About this report

The Canada Revenue Agency (CRA) was created to be an effective tax and benefits delivery system for federal and provincial governments in Canada. In response to the requirements of the legislation governing the CRA, this report guides the reader through a comprehensive discussion of our achievements during the 2010-2011 fiscal year, with a focus on the most important aspects of our core tax and benefits business. Based on the Strategic Framework, we gauge our success in achieving our outcomes by presenting our accomplishments during the fiscal year and the 2010-2011 results for the performance indicators found at the end of each chapter.

The Annual Report to Parliament 2010‑2011 introduces a new approach to providing Parliament and Canadians with an assessment of the results achieved by the CRA. For the first time, we are using a horizontal approach to report on our results rather than using the Program Activity Architecture (PAA) to structure our report, as we have in the past. The PAA was devised by the Treasury Board of Canada Secretariat to organize, integrate, and present plans, budgets, and performance measures, emphasizing linkages between resources allocated and outputs of the various activities undertaken by the organization. We have moved away from the PAA to allow us to focus our reporting on our horizontal strategic objectives.

As required by the Canada Revenue Agency Act, we provide information in this report concerning the objectives set out in our Corporate Business Plan 2010-2011 to 2012-2013. The core business outcomes set out in our Strategic Framework are the objectives of our Corporate Business Plan 2010-2011 to 2012-2013.

In order to provide a level of service that continues to meet Canadians’ expectations, we undertake specific initiatives each year to enhance how we administer tax and benefits. Our Corporate Business Plan 2010-2011 to 2012-2013 introduced these initiatives, along with the anticipated results they were intended to achieve, the success criteria we use to assess our progress, and the deliverables related to each initiative. An accounting against each deliverable we committed to complete during 2010-2011 can be found in the table at the end of each chapter.

We have provided a table in Schedule B to help you understand the linkages between the information contained in this Annual Report and the structure in which our activities were presented in prior reports.

CRA spending and human resources

The table below sets out the overall spending levels for the CRA over the period covered by this report.

Table note 1

The Agency’s Total Authorities increased by $10.5m from $4,586.2M in 2009-2010 to $4,596.7M in 2010-2011, a growth of 0.2%. This is attributable to a number of specific changes including incremental funding related to the implementation of the HST/ HSTC for Ontario and British Columbia and the Affordable Living Tax Credit for Nova Scotia. However, these increments were partly offset by the sunsetting of funding for the implementation of tax measures introduced in prior years through the Federal Budget. Return to table note 1 source text

Table note 2

Since the Taxpayers’ Ombudsman operates at arms-length from the CRA, this Annual Report does not reflect the activities of that office. Return to table note 2 source text

The nature of tax and benefit administration

A well-functioning tax system is critical to the ability of federal, provincial, territorial, and First Nation governments to deliver programs, services and benefits to Canadians and Canadian businesses. The Canadian tax system depends on Canadians voluntarily calculating how much tax they owe and then paying the correct amount. At the CRA, we call this self-assessment and voluntary compliance. Non-compliance is when taxpayers do not pay all of the taxes they owe.

A sustainable tax and benefit system is one where:

• taxpayers understand that paying tax is not only a civic responsibility but a legal duty that enables them to enjoy all the rights and benefits that accompany being a Canadian resident or business;
• the number of those who do not comply with the law is small however the tax administration has the tools to identify and deal with them in a fast and effective manner; and,
• the tax administration is equipped on an ongoing basis with the right people with the right skills and tools to meet its legislative requirements.

The CRA is Canada’s tax administrator. It exercises its mandate within a framework of laws enacted by Parliament and by provincial and territorial legislatures. The CRA’s fundamental approach to tax administration is to have individuals and businesses fulfil their obligations without our intervention. We work to promote taxpayer compliance to protect Canada’s revenue base. We do this by delivering a number of programs that help taxpayers to pay their fair share of tax. We also detect and address instances where this does not occur.

Administering tax

The taxes that the CRA levies and the credits it administers are primarily set out in the Income Tax Act and the Excise Tax Act. We also administer specialty legislation relating to the Canada Pension Plan, Employment Insurance and softwood lumber. We undertake many non-tax activities, as well, including those related to charities, tobacco, registered plans, and non-tax collections.

Figure 1 Tax Administration – Revenues for 2010-2011

Tax administration consists of several steps, beginning when taxpayers are registered in our automated systems using a Social Insurance Number for individuals or a Business Number for businesses. Taxpayers must report and pay tax owed (income tax for individuals) or collected on behalf of the government (e.g. payroll, goods and services tax, Canada Pension Plan contributions by businesses). Payments and return filing occurs at different times of the year depending on the type of tax and the category of taxpayer. We verify returns, payments, and registration or application data submitted for tax, benefit, and credit purposes to ensure that the information is accurate. Where individuals and businesses either unintentionally or intentionally fail to fully comply, we use a wide range of mechanisms in our verification and enforcement programs to induce taxpayer compliance and to protect Canada’s revenue base. If necessary, we collect any outstanding debts and provide recourse for those who do not agree with our decisions.

