Promoting compliance

Fair and effective tax administration, along with compliance with the laws that govern it, is essential to Canada's economic and social security. Our compliance measures for filing and remitting indicate continued strong overall performance for 2003-2004 (Exhibit 6). Maintaining these high levels of taxpayer compliance is a constant challenge since many factors influence compliance. The changing structure of the international economy, the threat of terrorism, increased business integration across borders, and the rising use of e-commerce are challenging Canada and other countries to preserve their fiscal integrity.

To meet these challenges, we monitor the compliance environment and constantly tailor our strategies and approaches using the best intelligence available. Information from our risk assessment systems allow us to focus on areas of highest risk and target our enforcement actions.

Measures taken in 2003-2004 to strengthen compliance included strengthening the GST/HST registration, returns processing, and pre-payment processes; implementing Part 6 of the Public Security and Anti-Terrorism Act, known as the Charities Registration (Security Information) Act; and increasing international co-ordination to better understand and exchange information about specific abusive practices. We also improved targeting in the validation and controls program for the benefit and credit payments. We have initiated a thorough internal review to assess and improve the effectiveness of our compliance instruments.

Our measures for addressing non-compliance identified $10.2 billion in fiscal impact, exceeding our commitment to the Government of Canada by $1.7 billion. As well, we referred 214 income tax and GST/HST investigations cases to the Department of Justice for prosecution.

In managing the level of tax debt, Canada faces challenges similar to those of other tax administrations around the world. Unfortunately, a small, but increasingly significant number of taxpayers who owe money related to their tax assessment do not or are not able to fully meet their obligations, and the amounts owed become accounts receivable.

We exceeded our commitment for cash collections of accounts receivable, but the level of tax debt, including accounts older than 5 years of age, continued to rise. We have started taking steps to further enhance the effectiveness of our collections processes in 2004-2005.

Date modified:

2004-10-28