Assessment of Returns and Payment Processing

Our Day-to-Day Activities

We undertake a wide range of activities to assess and process individual and business tax and information returns and payments. We use risk assessment, third-party data matching, and information validation to detect and address non-compliance. Our programs contribute to individuals and businesses meeting their filing, reporting, and payment obligations.

Our goal

To deliver accurate, efficient, and effective processing of individual and business tax and information returns and payments in order to protect Canada’s revenue base and make it easier for Canadians to meet their tax obligations.

Our outcome

In 2009-2010, we expanded our electronic service options to make it easier for taxpayers to interact with us. We processed individual and business tax and information returns and payments accurately and on time. We carried out pre-assessment and post-assessment activities to detect and address instances of non-compliance.

Our challenge

This program activity plays a key role as Canadians make use of measures introduced through budget announcements and economic updates at the federal, provincial, and territorial levels of government. Under tight timeframes, our challenge is to ensure that these measures are in place and that we are positioned to maintain effective delivery of our programs while continuing to focus on long-term sustainability with respect to modernization, integration, financial limitations and public expectations.

Spending Profile

Our 2009-2010 priorities

In support of the overarching objectives for the period, we committed to undertake a number of initiatives that focused on strengthening service and tax integrity.

Strengthening service

We focused on increasing the accessibility of our services and providing taxpayers with convenient self-service options to meet their needs. Providing taxpayers with easier ways to manage their tax affairs encourages voluntary compliance and helps them to meet their tax obligations.

In the fall of 2009, the CRA introduced a new online feature called My Payment. This service lets individuals and businesses make payments electronically through a secure link with participating Canadian financial institutions that offer the Interac® Online ^{[Footnote 1]} payment service. My Payment should simplify accounting because the transfer is immediate. There is no need for taxpayers to pay early to make sure their payment arrives on time or to monitor their account because of an outstanding cheque.

Our Quick Access online option, a complementary service to My Account, continues to be a popular choice for taxpayers who only need limited information on their taxes and benefits. In 2009-2010, there were over 1.1 million accesses, an increase of 12% over the previous year.

We added more options to My Account, our secure portal that gives individuals an online view of their tax and benefit information. Taxpayers can now view certain T4 information slips as well as their Tax Free Savings Account (TFSA) contribution room. We also launched targeted marketing efforts to generate more interest in the services available through My Account. Successful log-ins to My Account for individuals were up significantly from the previous year, as were new enrolments for this service.

In 2009-2010, we continued to enhance My Business Account by increasing the capacity for taxpayers requiring assistance to connect directly with enquiries agents from the My Business Account profile.

Our Represent a Client service, which gives authorized representatives a secure, single point of access to multiple clients’ information, continues to attract considerable interest in the representative community. In 2009-2010, the CRA made it possible for business owners and senior administrators to view transactions completed by representatives on individual accounts and for representatives to download client lists. As the results in the above table show, the number of accesses by representatives increased significantly this past year. We expect the upward trend will continue as more representatives become authorized for online access and begin taking advantage of its features.

In a continuing effort to expand the population that is eligible to file electronically, we increased the threshold for e-filing a GST/HST credit return. This allowed registrants to Netfile their GST/HST return rather than having to send in a paper return for periods with a credit balance greater than $10,000 and less than $50,000.

We continued to expand the use of the Business Number as a common client identifier for businesses to securely and efficiently interact with various levels of government. In the fall of 2009, we replaced the Filer Identification Number with the Business Number. The former Filer Identification Number was used as the account number by financial institutions and trust administrators to file T5 information returns. This latest conversion may reduce the administrative burden on clients as there will be fewer accounts numbers for clients to maintain. It also contributes to the ongoing efforts in the broader public sector to simplify and streamline the way businesses deal with the federal government.

Tax integrity

Tax integrity involves undertaking consistent and active steps to make non-compliance more difficult. Effective processes to detect and address non-compliance are essential to managing compliance risk and ensuring that individuals and businesses pay their required taxes. Therefore, we perform a further review of selected returns at a later date under our post-assessment programs. We devoted resources to areas where our assessments indicate that the risk and potential revenue consequences of non-compliance are higher.

Our review programs are designed to make administration of the tax system more equitable, recover more revenue, and impose less burden on compliant taxpayers. They also promote taxpayer education by identifying common areas of misunderstanding.

Over the years, we have improved our ability to conduct post-assessment activities for Individual returns. We also recognize the need to put in place equally effective measures to improve the risk assessment capabilities of our compliance programs as they relate to T2 corporation returns. With that in mind, we launched the Corporation Assessing Review Program. The goal of this new program is to enhance the CRA’s overall compliance coverage and help to quickly detect non-compliant activity in corporation returns. It is important to note that we are currently in the development stages of this program and, therefore, did not produce measurable data for 2009-2010.

Expected result

Our expected result is the criteria we use to measure our activities and report to Canadians on their effectiveness. We carry out our Assessment of Returns and Payment Processing activities to achieve the following expected result.

As our performance report card on page shows, we met our external service standards for processing T1 individual returns in both paper and electronic formats.

We also establish internal processing targets, and by mid-June, we had processed 99.7% of the individual returns that were filed on time. We also deposited 99.5% of payments within our target of 24 hours.

As projected, there is a continued decrease in the number of paper returns we process. This move toward electronic filing was further entrenched in the past year as the CRA announced in January 2010 that Internet filing will be mandatory for corporations whose annual gross revenues exceed $1 million.

Our primary tool for determining the accuracy of individual returns assessed is the T1 Quality Evaluation Program, which reviews initial assessments of individual tax and benefit returns. Our review for 2009-2010 shows that processing errors with an impact on a taxpayer’s refund or balance due were less than 1%. From 2000 through 2009, the amounts per error were, on average, between $270 and $352.

We also ensure accuracy by using two-dimensional (2D) bar-code technology for computer-generated paper returns. A 2D bar code contains all of the taxfiler identification and financial data necessary to assess the return and ensure we accurately capture taxfiler data. At the end of 2009-2010, 39% of all individual paper-filed returns had been processed using this technology, as had over 86% of all corporate returns. With the availability of electronic options and 2D bar-coding, the percentage of traditional paper returns (no bar code) processed continued to decline.

As indicated in our outcome, an important part of our day-to-day work is our contribution to improving reporting compliance. During 2009-2010, our pre-assessment and post-assessment activities were successful in identifying and addressing specific areas of non-compliance. Our T1 Matching Program compares information on an individual’s income tax and benefit return with information provided by third-party sources, such as employers or financial institutions. Our results reflect the vital role played by third-party information reporting in promoting compliance among individual taxpayers. Over $986.2 million in additional taxes were assessed through our three T1 review programs.

Another integral part of our overall review program is our Beneficial Taxpayer Adjustments initiative. By comparing an individual’s return to third-party information, we identify areas where the taxpayer may have under-claimed credits relating to tax deducted at source or Canada Pension Plan contributions. We adjust these returns to allow amounts the taxpayer is entitled to and, if applicable, issue a refund. In 2009-2010, we identified and corrected 234,744 individual returns, resulting in an average beneficial adjustment of $385 per return.

Overall, our success in meeting the targets for all of our high-volume processing workloads demonstrates to Canadians our commitment to timeliness in our processing activities. In addition, we believe that the combination of our quality evaluation program and use of bar-coding technology to capture data underscores our commitment to accuracy. For these reasons, we are confident in stating that we met our key expected result for this program activity.

Performance Report Card

^{[Footnote 1]} ® Trade-mark of Interac Inc. Used under licence.

Date modified:

2010-11-02