Managing the Compliance Continuum

To deliver on our mission of promoting compliance with Canada's tax, trade, and border laws, we use a mix of service and responsible enforcement strategies, backed by sound risk management. We implement these strategies through a comprehensive set of programs, activities, and initiatives that span the full breadth of the “compliance continuum” as illustrated in Exhibit 3. Our efforts in managing this continuum are greatly assisted by a strong legislative foundation; the co-operation of over 1.4 million employers who withhold and remit income taxes they deduct from their employees' wages; about 2 million businesses that regularly remit GST/HST; businesses, travellers, and traders who remit other duties and taxes; and the support of our federal, provincial, territorial, and international partners.

Exhibit 3: The Compliance Continuum

Facilitating Voluntary Compliance

Our experience over the years suggests that most individuals and businesses are willing to comply with their obligations voluntarily if they are given the opportunity, the right tools, and the proper information. Accordingly, as the cornerstone of our compliance strategy, we devote a substantial share of the CCRA's resources (57.7%) to programs and services that facilitate compliance. In keeping with the rising expectations of Canadians, we have undertaken a number of initiatives in recent years to enhance the accessibility and timeliness of our services. As a result, we offer more information over the Internet. We improved the accessibility of our telephone help lines, we processed corporation T2 returns faster, and we expedited processing of low-risk travellers and commercial goods through pre-clearance programs.

Assisted Compliance

Our compliance strategy is supported by a robust system of checks and balances to ensure that the law is properly understood and respected. These fundamental controls allow the CCRA to target its more resource-intensive efforts to areas of higher risk and reduce the compliance burden for individuals and businesses. Our system of checks and balances includes source deduction and information matching programs, as well as reviews, verifications, examinations, and audits to promote the accurate reporting of income and trade data, reduce problems with insufficient tax and duty remittance, and facilitate the early detection of reporting errors. Together, these “assisted compliance” activities account for 21.7% of the CCRA's resources. Over the past several years, we have invested additional funding from the Government of Canada in our compliance programs and management of accounts receivable. Although we have not yet fully achieved all of our enhanced audit targets, we have been successful in reversing the declining trend in audit coverage rates. These higher coverage rates, and various refinements to our risk assessment systems, have increased the total fiscal impact of our compliance programs, which now exceeds targeted levels.

Enforcement

About 20.6% of the CCRA's resources are devoted to enforcement activities such as investigations, seizures, arrests, detentions, prosecutions, and collections. These measures are directed towards those cases where the risk of non-compliance is deemed to be high or the potential consequences severe. We have enriched our programs to detect GST/HST, customs, and income tax fraud in recent years, and the number of prosecution referrals we make each year to the Department of Justice continues to increase. To further strengthen border security, we have invested heavily in new technologies that enhance our capacity to interdict weapons and contraband. We have also made new investments in our collections program to address the increasing debt and the age of accounts receivable. We have met our government commitments associated with these investments and have slowed the long-term trend of escalating arrears.

Exhibit 4: CCRA-wide Resources Allocated to the Compliance Continuum

Appeals

Underpinning the compliance continuum is a dispute resolution system that aims to provide fair and impartial redress. The fairness provisions of the Income Tax Act, Customs Act and the Excise Tax Act give the CCRA common-sense ways to help clients who, because of extraordinary circumstances, are unable to meet their tax or duty obligations. These provisions give us the discretion in certain situations to: cancel and waive penalties and interest; accept late-filed, amended, or revoked elections (income tax only); and issue income tax refunds beyond the normal three-year period (individuals and testamentary trusts only).

Our Appeals system ensures that taxpayers who disagree with the CCRA's decisions have a simple, low-cost method of filing appeals. We have made progress in reducing the case processing time for client appeals, exceeding our program targets. However, more work is needed to reduce the inventory of cases.

Date modified:

2003-10-29