Performance Context: Risks and Challenges

The CCRA has a strong foundation for client-centred service delivery, and the promotion of compliance remains central to our operations. If we fail to ensure fairness and integrity in the system and do not adequately address areas of risk, there is a danger that the level of compliance may diminish and the tax base may erode over time. Our efforts to maintain and improve the integrity of our core programs, while carrying out an ambitious service innovation agenda, continue to be challenged by ever-increasing workload volumes and the government's call for ongoing fiscal restraint. The Horizontal Reviews that are underway in the CCRA are a means of identifying potential efficiencies and savings. However, any sizeable reduction to our base budget would pose a risk to our ability to deliver on our commitments.

To promote compliance, it is essential that we manage ongoing risks as well as emerging risks associated with the changing nature of Canada's socio-economic environment, globalization, and the growth of e-commerce. Our dynamic environment demands vigilance and increasingly strategic approaches for assessing, prioritizing, and addressing compliance risks.

As in virtually all countries, the underground economy has been a significant element in Canada for many years. Addressing non-compliance in the underground sector continues to be a high priority for the CCRA in our efforts to promote a level playing field among Canadian individuals and businesses. In order to increase taxpayer awareness of the underlying risks associated with participation in the underground economy, we collaborate with our federal, provincial, territorial, and First Nations partners and industry representatives to target specific sectors in each province and territory. Our joint efforts include a range of education, data sharing, and enforcement initiatives. The Contract Payment Reporting Initiative (CPRI) promotes compliance in the construction industry, the Get it in Writing! Campaign addresses consumers who may consider participating in underground activities in the home renovation sector of the construction industry, and the CCRA High School Curriculum Initiative is developing a learning unit to be incorporated in the existing grade 9/10 curriculum. Applying penalties and publicizing enforcement actions on our Web site are other key components of our strategy.

We identify cases of possible GST/HST fraud and other illegal underground activities through the profiling of high-risk registrants, informant leads, partnerships with other law-enforcement agencies, audits, and investigations. All suspected cases of fraud are evaluated for prosecution potential and where further investigation reveals sufficient evidence to support a conviction of wilful non-compliance, cases are referred to the Department of Justice for prosecution. Through our Web site, publications, and news releases, we publicize the results of our efforts to build public confidence in the integrity of the tax system and to deter non-compliance.

Globalization, with its attendant multinational business operations and electronic flows of capital and intellectual property, increases the potential for aggressive tax planning and abusive transactions. Improper transfer pricing arrangements and the proliferation of tax havens pose a potentially significant threat to the tax base. Through our tax treaty partnerships and our participation in international organizations, such as OECD, PATA and CIAT, we develop international tax strategies and share information and best practices to mitigate the risk of international tax non-compliance. The CCRA has taken a major role in these partnerships by hosting the 2002 CIAT General Assembly and by participating in the development of a program for OECD-committed jurisdictions to address harmful tax practices.

Under the Charities Registration (Security Information) Act, we have been working to address the risk that groups supporting terrorism may be attempting to register as charitable organizations. If left unchecked, such abuses would have the potential to undermine the confidence of Canadians in the charities program. This has lead to the creation of a dedicated team that conducts intensive screening and review of applications. These actions have resulted in a number of referrals to the Canadian Security and Intelligence Service (CSIS) and the RCMP.

Date modified:

2003-10-29