believed that the reporting practices in place in 1994 with regard to losses of money due to GST input tax credit fraud did not meet the spirit of the TB policy, because the amount of the loss would be confirmed only through a court conviction, which could be handed down years after the incident occurred. Moreover, such convictions immediately resulted in assessments, which would be set up as receivables and either collected or subjected to a formal debt write off process. Both receivables and debt write offs would continue to be reported in the Public Accounts, and when combined with increased reporting on enforcement activities in the Estimates, part III, there was considered to be adequate disclosure.