Evaluating Our Overall Performance

We Have One Expected Outcome

Tax Services supports the achievement of the CCRA's two strategic outcomes–compliance and innovation — through the results it achieves against its expected outcome: Canadians pay their fair share of taxes and the tax base is protected . Our tax system is based on self-assessment and voluntary compliance. Canadians are more likely to participate in the tax system and pay the taxes they owe if we provide timely and accessible services to help them do so. People find it easier to participate when the system is accessible and when service is timely and fair. The accurate, timely, and efficient processing of returns encourages participation and shortens the time between filing and the receipt of taxes owing or the distribution of refunds.

Although quality service and the efficient processing of returns help to promote compliance, there will always be some instances where individuals and businesses either unintentionally or intentionally fail to be fully compliant. A knowledgeable, skilled, and appropriately staffed workforce that understands compliance behaviour and identifies areas of non-compliance is key to protecting the tax base, which the government relies upon to fund its social and economic policy objectives. This, along with a sound risk management approach for guiding audit, review, and debt collection activities, helps ensure that any leakage in the tax base (non-compliance) is kept at a relatively low level, thereby contributing to greater equity and fairness in the administration of tax laws.

Performance Context

Against the backdrop of our expected outcome, the need to achieve and maintain high levels of client satisfaction drives our performance efforts. This is fundamental to promoting confidence in the integrity of the tax system. In turn, client satisfaction is driven by our ability to do the job, and our capacity to continue to innovate in order to respond to the changing needs and expectations of Canadians. It is also driven by the effectiveness of our compliance programs, which work to responsibly contain intentional and unintentional non-compliance at relatively low levels and ensure that the tax system is fair. This is why we aim to ensure an appropriate audit presence, and we employ sophisticated compliance programs to help us target where risk is greatest, thereby reducing the burden on compliant Canadians. We also strive to clearly communicate obligations and requirements. For example, we have been proactive in establishing audit protocol agreements with large businesses to foster openness and transparency in our review activities. In addition, we conduct client satisfaction surveys so that we can be sure our messages are clear and our overall approach is balanced.

High-Level Success Criteria

Below, we assess our performance against our expected outcome using the following high-level success criteria:

• We provide high-quality services that encourage and facilitate participation in the tax system.

• We process returns in a manner that promotes the timely, accurate, and efficient assessment of taxes owing, the distribution of refunds as appropriate, and the proper updating of account information.

• We employ an appropriate mix of compliance and enforcement activities to effectively target and address compliance issues.

• The majority of Canadian individuals and businesses continue to participate in the tax system and meet their obligations.

Starting on , we discuss in detail our performance against each of our 11 anticipated results, using more detailed success criteria that are built on the high-level criteria.

Conclusions Against Expected Outcome

On balance, we believe that through our strong performance against each of the above success criteria, we have met our expected outcome in 2001-2002. Overall, in terms of Canadians participating in the tax system and paying their fair share of taxes, the most recent available estimates suggest that the majority of individuals and businesses filed their income tax and GST/HST returns and paid their reported income taxes on time. For instance, we estimate that 93.8% of all Canadian adults and 91.9% of all taxable corporations filed an income tax return on time, and over 90% of all taxable individual and corporate filers paid their reported taxes on time.

Our performance in client service delivery and processing returns was sound, meeting or mostly meeting many of our most important service standards and internal performance standards. For example, we exceeded our “mission-critical” target for processing 98% of timely filed T1 returns in time to update account information for the new benefit year. Based on estimates from our Annual Survey, nearly three quarters of Canadian individuals believe the CCRA is doing a good or very good job in the area of income tax.

With respect to protecting the tax base, we invested new funds to increase our audit presence, improve the collection of tax debt, and enhance the visibility of our compliance programs. Our strengthened compliance and collection activities exceeded our fiscal-impact and cash collection commitments to the Government of Canada. Further, in our judgement, non-compliance, while material, generally remains at relatively low levels, and the tax base is protected. Measuring the overall level of non-compliance (the “tax gap”) is inherently costly, imprecise, and fraught with assumptions. Our judgement, therefore, reflects a qualitative assessment based on our experience and available evidence and estimates relative to prior years and other countries. Compliance tends to be very high for income subject to third-party information reporting (over 98% for wages and salaries), but lower for business income (with over 20% of corporate and self-employed income tax accounts deemed to be at a substantial risk for non-compliance).

Notwithstanding, we continued to have a performance gap related to our audit coverage targets, due in part to delays in the receipt of funding and in the “ramping up” of new resources to fully productive levels. In addition, more progress is needed to address the level of accounts receivable, which grew from $13.9 billion to about $16 billion during the course of the year. With the aid of additional funding from Parliament, we have made some year-over-year progress on both issues. However, it will take several years to realize the full impact of the additional investments.

Further, we are continuing to refine our risk management framework and enhancing our systems to better allocate our compliance resources across our compliance operations in order to make tax administration more equitable, collect the right amount of taxes, and impose a smaller burden on compliant taxpayers.

Regarding our innovation agenda, extensive consultations with client groups through our Future Directions initiative have confirmed electronic service delivery to be the correct driving force behind our ongoing business transformation for improved service and efficiency. We have continued to expand our electronic service options, meeting all our commitments for 2001-2002. Canadians' responsiveness and take-up has shown steady growth.

As shown in the “Tax Services Performance Report Card” ( Exhibit 5 ), a summary of our performance, our overall strong performance on a year-to-year basis was sustained with improvements against six of our anticipated results, that support this outcome.

