What it is

Tax administration runs the spectrum from providing initial information and delivering services through to ensuring appropriate recourse when taxpayers don’t agree with decisions made about their assessments. We work to build and maintain the trust of taxpayers and other stakeholders through activities such as outreach; information services; a formal dispute resolution service that provides taxpayers with an impartial review of their file; and our Voluntary Disclosures Program. We strive to minimize the burden for taxpayers by streamlining administrative processes and providing quality service. When we fail to provide quality service to taxpayers, we have an established service complaints program as an avenue they may pursue.

The information below sets out the overall spending levels to promote compliance over the period covered by this report

(in thousands of $)

Total authorities
$456,533

Actual expenditures
$452,562

Variance
$3,971

Full-time equivalents
5,201

What we achieved during 2010-2011

• Visits to the CRA Web site increased by over 7%;
• Calls to our e-Services Helpdesk were up almost 15%; and
• We exceeded our transparency and consistency targets for all dispute cases, except for commodity taxes where we achieved 95% against a 98% target.

Where we go from here

Information for taxpayers

Our outreach programs and communications activities promote compliance by providing information and tools in a variety of formats and venues to reach our diverse audiences. Outreach efforts address a wide range of issues and are delivered by many different areas of the CRA. They sometimes revolve around one-time events. For example, a prime focus during 2010-2011 was the advent of the harmonized tax regimes in Ontario and British Columbia, which required targeted communications strategies and products to create awareness. A proactive multi-media approach was used to educate businesses. Interactive on-line seminars (webinars) were conducted. In addition, a series of short videos were produced and made available on the CRA Web site which provided information on various HST topics.

Our communication and outreach activities are most often used to inform and assist individuals and businesses with ongoing programs and issues. The majority of our outreach activities focused on small and medium enterprises, individual taxpayers, youth, newcomers to Canada, seniors, volunteers, people with disabilities, and Aboriginal communities. We continued to increase our use of technology to improve outreach this past year, including the use of video conferencing to inform taxpayer groups. This technology allows us to reach wider audiences and those who live in remote locations efficiently and cost effectively. We provided 48 video conferencing sessions to 6 distinct outreach groups during 2010-2011.

Service for taxpayers

Individuals and businesses often require information and services specific to their situations. We strive to ensure that taxpayers can rely on our agent-assisted services including specialized 1-800 telephone numbers, technological interactive services such as Smartlinks, and in-person appointments to meet their information needs. Comprehensive automated telephone response systems provide service 24 hours a day, seven days a week. During regular business hours, we route calls among call centres as demand increases or decreases. This makes the most effective use of our resources, reduces costs, and provides extended hours of service for Canadians.

Making sure that individuals, businesses and charities can reach us when they need assistance helps to foster trust in the tax system and compliance with tax laws. In 2010-2011, we met our caller accessibility targets of 90% for general and business enquires, despite a more than 7% increase in call demand on the business lines. This increase was largely due to enquiries related to the implementation of the Harmonized Sales Tax in Ontario and British Columbia as well as changes in mandatory electronic filing for GST/HST registrants. We also exceeded the 90% caller accessibility target for answering tier 1 charities enquiries.

Our call centre agents respond to the majority of enquiries. Service by appointment is available at our Tax Services Offices, however, the number of taxpayers making appointments has declined each of the last three years. We also work hard to ensure that the information we provide to taxpayers through our enquiries services is accurate. We make sure that agents have access to up-to-date training and online reference materials, including a newly developed service excellence training product, and use quality assurance techniques that provide ongoing, prompt feedback to our individual and business enquiries agents. This helps our agents to provide technically accurate responses to taxpayers’ questions.

We provide an array of user-friendly electronic services that help individuals and businesses to pay their taxes. Over the past year we made improvements to My Account based on our analysis of client needs. While electronic services can generate efficiencies they may also create a need to provide support and assistance to those who wish to take advantage of them. For instance, calls to the e-Services Helpdesk increased almost 15% over the previous year. Many of the calls were enquiries about the introduction of mandatory electronic filing for GST/HST registrants that came into effect on July 1, 2010. The introduction of the Credential Management System, which replaced the Government of Canada epass process for CRA services also contributed to the increase.

We continue to be recognized world-wide for the ways in which we migrate callers to self serve options, thereby reducing the number of callers needing agent-assisted service. In a recent international tax benchmarking study, comparing the quality of call centre operations in different tax administrations, Canada was singled out for a number of operating practices that promote the use of self service. Specifically mentioned was the use of automated Interactive Voice Response (IVR) systems (such as the Tax Information Phone Service, or “T.I.P.S.”) to provide general information and respond to simple, repetitive calls twenty four hours a day, seven days a week. Also noted was our use of queue messages in which callers, while waiting for an agent, hear topical messages that are continuously updated concerning upcoming deadlines, extended hours of service, and information available on the CRA Web site. In addition, our Taxpayer Services Agent Desktop application was cited as enabling agents to quickly authenticate a caller and display caller details and our stand-alone call centre environment was observed to promote more creative employee engagement, leading to higher morale and lower absenteeism.

