Canada Revenue Agency Quarterly Financial Report For the quarter ended December 31, 2023

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Canada Revenue Agency Quarterly Financial Report For the quarter ended December 31, 2023

Statement outlining results, risks and significant changes in operations, personnel and program

Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act in the form and manner prescribed by the Treasury Board. This report should be read in conjunction with the Main Estimates.

Further details on the Canada Revenue Agency’s (CRA) program activities can be found in the Departmental Plan.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the CRA's spending authorities granted by Parliament and those used by the CRA consistent with the Main Estimates for the 2023-2024 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation of statutory spending authority for specific purposes.

The CRA uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

This quarterly report has not been subject to an external audit or review.

Highlights of the fiscal year-to-date (YTD) results

Figure 1 below reflects the CRA's annual net authorities available for use, as well as the CRA’s YTD expenditures as at December 31, 2023.

The YTD spending as of Q3, in relation to the annual authorities, is approximately 70% in both years, illustrating that spending is trending as expected and no unusual year-over-year (YOY) variances have been noted.

The CRA’s annual net authorities and YTD expenditures have increased primarily due to the Canada Carbon Rebate (CCR). Further analysis of authorities and expenditures are below.

The Agency’s annual authorities available for use as of December 31 and cumulative expenditures for 2023-2024 and 2022-2023.

Figure 1 – details

Figure 1: Annual net authorities against YTD expenditures as at December 31, 2023
Authority/Expenditure Year Total Authorities Excluding Statutory Authorities Other Statutory Authorities Statutory - CCR payments Total

Authorities

2022-2023

$ 5.1B

$ 1.3B

$ 7.1B

$ 13.5B

2023-2024

$ 5.7B

$ 1.6B

$ 9.5B

$ 16.8B

Expenditures

2022-2023

$ 3.4B

$ 1.0B

$ 4.9B

$ 9.3B

2023-2024

$ 3.9B

$ 1.1B

$ 6.8B

$ 11.8B

Note: Amounts in Figure 1 may not correspond exactly to amounts listed in the report due to rounding.

YOY analysis of authorities

This report reflects the results for the current fiscal year in relation to the Main Estimates, Supplementary Estimates (B) and authorities available for use from the prior fiscal year. As shown in the summarized table below, the CRA’s total Budgetary Authorities have increased by $3,152M ($3.2B) since the third quarter of 2022-2023, from $13,526M ($13.5B) in 2022-2023, to $16,678M ($16.7B) in 2023-2024.

Summarized Statement of Authorities (unaudited) - YOY analysis of authorities

(in millions of dollars) Total available for use for the year ending March 31, 2024 Total available for use for the year ending March 31, 2023 Variance in budgetary authorities

Budgetary Statutory Authorities

$10,947M

$8,425M

$2,522M

The increase in Budgetary Statutory Authorities is primarily related to:

  • Increase in the quarterly CCR payments ($2,336 million). This reflects the fact that Newfoundland and Labrador, Nova Scotia, and Prince Edward Island residents became eligible for the CCR as of July 1, 2023, as well as rate increases on carbon pollution under the federal carbon pollution pricing system
  • Increase in authorities received for the Return of Fuel Charge Proceeds to Farming Businesses ($165 million). The purpose of this new credit is to assist eligible farming businesses afford the cost of fighting climate change by returning a portion of fuel charge proceeds from the price on pollution

Gross Vote 1 – Operating Authorities

$6,042M

$5,426M

$616M

The increase in Gross Vote 1 Operating Authorities is primarily related to:

  • Increase in authorities related to signing of the Public Service Alliance of Canada (PSAC) collective agreement ($267 million)
  • Funding received for some Budget 2022 measures ($258 million) was received through Supplementary Estimates (C) in the prior year; therefore, causing a YOY variance. The major components include:
    • $89 million increase in authorities to continue work on fighting tax evasion and strengthening tax compliance
    • $81 million increase in authorities primarily related to CRA contact centre post-pandemic sustainability
    • $40 million increase in authorities primarily related to the administration of the luxury tax, tax on unproductive use of Canadian housing by foreign non-resident owners
  • Increase in authorities available for use from the prior fiscal year ($202 million)
  • Decrease in authorities for COVID-19 measures ($70 million)
  • Decrease in operating authorities due to a vote realignment to the capital vote ($55 million)

Vote 5 – Capital Authorities

$158M

$115M

$43M

The increase in Vote 5 Capital Authorities is related to:

  • Increase in capital authorities due to a vote realignment from the operating vote ($55 million)
  • Decrease in authorities available for use from the prior year ($7 million)
  • Decrease in authorities related to previous federal budget measures ($5 million)

Revenue Credited to the Vote

($469M)

($441M)

($29M)

The increase in Revenue Credited to the Vote is primarily related to the increased pay rates in the new PSAC collective agreement

Total Budgetary Authorities

$16,678M

$13,526M

$3,152M ($3.2B)

This table is an extract of Appendix 1 of this report. Columns and rows may not add exactly due to rounding.

