The ILBD is working on reducing the number of TEBA-induced unsustainable assessments made by field auditors
CRA uses TEBA (“tax earned by audit”) to measure the performance of Tax Services Offices, and different CRA programs, and to decide where to allocate resources. Alexandra MacLean (Director General of the International Large Business Directorate) acknowledged that this has resulted in auditors making assessments that then should be reversed by Appeals. In this regard, she indicated that:
- A priority for the International and Large Business Program is to work on making sustainable reassessments that can be defended on both the letter and spirit of the law.
- CRA is working to better understand the reversal rate at Appeals in dollar terms and by tax issue.
- CRA is also working on trying to provide positive performance assessments for good audit work even where non-compliance is not found.
- Ideally, CRA would move to more of a whole-Agency approach on important tax interpretive issues (apparently, as contrasted with a divergence between positions applied at Audit, and before CRA Appeals with Headquarters input), and publishing more guidance so that taxpayers could know what they were facing at the time of filing their returns, and essentially making a choice to go to litigation if their filing position was contrary to the guidance.
- Having said that, a lot of what CRA does relates to matters where there is substantial interpretive uncertainty. On a recent count, the Federal Court of Appeal reversed four out of eight Tax Court decisions on GAAR. CRA has good resources now for pursuing litigation.
- Pressure on the system respecting interpretive uncertainties might be reduced with more s. 173 referrals to the Tax Court.
The ILBD has finished piloting, and has now made permanent, the Audit Files Resolution Committee, which has a mandate to try and resolve files at the audit stage. It has representation from Justice, Headquarters, the field office involved in the audit and another field office. It considers taxpayer proposals to resolve a material file at the audit stage. The Committee will examine the proposal, and make recommendations in terms of accepting, counter-proposing, or other possible responses.