Immediate and effective response to the September 11, 2001, terrorist attacks, an unprecedented tragic event, which caused us to implement our highest state of alert and tighten security at border sites. This event confirmed the need to continue the direction set out in our Customs Action Plan, and to accelerate the implementation of key initiatives that support the recent Manley-Ridge Smart Border Declaration.

Over 99% of 22.8 million individual T1 returns received for the 2001 tax year were processed efficiently and on time, exceeding our performance during the last two years.

Over 99% of 34 million Canada Child Tax Benefit (CCTB) payments and 33 million GST/HST credit payments were issued on time, exceeding our consistently high performance of previous years.

Completed the implementation of Tax on Income (TONI) processing, representing one of the most fundamental changes to income tax legislation in 25 years, to include all provinces, except Quebec, and the three territories. With TONI, the provinces and territories have more flexibility in how they adapt their income tax policy to reflect fiscal and social policies.

We responded swiftly to increase resources to address the performance gaps identified last year and to meet added expectations in revenue generation, meeting most of our commitments to the Government of Canada. We were able to recruit and train new staff, while dealing with competing priorities and the impact of September 11.

Significant progress in the overhaul of the Excise Act and Excise Tax Act . We have conducted a major review with the Department of Finance to overhaul the federal tax provisions for alcohol and tobacco products under the Excise Act and the Excise Tax Act. This review aims to replace the outdated administrative and enforcement structure with a modern regime reflecting current practices.

Significant gains in continued transformation of our business to provide integrated, harmonized, and client-centred services to Canadians:

• Leadership in the Government On-Line (GOL) initiative – The 39% rate of electronic filing of tax returns in the 2001 tax year positions us well to achieve a rate of 50% next year. As well, we are building the capability to process 75% of tax returns electronically in the next few years. In addition, we received fewer tax-related calls, suggesting that our alternative service channels are contributing to a reduction in our clients' need to call for information.

• Continued positive public perception of the CCRA – Results of the 2001 CCRA Annual Survey suggest that more Canadians (68% compared to 61% last year) say the CCRA is doing a good job overall, including 12% (versus 9% in year 2000) who feel it is doing a very good job. We recognize that this increase may be due to Canadians tending to be more supportive of government following September 11.

• A Future Directions service vision for the CCRA – Our most extensive consultations exercise to review our relationship with key client groups has confirmed that our service delivery fundamentals are on track.

Our inaugural Annual Report was commended by the Auditor General as an “impressive start” and demonstrates our commitment to transparently reporting our results to Parliament and Canadians. Performance agreements established for over 3,000 managers and 30,000 employees provide the fundamentals for achieving results in line with agency goals and outcomes.

The implementation of our human resources regime has shown significant progress in the areas of performance management and employee development. A new management group has been established, recognized, and compensated, highlighting the key role played by our front-line staff and creating an environment where service is the first focus. We also developed over 25,000 individual learning plans—key to sustaining a more knowledgeable and skilled workforce.

Good progress in Administrative Reform and Renewal. We have implemented the infrastructure to realize administrative efficiencies that will result in savings of at least $50 million during the period of 2002 to 2006. We have set priorities to streamline key administrative policies and programs and to achieve efficiencies in such areas as procurement, materiel management, budgeting, and costing.

• Reduced credibility with the provinces following the discovery of an error in the application of the capital gains refunds earned by mutual fund trusts (the T3 issue) worth more than $3.4 billion, for the 1993 to 1999 tax years. This was a significant issue last year and we have since put in place corrective measures that have had a positive impact on stakeholders' confidence. As a learning organization, we are using this incident to improve our internal risk management capacity.

• We have made little progress in advancing our service standards, meeting or mostly meeting less than half of our 36 standards. We must improve in key areas such as income tax rulings, T2 corporate income tax returns, and our ability to monitor results. We have added or modified a few standards, but those for telephone accessibility and correspondence are still under development.

• Continued slow progress in our ability to prevent further deterioration of the level of accounts receivable as a percentage of gross revenues. Our total tax collections related to unpaid taxes exceeded our commitment to the Government of Canada by 12.8%. However, tax receivables grew due, in part, to stronger than anticipated intake of new accounts.

• While we have been able to reduce backlogs, our timeliness in processing corporate tax returns declined compared to previous years. Our timeliness in processing corporate returns was also below our revised standard for processing 75% of returns in 50 days and 90% in 90 days.

• While there have been improvements, Appeals disputes still take too long to resolve; on average, 102 to 304 non-consecutive calendar days. As a result of a comprehensive review in early 2002-2003, we have established targets to improve timeliness over the next three years. We must also make further progress in monitoring the quality and consistency of decisions regarding our application of the fairness provisions.

• More effort is needed to reliably and consistently measure the cost and other dimensions of our operations. In HR and financial management in particular, legacy systems are impairing our ability to make strategic decisions based on sound and comprehensive costing and results information.

Innovating for the Future

• To complete the roll-out of key elements of the CCRA's HR regime, we need a comprehensive plan to 2004-2005, particularly in the areas of competency-based staffing, front-line learning, compensation, and official languages.

• Delays in implementing the Balanced Scorecard as the CCRA's performance measurement system. The full implementation of the Balanced Scorecard is vital to providing our employees with the right information at the right time, empowering them to make sound decisions about the programs we are delivering.

• While we made solid progress in advancing our partnerships with the provinces and territories, we recognize that we need to move beyond incremental change between now and our five-year parliamentary review. We will work to expand our administration of tax programs on behalf of the provinces.