YOY analysis of expenditures

Expenditures by vote

The YTD third quarter expenditures as at December 31, 2023 have increased by $2,568M ($2.6B) from $9,259M ($9.2B) in 2022-2023, to $11,827M ($11.8B) in 2023-2024, as displayed in the Statement of Authorities. The material components of this YOY change are explained below.

Summarized Statement of Authorities (unaudited) - YOY analysis of expenditures

(in millions of dollars) YTD expenditures at December 31, 2023 YTD expenditures at December 31, 2022 Variance in YTD expenditures

Budgetary Statutory Authorities

$7,942M

$5,868M

$2,074M

The majority of the increase in Budgetary Statutory Authorities is related to:

  • Increase in quarterly CCR payments ($1,924 million) made to families and individuals. This increase reflects the payments made to the new provinces that became eligible for the CCR as of July 1, 2023 as well as the rate increases on carbon pollution under the federal carbon pollution pricing system
  • Increase in fuel charge proceeds paid to farming businesses through tax credits ($111 million). This increase is equal the total amount of credits paid in 2023-2024, as this is the first year of the program

Net Vote 1 – Operating Expenditures

$3,813M

$3,340M

$473M

The increase in Net Vote 1 Operating Expenditures is primarily related to:

Salary

  • Increase in spending on Budget 2022 measures ($161 million)
  • Increase in salaries paid for the retroactive impacts of the new PSAC collective agreement ($146 million)
  • Increase in in-year salaries paid due to the increase in pay rates in the new PSAC collective agreement ($86 million)

Operating and maintenance

  • Increase primarily in billings from other government departments for information technology (IT) and other services ($54 million)

Vote 5 – Capital Expenditures

$72M

$51M

$21M

The increase in Vote 5 Capital Expenditures is primarily related to major project investments

Total Budgetary Authorities

$11,827M

$9,259M

$2,568M ($2.6B)

This table is an extract of Appendix 1 of this report. Columns and rows may not add exactly due to rounding.

Expenditures by standard object

As mentioned previously, the material variances will be explained in the table below. The transfer payments standard object makes up the majority of the YOY variance in YTD expenditures with the other standard objects making up only a small portion.

Summarized Departmental Budgetary Expenditures by Standard Object (unaudited)

(in millions of dollars) YTD expenditures at December 31, 2023 YTD expenditures at December 31, 2022 Variance in YTD expenditures

Transfer Payments

$7,236M

$5,170M

$2,066M

The increase in Transfer Payments, is primarily related to:

  • Increase in quarterly CCR payments ($1,924 million) made to families and individuals. This increase reflects the payments made to the new provinces that became eligible for the CCR as of July 1, 2023 as well as the rate increases on carbon pollution under the federal carbon pollution pricing system
  • Increase in fuel charge proceeds paid to farming businesses through tax credits ($111 million). This increase is equal the total amount of credits paid in 2023-2024, as this is the first year of the program

Personnel

$4,114M

$3,674M

$440M

The variance explanation noted in the Net Vote 1 salary section is also applicable to the Personnel standard object, in addition to increases in other items, including the Employee Benefit Plan

Other Standard Objects

$807M

$748M

$59M

The increase in the remaining standard objects are primarily related to:

  • Increase in billing from other government departments for IT requirements as a result of a greater amount of planned work being completed as of the third quarter compared to the prior year ($21 million)
  • Increase in billing from the Department of Justice for investments in previous federal budget measures ($13 million)
  • Increase in travel as restrictions have been lifted and operational travel continues to come back on stream ($10 million)
    • Despite this increase, the level of travel spending is still within the CRA’s travel cap including all required reductions
  • Increase in online database services due timing differences in billing ($6 million)

Revenue Credited to the Vote

($330M)

($333M)

$3M

Total Budgetary Authorities

$11,827M

$9,259M

$2,568M ($2.6B)
  • Transfer payments include the Children’s Special Allowance payments, CCR payments, Return of Fuel Charge Proceeds to Farming Businesses, and the Distribution of Fuel and Excess Emission charges.
  • This table is an extract of Appendix 2 of this report. Columns and rows may not add exactly due to rounding.

