Conclusions Against Expected Outcome

We have one expected outcome: Canadians pay their fair share 1 of taxes and the tax base is protected – Our tax system is based on self assessment and voluntary compliance. We believe that 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 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 fully comply. A knowledgeable, skilled, and appropriately staffed work force 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.

We have met our expected outcome through our strong performance against each of our anticipated results. Overall, in terms of Canadians participating in the tax system and paying their fair share of taxes, our most recent available estimates indicate that a majority of individuals and businesses filed their income tax returns and paid their reported taxes on time. For instance, we estimate that 94.3% of individuals and 87.2% of taxable corporations filed a timely income tax return and that over 90% of all taxable individuals paid their reported taxes on time. Although a significant number of corporations do not pay their full balance by their due date, our statistics indicate that over 93% of total reported income taxes are paid on time. As well, over 90% of employers remitted taxes they withheld on behalf of their employees by the due date.

Our overall performance in service delivery and returns processing continues to be strong, and we have made significant improvements in expanding our range of electronic service offerings. More clients every year are taking advantage of our electronic self-service options, which allow them to get information without making a phone call. As well, a variety of electronic filing options that permit faster service and improved accuracy are now either available or being piloted for most types of returns, and participation in electronic filing continues to grow. We exceeded our service standard targets for the processing of both individual and corporate returns based on sampling. Overall, we have improved our performance against our service standards and internal performance targets. The 2002 Citizens First Survey indicated that our service quality rating by Canadians has improved by four points since 2000, from 55 to 59 on a 100 point scale.

With respect to protecting the tax base, we continue to invest new funds to increase our audit presence, improve the collection of tax debt, and enhance the visibility of our compliance programs. Again this year, we exceeded our fiscal impact and collections targets. Although audit coverage rates overall have increased, we are not yet meeting all of our coverage targets. In both the audit and collections areas, we anticipate it will be several years before the full impact of our investments are realized. In our judgement, non-compliance, while material, generally remains at low levels and the tax base is protected. As we are not aware of any reliable and accurate methodology for measuring the overall level of non-compliance, our judgement reflects a qualitative assessment based on our experience and available evidence and estimates relative to prior years and other countries. Compliance tends to be higher for income subject to information reporting (over 91.1% for wages and salaries). Non-compliance tends to be higher for business income (with over 38% of corporate and 27% of self-employed income tax accounts deemed by our risk assessment systems to be at substantial risk).

We continue to work on our compliance strategy so that we have the right mix of programs to address areas of high risk and non-compliance. Our risk assessment system was expanded and work on the Compliance Measurement framework continues to be refined. Ultimately, our objective is to improve the allocation of our resources across our compliance operations to make tax administration more equitable, collect the right amount of taxes, and impose a smaller burden on compliant taxpayers.

The next section presents our Performance Summary for the Tax Services business line against our seven anticipated results. Anticipated results 1 through 6 deal with our strategic outcome of managing the compliance continuum, while anticipated result 7 relates to our strategic outcome of innovating for the future. These anticipated results support our expected outcome—Canadians pay their fair share of tax and the tax base is protected.

Performance Highlights

Key Volumetrics

Date modified:

2003-10-29