During 2010-2011, as in recent years, the turnaround time for advance income tax rulings was longer than our published service standard. The increase in turnaround time for issuing advance income tax rulings is largely due to the greater complexity of incoming files, combined with less experienced, newly hired staff for this specialized workload. Over the past year, we followed through with recommendations stemming from an in-depth study conducted of this workload in order to improve performance. As a result of this study, we are considering the revision of the advance income tax rulings service standard to better align with anticipated outcomes and put in place various process improvements in order to meet the service standard by the end of 2012-2013.

Redress

The right of taxpayers to request an impartial review of CRA decisions is integral to our tax administration system. If they are still not satisfied following this comprehensive review, recourse through the judicial process is available.

As discussed in prior annual reports, the CRA is experiencing an increase in disputes from taxpayers impacted by the CRA’s audit approach to aggressive tax plans. These plans typically involve transactions, arrangements, or events specifically designed to reduce taxes. We have preserved our high quality standards in the processing of disputes. However, due to the high volume, we have not been able to maintain overall timeliness.

During 2010‑2011, we further strengthened service to Canadians by taking a centralized workload distribution approach to the less complex disputes received. Previously, this work was handled regionally but today it can be distributed throughout the country. This strategy is starting to produce improvements in service delivery.

An internal reallocation of resources has stabilized the front-end management activities of our redress process. As a result, our response time to acknowledge receipt of disputes has improved. In 2009-2010, it took us, on average, 47.7 days to acknowledge a dispute. Last year that was reduced to an average of 39.5 days, a 17.2% improvement.

We continued to ensure high quality standards during 2010‑2011. Two key measures of our quality redress process are our levels of transparency and consistency. Transparency measures evaluate whether we offered to provide to the taxpayer all relevant information supporting the issues under dispute. Consistency measures evaluate whether we reviewed, researched, and addressed taxpayers’ issues under dispute, applied the law correctly, provided taxpayers with an opportunity to respond to our proposals, and arrived at correct decisions. During 2010-2011, we exceeded our transparency and consistency targets, except for commodity taxes where we achieved 95% against a 98% consistency target.

Figure 3 Appeals workload – disputes received related to aggressive tax planning

The largest proportion of our dispute-resolution workload involves income tax disputes. During 2010-2011, it took, on average, nine workable days more to provide taxpayers with a decision compared to 2009-2010. In contrast, we took 30 workable days more in 2009-2010 compared to 2008-2009. Even though the number of days to resolve disputes has continued to climb, this growth is lower than in prior years. Next year, we will add extra resources to reduce our inventory. We anticipate this will improve the overall timeliness of our redress process in the future.

Figure 4 Workable days to complete an income tax case

During 2010-2011, the average time to resolve commodity tax disputes rose by an average of 48 days and the average age in inventory for our commodity tax files increased. These increases resulted from the reassignment of resources from commodity tax to income tax resolution activities in 2009‑2010. This past year, we adjusted our commodity tax capacity, leading to the resolution of more commodity tax disputes than in the previous year.

The average time to resolve a CPP/EI appeal to the Minister of National Revenue rose by six days in 2010-2011. Our production rate increased and our inventory of workable files at the end of the year dropped. These changes were influenced by the resolution of older files and a slight drop in intake. The average age of inventory for our CPP/EI files also improved this past year, dropping to 118 days during 2010-2011 from 135 days in 2009-2010.

We further refined our online presence to improve taxpayer’s access to appeals services. During 2010-2011, we expanded the online formal dispute service for appeals involving Canada Pension Plan and Employment Insurance.

Service complaints

Service complaints help us to identify problems, propose solutions, and provide taxpayers with a formal avenue of recourse, which is guaranteed under the Taxpayer Bill of Rights. If taxpayers disagree with a decision resulting from our Service Complaints process, they can file recourse actions with the Taxpayers’ Ombudsman.

Improving this service to taxpayers is critical to the ongoing success of the program and to increasing Canadians’ confidence in the CRA’s promise of fairness. In 2010-2011, we reviewed the cases received by the Service Complaints program to identify common complaints from taxpayers.

We identified 26 issues of national importance through an analysis of our Service Complaints Program. Of these, five were resolved, and 21 are still under review. Some of the examples of issues resolved included:

• An international fax number for anyone not satisfied with the services provided by CRA – we have published a non-toll free fax number on our Web site and added the number to our Service-Related Complaint and Service Complaints forms.
• Tax information for the Retirement Compensation Arrangement slips – we made a spreadsheet available to our agents that identifies recipients of these slips that includes the amounts of tax deducted at source. This eliminates the need for taxpayers to submit paper copies.

We have in place three performance indicators to demonstrate our determination to provide taxpayers with a consistent and effective service complaints process:

• We aim to send the taxpayer a complaint acknowledgement letter within two business days of receiving the complaint;
• We are committed to updating the taxpayer on the status of their complaint every 15 days thereafter; and
• We strive to resolve the taxpayer complaint within 30 working days.

For the period 2010-2011, we exceeded the 90% performance targets for all three standards.

