Finance committee  Any taxpayer, whether it's an individual or a business, assessed by the Revenue Agency has the option to contest that assessment for whatever reason. We've had the process for many years, and the first step is an internal process through the appeals branch. This is part of the Revenue Agency, but it has complete independence, which allows it to take an objective look at any decision the agency has taken and review the facts.

Finance committee  It's true, Mr. Chair, that it only affected tax processing of individuals, because the corporate tax systems and the GST systems are on separate systems or platforms. There's a limited amount of connectivity between the different systems, and those systems were not affected. What became public was the difficulty people had in submitting electronically filed tax returns, but in fact, the problem affected our ability to process any kind of tax return, whether paper or electronic.

Finance committee  Mr. Chair, it is true that as tax changes are made, we have to make sure we can adequately incorporate them into our processing systems. This particular problem had nothing to do with any specific tax measure. If I may explain, Mr. Chair, what we do once a year is essentially shut down our IT systems to program any new budgetary measures and any new tax rules into the system.

Finance committee  As regards our activities in administering responsibilities related to EI and the CPP, we receive funds directly to cover our expenses. This sum simply reflects the fact that this type of work is being increasingly requested.

Finance committee  That is essentially the case. Regardless, and with the permission of the chair, I wish to ask my colleague James to answer.

Finance committee  Mr. Chair, there are a couple of elements in terms of response. The budget that was just brought down on March 19 included, as I'm sure you're aware, some specific tax policy measures to address international taxation. They relate to the withholding of interest. There the whole issue of interest deductibility, which was an area where profits could be shifted offshore.

Finance committee  Mr. Chair, as for the increase you're seeing in reporting compliance, essentially this is a way of characterizing our audit work, primarily--when people have complied, they have filed, but we have to check their records; they have to check the accounts. This is more representative of an increased level of effort that the agency has been making over the years, supplemented at times by additional budgetary money to increase our audit presence in areas of higher risk.

Finance committee  Mr. Chair, with permission, I'll answer your second question first; that's easier. We estimate that about 52% file electronically, and that would be from the home through NetFile or through a tax preparer, through electronic filing, and other filing options that have been around for awhile, including Telefile.

Finance committee  Thank you, Mr. Chair. This was a serious matter, there's no doubt about it. It did inconvenience Canadians and it prevented us from providing the quality and timeliness of service we aspire to provide and we take the matter very seriously. The problem started on a weekend, March 4, when we were undertaking a relatively routine procedure, which is putting what we call a patch on our software.

Finance committee  I'll ask my colleague Mr. Ralston to give you more precision than I'm capable of. Thank you, Mr. Chair.

Finance committee  Mr. Chair, I don't have the volume of appeals here. I don't think we're looking at a significant number. One thing we are finding generally is that the files that are going to the appeals, which is the administrative stage of redress in the agency, are increasingly complicated.

Finance committee  Mr. Chair, under the provisions of the Income Tax Act, it is not possible to talk about specific cases. However, I would be willing to provide this committee with an update on that issue at a later time.

Finance committee  Mr. Chair, I can assure you that our case selection process of cases is absolutely fair. I am more than willing to provide you with information to that effect.

Finance committee  Yes. Most of the time, it depends on the documents that taxpayers do not provide. Sometimes it is necessary to do a follow-up, or pay a visit to a taxpayer's business or residence to obtain more information, carry out interviews, or do what is necessary to corroborate facts.

Finance committee  We do so with a very specific goal in mind. With your permission, Mr. Chair, I will ask my colleague, Mr. Ralston, to answer that question. Thank you.