Risks and uncertainties

The CRA strives to be a world-class tax and benefits administration that is trusted, fair, and helpful. As such, the CRA dedicates significant effort to conduct regular environmental scans and update its Corporate Risk Profile (CRP), as the economic and technological landscape changes. The Board of Management monitors, and CRA senior management receives, quarterly updates on the CRP. The CRA’s key risks and mitigation strategies are outlined in the 2023-2024 Departmental Plan.

Current financial management risks present at the CRA include the spending reductions announced in Budget 2023. This series of reductions, starting in 2023‑2024, aims to support the government initiative of Refocusing Government Spending (RGS). Given the CRA’s solid financial position, the required reduction in the current year of $12 million for travel and professional services expenditures will be absorbed without impacting workplan targets. These expenditures are being closely monitored to ensure the CRA is compliant with this requirement. The operating reductions required to comply with the RGS will be published in the 2024-2025 Main Estimates for the 2024-2025 fiscal year and ongoing. The CRA continuously and cautiously monitors its authority levels and expenditures throughout the year, conducts accurate and reliable forecasting of its operational spending, and has significant controls in place to ensure effective financial management is achieved.

Furthermore, the CRA recognizes that all of the key risks identified in the Departmental Plan could have financial impacts should they materialize. In particular, the CRA is managing risks related to the strategic priority of strengthening security and safeguarding privacy. In this regard, the Agency Security Officer (ASO) plays an important role in promoting "Security by Design", which includes strengthening the CRA’s overarching posture for cybersecurity, fraud risk management, and data protection. In order to keep pace with a continuously evolving threat landscape, the CRA proactively anticipates and implements measures to reduce and address potential risks and respond swiftly to incidents and events.

Significant changes in relation to operations, personnel, and programs

A significant change this fiscal year includes the signing of new collective agreements. The PSAC, the Professional Institute of the Public Service of Canada (PIPSC), the Human Resources group, and the Executive group have all signed new collective agreements this year. Most of the current year financial impacts are included in the authorities and expenditures section of this report, excluding the PIPSC impacts which will be incurred later in the fiscal year. The new agreements will also have ongoing financial impacts in future years.

Approval by Senior Officials

Approved by:

[original signed by]

________________________

Bob Hamilton, Commissioner

[original signed by]

_____________________________

Hugo Pagé, Chief Financial Officer

Ottawa, Canada

Date:

Statement of Authorities (unaudited) – Fiscal year 2023-2024
(in thousands of dollars)
Total available for use for the year ending March 31, 2024table 4 note 1 Used during the quarter ended
December 31, 2023		 Year-to-date used at quarter-end

Vote 1 - Operating expenditures

Gross Operating expenditures

6,042,076

1,446,587

4,143,696

Revenues netted against expenditures

(469,122)

(110,142)

(330,426)

Net Vote 1 - Operating expenditures

5,572,954

1,336,445

3,813,270

Vote 5 - Capital expenditures

157,683

30,014

72,118

Budgetary Statutory Authorities

Contributions to employee benefit plans

584,983

146,453

439,360

Children's Special Allowance payments (Children's Special Allowances Act)

368,000

100,606

291,417

Canada Carbon Rebate payments

9,424,000

2,525,170

6,788,019

Spending of revenues received through the conduct of its operations pursuant to section 60 of the Canada Revenue Agency Act

357,679

91,659

258,010

Distribution of Fuel and Excess Emission Charges

48,000

19,951

41,761

Return of Fuel Charge Proceeds to Farming Businesses

165,000

12,414

111,129

Minister's salary and motor car allowance

95

24

71

Collection Agency Fees under section 17.1 of the Financial Administration Act

-

-

-

Court awards - Supreme Court

-

-

-

Court awards - Tax Court of Canada

-

502

12,282

Spending proceeds from the disposal of surplus Crown Assets

-

21

77

Energy Cost Benefit

-

-

(1)

Refunds of previous years revenue

-

-

79

Total Budgetary Statutory Authorities

10,947,757

2,896,800

7,942,204

Total Budgetary Authorities

16,678,394

4,263,259

11,827,592

This financial table compares the Agency’s total available authorities available as of December 31, expenditures used during the quarter and year-to-date expenditures for fiscal years 2023-2024 and 2022-2023 by voted authority. This table uses parentheses to show negative numbers.

