Executive Summary

Canadians pay their required taxes and the tax base is protected

We believe that, to achieve our mandate, we must make it easy for taxpayers and businesses to meet their obligations. We must also ensure fairness and tax integrity by applying robust compliance programs, and operate in a cost-effective manner.

As Estimated Compliance Rates and Indicators shows, voluntary compliance continued to be high for filing, registration and remittance in 2004-2005. There are non-compliance challenges related to the reporting of the right amount of income and claiming the correct deductions and credits--whether unintentional or not. It is our assessment that, for the vast majority of Canadians, the incidence and magnitude of non-compliance are relatively low, although in total it is financially significant. Notwithstanding, we have established a strategy to further strengthen compliance in both the short and the long term, specifically in the following areas:

• aggressive tax planning;
• the underground economy;
• Goods and Services Tax / Harmonized Sales Tax (GST/HST); and
• Non Filers / Non-Registrants and Collections.

Our measures to address non-compliance identified almost $10.2 billion in fiscal impact, exceeding our commitment to the Government of Canada by nearly $1.5 billion.

Further, to better manage the level of tax debt, we invested additional resources in our accounts receivable program to improve the collection of outstanding accounts and reduce the proportion of aged accounts. Reducing the size of inventory of older accounts continued to be a high priority in 2004-2005. As a result of this special initiative to reduce accounts to their net realizable value, we wrote off in whole or in part approximately $2.4 billion of uncollectible amounts--almost double that of previous years. This, coupled with the reduced intake of tax debt, eliminated the gap between the dollar value of accounts resolved and the intake of new debt, lowered the ratio of gross tax debt to gross revenues, and reduced the inventory of older tax debt. Total tax debt now stands at $18 billion.

In 2004-2005 we increased the reliability and efficiency of our financial systems that are used to record revenues owed by and due to taxpayers. We also embarked on a multi-year process to modernize our data-processing systems to support our move towards an integrated, client-centred approach and improve our ability to manage tax debt.

Part of our strategy in 2004-2005 to deliver affordable client services was to increase client self-service by enhancing our electronic service options. For instance, Canadians can now go online to view their income tax information, change their return, change their address or file a formal dispute, and obtain benefits information.

Our commitment to timely, accessible, reliable and fair service that is responsive to clients' needs is supported by published service standards that help to set public expectations and contribute to overall client satisfaction. This year, we added four new service standards, bringing the total to 36 service standards related to this expected outcome. We met or mostly met 89% of our service standard targets compared with 69% in 2003-2004. See Schedule C for our performance against service standards.

Date modified:

2005-10-26