Voluntary disclosures by taxpayers

The Voluntary Disclosures Program (VDP) allows taxpayers to come forward and correct inaccurate or incomplete information or disclose information they have not previously reported to the CRA. This promotes voluntary compliance with Canada’s tax laws. Taxpayers using the program have to pay the taxes owing, plus interest, but may avoid penalties and prosecution relating to the amounts disclosed.

During 2010-2011, we promoted the program through speaking engagements and other outreach initiatives as well as increased references to VDP in our correspondence with taxpayers and in tax alerts. In addition, clarification of VDP policies was provided through presentations to various associations and responses to media enquiries.

The program saw growth in intake and an increase in the number of disclosures processed during the past year, totalling $600 million in additional tax revenue. Voluntary disclosures led to the identification of $773 million in unreported income compared to $1.8 billion identified during 2009‑2010. The latter was significantly larger than historical norms because it included two large disclosures with income totalling more than $900 million. Despite the growth in intake, the average number of days to process a file was 180 compared to 196 in 2009‑2010 and our VDP inventory is the lowest it has been in years. This program is driven by taxpayers coming forward and therefore it is not possible to control either the number of taxpayers disclosing, or the associated unreported income.

Charities

In 2010-2011, we continued to provide timely telephone and written responses to the charitable sector through our registration application processes, our call centres, and our written enquiries process. We also improved our outreach activities to ensure registered charities have access to the information they need to meet their legal obligations to comply with the Income Tax Act. We offered 75 Charities Information Sessions to registered charities across Canada, with 96% of participants indicating they were satisfied or very satisfied with the sessions. We also delivered 17 webinars (a limited interactive environment in which dialogue can occur between participants and CRA representatives) to 2,164 individuals. When surveyed, 91% of participants indicated that they were satisfied or very satisfied. The client satisfaction survey scheduled to be completed in 2010‑2011 has been postponed to 2011‑2012.

We continue our work on the Small and Rural Charities Initiative. Only two of the 58 recommendations have not been completed and are scheduled for completion in 2011-2012 and 2012-2013.

We also enhanced the functionality of the Charities and Giving Web site by updating search tips, download instructions, links to definitions, and providing the latest available web and e-mail addresses of registered charities. There were over 1,700,000 visits to the Charities and Giving Web site, an increase of 14% over 2009-2010.

Conclusion

Overall, we can conclude that we have mostly met our core business outcome. We continued to strengthen the quality of our services for taxpayers to promote voluntary compliance with Canada’s tax laws. Our work during 2010-2011 provided valuable assistance towards the development of a CRA outreach strategy, and helped us to deliver important messages to Canadians. It is not possible to provide an objective measure of the impact of these outreach activities, however we are confident they advanced our objective of providing taxpayers with the necessary information to voluntarily comply with their obligations. We maintained our high caller accessibility levels on all of our enquiries lines. We made improvements to a wide range of electronic services available on the CRA Web site and we interpret the increase in e-Services Helpdesk calls as an indication this service is achieving the goal of providing access for taxpayers who need it. We demonstrated fairness and impartiality in our review of taxpayers’ contested decisions. Service complaints and the taxpayer relief provisions were administered consistently, underscoring our commitment to fairness. Our Voluntary Disclosures Program continued to generate the intended results and it is our assessment that the services we provide to registered charities are trusted and that our levels of responsiveness contribute to promoting compliance with the charitable sector.

Canadians expect quality decisions from their dispute resolution process – a key element in maintaining their trust in the CRA. With that said, having a more timely process is also important. We remain cognizant that even with additional resources being allocated and dispute inventory growth stemmed, it has taken us more time to process decisions. We anticipate our strategies will achieve year over year reductions in the overall time it takes us to resolve disputes. Overall, we can conclude that we have mostly met our core business outcome and continue to build trust among Canadians in our tax administration and promote compliance among taxpayers.

Note 1

Non-workable files are those awaiting a court decision or action from others. Return to note 1 source text

Note 2

Waivers can either be client requested or automated depending on the situation. An automated waiver results when a penalty or interest that has not yet been charged to an account is waived due to administrative policies. Return to note 2 source text

Our performance measurement framework – Building trust to promote compliance

Table note 1

The caller accessibility targets for general and business callers were raised from 80% in 2008-2009 Return to Table note 1 source text

Results against 2010-2011 planned deliverables

This past year, the CRA took steps to implement the initiatives listed below to enhance our ability to build trust to promote compliance with Canada’s tax laws. The tables also identify the status as of the end of the past fiscal year for each commitment related to these initiatives to be delivered in 2010-2011 as set out in our Corporate Business Plan 2010-2011 to 2012-2013.

The status of a deliverable falls into one of three categories:

Completed – All planned activities related to the deliverable were finished on or before March 31, 2011.

In progress – At least one activity related to the deliverable was not completed prior to the end of the fiscal year.

Not started – No activities were begun by March 31, 2011, in relation to the deliverable.

Where no deliverables were to be completed during the 2010-2011 fiscal year for an initiative, we have inserted the abbreviation N/A (not applicable).

Initiative – Strengthen outreach

Initiative – Optimize service delivery channels

Initiative – Resolve taxpayer disputes and service complaints

Initiative – Enhance the administration of our Voluntary Disclosures Program

Initiative – Enhance our charities program