Statement of Authorities (unaudited) – Fiscal year 2022-2023
(in thousands of dollars)
Total available for use for the year ending March 31, 2023table 5 note 1 Used during the quarter ended
December 31, 2022		 Year-to-date used at quarter-end

Vote 1 - Operating expenditures

Gross Operating expenditures

5,426,158

1,246,446

3,672,544

Revenues netted against expenditures

(440,567)

(110,880)

(332,639)

Net Vote 1 - Operating expenditures

4,985,591

1,135,566

3,339,905

Vote 5 - Capital expenditures

114,518

24,075

51,056

Budgetary Statutory Authorities

Contributions to employee benefit plans

568,300

132,996

398,989

Children's Special Allowance payments (Children's Special Allowances Act)

365,000

92,071

275,431

Canada Carbon Rebate payments

7,088,000

1,676,680

4,864,360

Spending of revenues received through the conduct of its operations pursuant to section 60 of the Canada Revenue Agency Act

384,998

96,691

294,886

Distribution of Fuel and Excess Emission Charges

19,000

12,291

30,317

Return of Fuel Charge Proceeds to Farming Businesses

-

-

-

Minister's salary and motor car allowance

93

23

69

Collection Agency Fees under section 17.1 of the Financial Administration Act

-

-

-

Court awards - Supreme Court

-

-

34

Court awards - Tax Court of Canada

-

2,314

3,869

Spending proceeds from the disposal of surplus Crown Assets

-

54

61

Energy Cost Benefit

-

(1)

(3)

Refunds of previous years revenue

-

3

14

Total Budgetary Statutory Authorities

8,425,391

2,013,123

5,868,027

Total Budgetary Authorities

13,525,500

3,172,764

9,258,988

This financial table compares the Agency’s total available authorities available as of December 31, expenditures used during the quarter and year-to-date expenditures for fiscal years 2023-2024 and 2022-2023 by voted authority. This table uses parentheses to show negative numbers.

Departmental Budgetary Expenditures by Standard Object (unaudited)
Fiscal year 2023-2024
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2024 Expended during the quarter ended December 31, 2023 Year-to-date used at quarter-end

Expenditures:

Personnel

5,085,205

1,447,886

4,114,477

Transportation and communications

305,909

20,360

76,706

Information

58,489

9,402

17,485

Professional and special services

1,136,647

135,716

406,343

Rentals

340,398

67,962

218,309

Purchased repair and maintenance

81,328

12,738

38,509

Utilities, materials, and supplies

52,159

3,097

9,224

Acquisition of machinery and equipment

76,588

13,332

22,679

Transfer payments

10,010,379

2,661,434

7,235,762

Other subsidies and payments

415

1,473

18,525

Total Gross Budgetary Expenditures

17,147,516

4,373,401

12,158,018

Less: Revenues netted against expenditures

469,122

110,142

330,426

Total Net Budgetary Expenditures

16,678,394

4,263,259

11,827,592

This financial table compares the Agency’s planned expenditures available as of December 31, expenditures used during the quarter and year-to-date expenditures for fiscal years 2023-2024 and 2022-2023 by standard object. This table uses parentheses to show negative numbers.

Departmental Budgetary Expenditures by Standard Object (unaudited)
Fiscal year 2022-2023
(in thousands of dollars)
Planned expenditures for the year ending March 31, 2023 Expended during the quarter ended December 31, 2022 Year-to-date used at quarter-end

Expenditures:

Personnel

4,704,789

1,245,719

3,673,719

Transportation and communications

275,694

19,788

65,027

Information

52,309

4,009

10,510

Professional and special services

938,279

131,867

363,022

Rentals

323,985

66,599

211,090

Purchased repair and maintenance

87,013

19,409

48,736

Utilities, materials, and supplies

46,123

2,355

6,984

Acquisition of machinery and equipment

60,668

8,802

33,068

Transfer payments

7,476,854

1,781,043

5,170,106

Other subsidies and payments

355

4,052

9,366

Total Gross Budgetary Expenditures

13,966,067

3,283,645

9,591,627

Less: Revenues netted against expenditures

440,567

110,880

332,639

Total Net Budgetary Expenditures

13,525,500

3,172,764

9,258,988

This financial table compares the Agency’s planned expenditures available as of December 31, expenditures used during the quarter and year-to-date expenditures for fiscal years 2023-2024 and 2022-2023 by standard object. This table uses parentheses to show negative numbers.


Footnote 1

Includes only authorities available for use and granted by Parliament at quarter-end.

Return to footnote1 referrer


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Date modified:
2024-02-28