Our 2006-2007 Results

Our Program Activities

Filing and Remittance Compliance (PA3)

Compliance with Canada’s tax laws brings with it the obligations to file returns on time and pay all amounts owing when due. As noted in the section on Achieving Our Tax Services Strategic Outcome, we believe that, overall, we have succeeded in mostly meeting our goals for filing and remittance compliance by helping to ensure that taxpayers have honoured their obligations for filing returns on time and withholding and/or remitting tax owing.

We carry out our Filing and Remittance Compliance program activity to achieve two expected results: tax and non-tax debt are resolved on a timely basis and are within targeted levels; and reporting non-compliance is detected and addressed. As discussed earlier, we face significant challenges as we work to stem the growth in total tax debt. Within this context, we annually establish targets that reflect what we feel we can achieve. On balance, it is our assessment that we mostly met our expected result related to tax debt.

As demonstrated in our Performance Report Card, in 2006-2007, we met several key performance targets; we did not, however, reduce the proportion of accounts over five years of age as we had expected.

Our Measure: Timely resolution of tax debt

We aim to resolve new receivables on a timely basis. We surpassed our target for the percentage of intake resolved in the year of intake, achieving a result of almost 67%. This was accomplished through our continued efforts on addressing new debt, which increased significantly in 2006-2007.

Our Measure: Tax debt and non-tax debt are within targeted levels

We have in place a target that relates the dollar value of the overall TSO production to the dollar value of TSO intake of new accounts receivable. During 2006-2007, we resolved just under 90% of the value of new intake as a result of collections activities in our TSOs, bringing us just short of meeting our target of greater than 90%. This was the result of two extraordinary items. If not for these two items, we would have significantly exceeded our performance target, resolving 96%.

We also have in place targeted levels for the tax debt and non-tax debt we manage. At the end of 2006-2007, the proportion of tax debt between one and five years of age was approximately 52% of the total TSO inventory. With some resources being reallocated to other CRA priorities, there was a shift in our focus from aged accounts to cash and write-off production and the proportion of tax debt under one year old fell to 28%.

Our target was to reduce to less than 16% the proportion of tax debt older than five years of age. In 2006-2007, we did not achieve this target, as the proportion rose to 20% of the total accounts receivable inventory (see Figure 13). We collected almost $9.7 billion, thus surpassing our target for cash collections by our TSOs by over $1 billion.

Figure 13 TSOs--Aging of Tax Debt

Our non-tax collections initiative began with the transfer of the Human Resources and Social Development Canada (HRSDC) collection program to the CRA in 2005. This initiative was started to standardize and streamline collection processes and consolidate and specialize collection activities. In addition, it will position the CRA to further develop the Collections Canada concept and move towards an integrated debt management approach. In 2006-2007, the non-tax debt collections program exceeded the established objectives for the workloads that were transferred, including the commitments to the Expenditure Review Committee (see our Performance Report Card).

Our Measure: Dollar value of non-compliance

Employing a range of enforcement activities, we continue to ensure that taxpayers meet their filing and remittance obligations. We exceeded our targets for the dollar value of identifying non-compliance for our two key areas within the Filing and Remittance Compliance program activity: our non-filer/non-registrant program and Employer/Payroll and GST/HST non-compliance.

In 2006-2007, the T1/T2 non-filer program continued to address non-compliance by obtaining more than 800,000 returns for taxpayers who had failed to file, resulting in over $2 billion in taxes assessed, exceeding our target. The non-filer and non-registrant work initiated legal action that resulted in the conviction of 1,266 taxpayers; over $1.4 million in fines being levied; and 42 prison sentences.

Our Employer/Payroll and GST/HST non-compliance area also exceeded its established target. In 2006-2007, our payroll compliance programs addressed over 500,000 instances of non-compliance. The total dollar value resulting from our employer payroll compliance activities was $1.2 billion in taxes assessed.

Our principal focus involving GST/HST is to ensure filing compliance with legislative requirements under the Excise Tax Act. Of the businesses registered for the GST/HST, only a relatively small portion failed to meet their filing obligations. In 2006-2007, our programs addressed over 600,000 GST/HST non-compliance occurrences, which resulted in taxes assessed of $1.1 billion. These programs continue their balanced approach to address non-compliance through the use of education, assisted compliance activities, and, where warranted, more rigorous actions, such as prosecutions.

A Snapshot of Filing and Remittance Compliance (PA3)

Figure 14 Resource Spending

Description

In 2006-2007, spending for this program activity totalled $645.3 million (9,497 FTEs) or 18.9% of the CRA’s overall expenditures (Figure 14).[Footnote 1] Of this $645.3 million, $406.9 million was for net program expenditures and $238.4 million was allocated to this program activity for corporate services. Note: The results for CPP/EI Eligibility are reported in the Client Assistance (PA1) section. CPP/EI Eligibility gross expenditures total $24.7 million. Of this total, $21.7 million is funded through revenues credited to Vote 1.

Performance Report Card

Timely Resolution of Tax Debt

Tax Debt and Non-Tax Debt Are Within Targeted Levels

Dollar Value of Non-Compliance

Date modified:

2007-11-01