Appeals

Expected Result - Clients receive timely, accessible, reliable and fair service that is responsive to their needs

Maintain or exceed the high levels of transparency, accessibility, and consistency reported since 2000-2001

Our aim is to ensure all of our clients have access to responsive and impartial redress. To achieve this, we believe our dispute resolution process must maintain high levels of transparency, accessibility, and consistency.

We use our Quality Assurance Program to measure transparency for our Income Tax and GST/HST/Excise program areas and to measure consistency for these two program areas as well as for CPP/EI. Using sampling techniques, our quality assurance review covered all Appeals activities across Canada in order to assess the performance of our dispute resolution service against established benchmarks.

Our 2004-2005 review found that all relevant information supporting issues under dispute, including records of discussion with the auditor and excluding the information held in confidence under the Canadian tax system, was made available to the client under the transparency rules 96% of the time for income tax and 98% of the time for GST/HST/Excise cases. To meet our very demanding 100% benchmarks for transparency, recommendations were made to ensure that, in the future, relevant information related to the issues in dispute and records of discussion with the auditor are always provided to the clients.

In the case of consistency, our review indicated that officers determined and weighed all the facts and evidence of the case; reviewed, researched, and addressed issues under dispute; applied the law correctly and impartially; provided clients with an opportunity to respond to our final position and, where warranted, to find a mutually acceptable resolution; and decisions were applied within the law and were consistent with the facts of the case. Although some improvements are required for certain elements, the results of 99% for income tax and CPP/EI and of 95% for GST/HST/Excise cases reviewed showed that the benchmarks for consistency were exceeded in all of the three program areas.

To ensure that all clients are aware of their right to redress as well as how to access Appeals services, we continually advise potential clients of the appeals program and their appeal rights through our major tax and benefits forms. Our 2004 Annual Survey ¹ found that 74% of Canadians were aware of their right to file a dispute if they disagreed with our decision; this represented a slight increase from the results of the previous survey.

In an effort to continue to improve client accessibility to our Appeals process, the ‘My Account' feature on the CRA website was expanded in the fall of 2004. Through it, over 2,000 individual income tax filers requested an administrative review of their assessments in 2004-2005. Further improvements are proposed for 2005-2006, including making it easier for clients to retain copies of their submission for future reference.

Meet service standard for contact across all three program areas

To support the government-wide Service Improvement Initiative and maintain timely service that is responsive to client needs, we have in place a service standard to ensure that 85% of clients who file disputes are provided with a status update within 30 days of filing. This status update confirms receipt of the dispute and provides a contact name and telephone number; it may also indicate when an appeals officer will contact the client.

In 2004-2005, we again exceeded our service standard, achieving a rate of 90% across all three program areas. In fact, we have consistently met this standard for the past four years (see Figure 32).

Figure 32 Service Standard - Client Contact

Meet targets for turnaround times

Our three-year initiative to improve timeliness in delivering Appeals services ended in 2004-2005. This year, we established revised performance objectives for Income Tax files, aiming to improve on the 2003-2004 results that we achieved.

For Income Tax files (our largest program), we did not meet all specific internal targets; however, we succeeded in reducing the average processing time from 135 to 130 days (see Figure 33). We did not meet our internal target for GST/HST files. A review of these results will help us determine the next steps we should take regarding our timeliness, while ensuring that we do not sacrifice the quality of our decisions for the sake of timeliness.

For CPP/EI files, there was a rise in the number of larger and more complex cases received, leading to longer processing times and a growing overall inventory. As a result, our CPP/EI program failed to meet any of three established processing targets. In January 2005, we released the CPP/EI Appeals Process Review interim report. This outlined the challenges facing the program and made recommendations for enhancing timeliness and efficiency; we intend to implement the report's recommendations in the coming year.

Figure 33 Average Time to Resolve Disputes

Reduce the average age of workable inventory

Disputes are categorized within Appeals as being either workable or non-workable; cases can move from one category to the other and back again several times before they are resolved. When a dispute is in non-workable status, our officers cannot pursue the case because it has been referred to another party (e.g., to the Department of Justice) for an opinion, or the case is related to a case in court on the same issue. At the end of 2004-2005, just under 73% of our total inventory of disputes, or 51,720 cases, were in non-workable status; included in this inventory are more than 20,000 cases related to the treatment of federal government pay-equity payments, a matter that is currently before the courts.

We monitor the average days in which a case is in workable status to provide us with an indication of the aging of the inventories that we can move forward. The average age of our workable inventory of income tax files--which is, by far, the largest proportion of files in our workable inventory--fell from 166 days old in 2003-2004 to 162 days old in 2004-2005 (see Figure 34).

