Performance by Business Line

Context: Strategic Risks and Priorities

The strategic priorities--tax integrity, trust and integrity, business sustainability, and service to Canadians--established in the Corporate Business Plan 2004-2005 to 2006-2007 were based on an assessment of the following six key risks, challenges and opportunities facing the CRA:

• addressing threats to compliance;
• fulfilling our fiduciary responsibilities;
• managing financial pressures;
• protecting confidential information;
• sustaining human resources; and
• responding to socio-economic and political trends.

In 2004-2005, our greatest risk, that of increasing threats to compliance, was addressed by establishing tax integrity as a strategic priority. An Agency-wide review of compliance risks, including emerging trends, as well as shifts in attitudes and behaviours that might affect client confidence in the CRA, confirmed the following four areas of focus.

• Aggressive tax planning: The growth in abusive tax schemes, such as tax avoidance arrangements through liberal interpretations of Canada's tax laws, undermines public confidence in our tax system and may give the impression that tax avoidance and evasion are pervasive. The strategy used by the CRA to counteract this includes identifying and auditing all such transactions as quickly as possible, and publicly stating our position on those transactions to prevent further abuses.
• GST/HST: Millions of GST/HST transactions take place daily, and an extremely large number of registrants request refunds. Our primary focus is to prevent improper refunds and create a legislative and administrative environment to reduce systemic opportunities for fraud. We used the profiling of high-risk registrants, informant leads, partnerships with other law enforcement agencies, as well as our own audits and investigations to identify cases of possible GST/HST non-compliance.
• Underground economy: As part of our multi-dimensional strategy for dealing with the underground economy, we have expanded the use of third-party reporting as well as third-party information. Since non-reporting and under-reporting by self-employed individuals account for much of the unreported income, in addition to our “Get it in Writing!” campaign and Contract Payment Reporting initiative, which are already in place, we published a new pamphlet, entitled “Will you do it for cash?”. The pamphlet reminds construction businesses of the requirement to report cash payments on their GST/HST and income tax returns, identifies the consequences of participating in the underground economy, and provides information on the results of our activities to combat the underground economy.
• Non-filers/non-registrants and collections: A number of key risks to our compliance objectives were identified in the area of collections and non-filers/non-registrants, including employer compliance issues, inventories of non-filers and past performance in the collections of accounts receivable.

The trust and integrity strategic priority mitigated risks associated with protecting confidential information, by responding to policy, social and economic trends, and meeting our financial responsibilities. In 2004-2005, key mitigation strategies included increased focus on the security of information and systems, continued attention to ethics and conduct, and strengthened financial controls and reporting.

In addressing the risks associated with maintaining program integrity, we set the strategic priority of business sustainability (the maintenance of our programs and services, with particular emphasis on financial and human resources). We realized further productivity gains through a risk-based decision process to reallocate resources to support our core tax and benefits programs and to invest in service innovations.

To meet the challenges of maintaining a voluntary compliance approach to Canada's taxation system and to support the government-wide service priority, we made service to Canadians a strategic priority. We believe that if they feel they are getting good service, our clients will have a more positive overall view of our tax administration. This in turn, will reinforce their voluntary compliance. Specific results achieved in 2004-2005 related to this priority are discussed in both the Tax Services and the Benefit Programs and Other Services sections of this report.

The CRA has remained vigilant about managing ongoing risks through the strategic priorities we have established. Our overall strong performance against our expected results demonstrates our success in integrating risk management strategies into our decision making.

Date modified:

2005-10-26