Administering benefits

The CRA plays a vital role in supporting families and individuals across Canada. We help millions of Canadians by administering a range of ongoing and one-time benefit and tax credit programs on behalf of federal, provincial, and territorial governments. In some instances, legislation allows us to provide information to support the programs administered by our government clients. By ensuring that benefit recipients have access to timely and accurate information, we help them receive their proper entitlements. Equally important, by working as a single delivery service on behalf of several levels of government, we reduce duplication and the overall cost of administering benefit programs.

Figure 2 Benefit and Credit Payments

We are very aware of the importance that Canadians place on fairness and transparency in all interactions with government. We respond to Canadians’ expectations by ensuring that only eligible individuals receive benefits and that their entitlements are correct. This protects benefit and credit recipients from undue hardship that could be caused by underpayments while protecting government revenues by reducing overpayments.

Rating our results

We use both qualitative and quantitative measures or indicators, to assess our success in producing the results that we expect from achieving our objectives. We gather operational data, statistical samples, and survey results that form the basis of our assessments. Our targets identify the percentage or degree we expect to attain for a performance level. Our management teams establish performance targets by analyzing affordability constraints, historical performance, the complexity of the work involved, and the expectations of Canadians. We rate our results in terms of whether the targets identified in our Corporate Business Plan 2010-2011 to 2012-2013 were met, mostly met, or not met. Additionally, we recognize that each measure and indicator does not have the same impact against our larger core business goals. We work to ensure balance in our evaluation by taking relative impact of each measure and indicator into consideration throughout our rating process.

We continue to make progress in strengthening our indicators and are developing further concrete measures. Like all tax administrations around the world we recognize that this is challenging work, however, it will allow us to make clear links between our long- and short-term goals, our actions, our outcomes, and the results that we expect. We look internally and externally to identify and exchange best practices in the area of results reporting and rating. We share information with other tax administrations on results measurement through various international fora. The CRA also participates in initiatives designed to benchmark key aspects of tax administration with jurisdictions around the world.

CRA strategic framework

The strategic framework below illustrates how the Anticipated Results from our Corporate Business Plan 2010-2011 to 2012-2013 link to our core business outcomes. The chapters that follow describe the key accomplishments and areas for improvement that are most relevant to the achievement of our Anticipated Results and our core business outcomes. A table has been provided near the end of each chapter to summarize the performance indicator results that contribute to our assessment of whether we met our core business outcome. In addition, a table is provided that includes a listing of the year-end status of the 2010-2011 deliverables related to each initiative contained in our Corporate Business Plan 2010-2011 to 2012-2013.

Our approach

Building trust to promote compliance

Core business outcome

Canadians have access to the information they need to voluntarily comply with tax laws and have access to impartial and timely review of contested decisions

Anticipated results from related Corporate Business Plan initiatives

• Specific taxpayer groups have access to the information they need to meet their obligations and receive their entitlements
• Individuals and businesses have access to the information and services they require to voluntarily comply with tax and benefit laws
• Improving service to taxpayers through enhanced management of Agency-wide service-related issues
• Service to Canadians is enhanced through increased awareness of the Voluntary Disclosures Program
• Service to registered charities and applicants for charitable status is enhanced through improved application and enquiries processes

Strengthening service to make compliance easier

Core business outcome

Canadians have access through multiple channels to services that they need to voluntarily comply with tax laws

Anticipated results from related Corporate Business Plan initiatives

• Individuals and businesses utilize the services and information that they need through self-service channels
• Individuals and businesses continue to file and make payments electronically
• The HST is successfully implemented on behalf of the Government of Canada and the provinces of Ontario and British Columbia

Making non‑compliance more difficult

Core business outcome

Identified non-compliance is addressed

Anticipated results from related Corporate Business Plan initiatives

• Increased number of taxpayers who pay on time
• Aggressive tax planning arrangements are identified and addressed more effectively through audits, research, risk assessment, and international collaboration
• Underground Economy activity in selected economic sectors is identified and addressed
• Reduce the risk of employers and businesses failing to file, withhold, or remit taxes
• All stamped tobacco products in Canada are excise duty paid
• The administration of the SR&ED Program is improved
• Reporting non-compliance is detected and corrected
• The participation of charities involved in non-compliant arrangements is reduced

Making it easier to receive the right social benefits

Core business outcome

Canadians have access to the benefits and credits to which they are entitled and related payments are timely and correct

Anticipated results from related Corporate Business Plan initiatives

• Individuals are aware of and can apply or register for their entitlements to benefits and credits under various federal, provincial, and territorial programs
• The overall cost to Canadians of benefit and credit issuance is lowered through increased integration in administration
• The demands of current and future programs and services are fulfilled
• Benefit issuance accuracy is further improved through enhanced targeted reviews