Meanwhile, the average age of our workable GST/HST files rose from 151 days old to 176. Some short-term remedial actions have commenced pending completion of an analysis to determine the underlying causes of this increase. Once this analysis is complete, we will be better positioned to determine any additional action that may be required.

As discussed earlier, the timeliness of our CPP/EI files is on the rise; consequently, the average age of these files also rose from 102 days in 2003-2004 to 148 in 2004-2005. Additional resources were secured for a two-year period to reduce the size and average age of this inventory. Implementation of the recommendations from the CPP/EI Appeals Process Review interim report is expected to have a positive effect on the average age of CPP/EI files.

Figure 34 Average Age of Workable Files

Demonstrate fairness, responsiveness, and cost-effectiveness in resolution of disputes. The majority of disputes are resolved administratively or the CRA's original determinations are upheld by the courts

In 2004-2005, we resolved a great majority of appeals cases administratively in the Income Tax and GST/HST/Excise program areas (almost 94% and over 92% respectively--slightly down from the 95% achieved in the previous year). In this way, we continued to demonstrate fairness, responsiveness and cost-effectiveness. In the CPP/EI program, the administrative resolution rate was 70%, an improvement over the results for the previous year (66%). The variance in the resolution rates between the programs is the result of legislated program differences in the administrative redress processes.

Although, we have been successful in resolving most disputes at the administrative level, in some cases clients may still wish to appeal to the Tax Court of Canada. In 2004-2005, the majority of the decisions (almost 51%) rendered by the courts continue to support the CRA, a result that is consistent with our goals. We review the impact of adverse court decisions to determine whether to appeal or to accept the Court's decision, which may result in the amendment of legislation or policy.

Fairness provisions are applied consistently

Fairness principles are integrated generally across the CRA. They find expression in two major ways: through our VDP and through our application of the CRA's fairness provisions. Use of the VDP by the public remained virtually constant in 2004-2005. There was an increase in the number of cases completed: 6,632, up from 6,164 in the previous year (see Figure 35). Still, the VDP inventory in 2004-2005 remained relatively stable compared with 2003-2004. An estimated $318 million was generated in related assessments, with related income tax files accounting for $153 million and GST/HST files, including the cases now administered for us by the MRQ, accounting for $165 million.

Figure 35 VDP Case Completion

Note: In 2004-2005, completion results include GST/HST voluntary disclosures administered by the MRQ, which totalled 171 cases during the year.

Sections of the Income Tax Act and other acts administered by the CRA permit us to cancel and/or waive penalties and interest payable by clients who have faced extenuating circumstances. Interest and penalties may be cancelled in cases where they have already been assessed; they may be waived when they have not been assessed. As noted in the Tax Services chapter, most of the day-to-day administration of the fairness provisions falls to various Tax Services programs. The Appeals business line, however, leads the Fairness Initiative across the CRA.

Requests from clients processed under the fairness provisions last year totalled 75,299, an 11% increase from 2003-2004. Relief was provided in 64% of these cases. The value of interest and penalties cancelled or waived as a result of these requests also increased, from more than $184 million in 2003-2004 to approximately $234 million in 2004-2005.

The total value of automatic waivers of penalty and interest under the fairness provisions increased significantly, from approximately $446 million in 2003-2004 to over $851 million in 2004-2005; the 2003-2004 total is a restatement from the over $290 million reported in last year's Annual Report. The near-doubling of the total value of automatic waivers occurred for a variety of reasons, including system enhancements that allowed for improved reporting. In total, more than $1 billion was cancelled or waived by the CRA in 2004-2005 for over one million clients.

We use monitoring visits to ensure the effective and efficient administration of the fairness provisions. We continued with the commitment to expand the monitoring to all programs that are involved in granting relief under the fairness provisions. In 2004-2005, these reviews found that existing policies and procedures were being followed and consistently applied in most cases. Some common problems, however, were identified in the application of the fairness procedures across the functions. Where inconsistencies were identified, solutions were implemented, culminating in an updated version of the Fairness Registry User Guide. Some of these suggestions will be incorporated in the next release of the Fairness Provisions Reference Guide.

All cases are resolved consistently, and complex cases are handled where expertise exists

As discussed earlier, our Quality Assurance Program found in 2004-2005 that, with a few exceptions, our dispute decisions were applied within the law and consistent with the facts of the case. This program also found that, overall, dispute files were screened at the proper complexity level and were assigned to an officer at the appropriate level.

¹ See footnote on page 28 for further information regarding the CRA's Annual Survey.

Date modified:

2005-10-26