Exhibit 5: Tax Services Performance Report Card

Tax Services Report Card Expected Outcome – Canadians pay their fair share of taxes and the tax base is protected
	Anticipated results	This year's ratings	Last year's ratings	Variance		Actual results as demonstrated by	Page
Managing the Compliance Continuum	1. Majority of Canadians and businesses participate in the tax system					We estimate that 95% of taxes were received without any audit or collection activities.
						Over 90% of all taxable Canadian individuals and businesses filed and paid their reported income taxes on time, and over 90% of all registrants outside Quebec filed their GST/HST returns on time.
	2. Taxpayers receive timely, accessible, reliable, and fair service that is responsive to their needs					Our annual survey indicates that nearly three-quarters of Canadians believe the CCRA is doing a good or very good job in the area of income tax.
						On balance, our performance against our service standards improved modestly from last year, and the scope of standards has not yet been expanded beyond timeliness.
						Telephone caller accessibility was within target and substantially improved during peak periods. Overall, caller volume declined while number of Web hits almost doubled–a possible indication of a reduced need for clients to call.
						We again successfully communicated and implemented major legislative changes, including completion of Tax on Income (TONI) for remaining provinces and territories (except Quebec).
						$245 million in interest and penalties was cancelled or waived in cases of hardship or other extenuating circumstances. A systematic, Agency-wide program for monitoring the consistency of cancellation decisions has not yet been implemented, although the fairness registry was reviewed as a first step.
	3. Processing of returns is accurate, timely, and efficient					99.8% of timely filed T1 returns were processed by the critical target date.
						Electronic filing continues to grow in popularity.
						Accuracy rates have remained high despite increased complexity.
						Timeliness in processing corporate income tax returns declined, although the backlog of unassessed returns from the year before was successfully reduced.
	4. Level of tax debt is within targeted level					We significantly exceeded our cash collection commitment to the Government of Canada associated with new funding by $1.0 billion.
						The proportionate share of the value of accounts receivable over five years old declined by two percentage points relative to last year.
						Accounts receivable continued to grow as a percentage of gross revenue in part due to rising intake of new debt. A major initiative was launched to improve overall performance.
	5. Compliance behaviour is understood with a view to minimizing areas of non-compliance					We developed an initial framework, based on the establishment of a comprehensive “basket” of performance indicators, for improving our understanding of compliance.
						Our risk assessment and validation programs indicate that the risk of non-compliance has remained relatively stable for both individual and business accounts, and it is our judgement that non-compliance overall is contained at relatively low levels.
	6. Allocation of compliance and enforcement resources is guided by risk					Our effectiveness in securing tax returns and GST/HST registrations has improved.
						Matching and validation programs continue to show a higher average dollar adjustment amount and adjustment rate than those sampled at random.
	7. Actively seek legislative changes as required to enhance simplification, minimize misreporting and unintentional non-compliance					We continued to demonstrate diligence in identifying and recommending changes to legislation. Significant progress made in the overhaul of the Excise Act and Excise Tax Act. Following events of September 11, we helped draft and subsequently executed our new found responsibilities under the Charities Registration (Security Information) Act.
	8. The right programs are used and are effectively delivered					The $6.5 billion overall fiscal impact from our programs exceeded the $6.2 billion commitment to the Government of Canada.
						Take-up under our Audit Protocol Agreement program continues to grow.
						Modest progress achieved in improving the timeliness of SR&ED delivery, but further progress is needed to achieve service standards.
	9. Sufficient resources are available to invest in compliance programs					900 new auditors were hired and trained with new funding resources. Fiscal impact improved by $500 million over last year.
						Although we were unable to meet some of our audit coverage level targets, our overall coverage was similar to last year; our investments in hiring and training position us well to meet our future audit coverage targets.
	10. Knowledgeable and skilled workforce is in the right place at the right time					We met our overall target for additional staff, with 900 new auditors hired by the end of the year.
						Across all functions, the number of full-time equivalent (FTE) staff for this year has remained virtually constant. The hiring of auditors occurring late in the year had a marginal impact on our FTE count for this year.
Innovating for the Future (Year 2 of 5)	11. Core business is under transformation to better meet our mission					We have exceeded our key program commitments earmarked for year 2 of our innovation agenda.
						Extensive client consultations confirm the relevance our strategy of continued expansion of electronic service options. As well, take-up rates for these options continue to grow and we have enhanced our leadership role in the Government-On-Line initiative.
						Under the Future Directions Initiative, we made solid progress in developing an integrated service vision across agency business lines.

Contributions of Others

The achievement of our expected outcome is not solely attributable to the CCRA. Our job is made easier through the support of a strong legislative foundation, which promotes compliant behaviour through such provisions as requirements for employers to withhold source deductions (over 1.4 million employers withheld and remitted some $151 billion in source deductions in 2001-2002), and sanctions and penalties for non-compliance. We also benefit from the assistance of the ministère du Revenu du Québec, which administers the GST within Quebec. As well, many financial institutions contribute to our expected outcome by providing accessible service to individuals and businesses so that they can conveniently receive and deposit refunds and meet their obligations to remit tax payments.

Logic Model

We have prepared a Tax Services logic model (see ), which offers a roadmap showing the links between our inputs, activities, and outputs that are essential to achieving our eleven anticipated results in support of our expected outcome. It also shows how these fit into the CCRA's overall strategic outcomes. This logic model is the foundation of our performance report card, which summarizes our performance against each anticipated result.

Date modified:

2002-11-07