1. Majority of Canadians and businesses participate in the tax system

We estimate that 95% of taxes were received without any audit or collection activities.

Over 90% of all taxable Canadian individuals and businesses filed and paid their reported income taxes on time, and over 90% of all registrants outside Quebec filed their GST/HST returns on time.

2. Taxpayers receive timely, accessible, reliable, and fair service that is responsive to their needs

Our annual survey indicates that nearly three-quarters of Canadians believe the CCRA is doing a good or very good job in the area of income tax.

On balance, our performance against our service standards improved modestly from last year, and the scope of standards has not yet been expanded beyond timeliness.

Telephone caller accessibility was within target and substantially improved during peak periods. Overall, caller volume declined while number of Web hits almost doubled–a possible indication of a reduced need for clients to call.

We again successfully communicated and implemented major legislative changes, including completion of Tax on Income (TONI) for remaining provinces and territories (except Quebec).

$245 million in interest and penalties was cancelled or waived in cases of hardship or other extenuating circumstances. A systematic, Agency-wide program for monitoring the consistency of cancellation decisions has not yet been implemented, although the fairness registry was reviewed as a first step.

3. Processing of returns is accurate, timely, and efficient

99.8% of timely filed T1 returns were processed by the critical target date.

Electronic filing continues to grow in popularity.

Accuracy rates have remained high despite increased complexity.

Timeliness in processing corporate income tax returns declined, although the backlog of unassessed returns from the year before was successfully reduced.

4. Level of tax debt is within targeted level

We significantly exceeded our cash collection commitment to the Government of Canada associated with new funding by $1.0 billion.

The proportionate share of the value of accounts receivable over five years old declined by two percentage points relative to last year.

Accounts receivable continued to grow as a percentage of gross revenue in part due to rising intake of new debt. A major initiative was launched to improve overall performance.

5. Compliance behaviour is understood with a view to minimizing areas of non-compliance

We developed an initial framework, based on the establishment of a comprehensive “basket” of performance indicators, for improving our understanding of compliance.

Our risk assessment and validation programs indicate that the risk of non-compliance has remained relatively stable for both individual and business accounts, and it is our judgement that non-compliance overall is contained at relatively low levels.

6. Allocation of compliance and enforcement resources is guided by risk

Our effectiveness in securing tax returns and GST/HST registrations has improved.

Matching and validation programs continue to show a higher average dollar adjustment amount and adjustment rate than those sampled at random.

7. Actively seek legislative changes as required to enhance simplification, minimize misreporting and unintentional non-compliance

We continued to demonstrate diligence in identifying and recommending changes to legislation. Significant progress made in the overhaul of the Excise Act and Excise Tax Act. Following events of September 11, we helped draft and subsequently executed our new found responsibilities under the Charities Registration (Security Information) Act.

8. The right programs are used and are effectively delivered

The $6.5 billion overall fiscal impact from our programs exceeded the $6.2 billion commitment to the Government of Canada.

Take-up under our Audit Protocol Agreement program continues to grow.

Modest progress achieved in improving the timeliness of SR&ED delivery, but further progress is needed to achieve service standards.

9. Sufficient resources are available to invest in compliance programs

900 new auditors were hired and trained with new funding resources. Fiscal impact improved by $500 million over last year.

Although we were unable to meet some of our audit coverage level targets, our overall coverage was similar to last year; our investments in hiring and training position us well to meet our future audit coverage targets.

10. Knowledgeable and skilled workforce is in the right place at the right time

We met our overall target for additional staff, with 900 new auditors hired by the end of the year.

Across all functions, the number of full-time equivalent (FTE) staff for this year has remained virtually constant. The hiring of auditors occurring late in the year had a marginal impact on our FTE count for this year.

11. Core business is under transformation to better meet our mission

We have exceeded our key program commitments earmarked for year 2 of our innovation agenda.

Extensive client consultations confirm the relevance our strategy of continued expansion of electronic service options. As well, take-up rates for these options continue to grow and we have enhanced our leadership role in the Government-On-Line initiative.

Under the Future Directions Initiative, we made solid progress in developing an integrated service vision across agency business lines.

1. Program communication and delivery is fair and responsive to recipients' needs

Improved targeting of outreach activities and expanded information programs have contributed to improved awareness of our benefit programs.

Telephone services have improved, with caller accessibility rates of 91% for Canada Child Tax Benefit (CCTB) callers and 71% for GST/HST credit callers. Access through alternative channels is increasing.

An estimated three-quarters of CCTB and GST/HST credit clients continue to rate the CCRA as doing a good or very good job in administering these programs based on our Annual Survey.

2. Entitled recipients receive accurate and timely payments and credits

According to information on our benefit rolls, over 99% of all payments to 3 million CCTB recipients and 9 million GST/HST credit recipients – including payments under related provincial and territorial benefit and credit programs – were issued on time. A review also showed that we met our internal performance standard in the payments and notices issued when processing CCTB applications, achieving an estimated 98% accuracy rate.

The most recent available estimates suggest that approximately 95% of CCTB clients are fully compliant with their reporting requirements. The number of reviews under our validation and controls programs was increased, with adjustment rates also increasing to 31.6%.

We processed an estimated 97% of CCTB applications in a timely manner, just below our 98% service standard. We also processed an estimated 80% of account maintenance adjustments on time, below our internal performance standard of 98%.

We increased the timely processing of Canada Pension Plan/Employment Insurance (CPP/EI) rulings to 81%, but are still short of our 85% target.

3. Successful leveraging of CCRA systems expands service, eliminates duplication across all levels of government, and reduces overall cost to taxpayers

We have exceeded our second year expectations with respect to data exchanges and expansion of other services, and we are generally on track with respect to the remaining elements of our change agenda.

We implemented two additional benefit programs on schedule and within overall funding levels, bringing to 20 the total number of on-going benefit programs and one-time payment programs delivered for provincial and territorial governments.

Enhanced data exchanges in support of the National Child Benefit initiative through the Benefit Data Synchronization Link, a Technology in Government Week 2001 Gold Medal winner for enhancing government operations, and improving systems and services.

Refund set-offs for other government organizations up $5 million, totalling some $105 million.

Expansion of other services, including continued development of our Workers' Compensation Board (WCB) partnership and implementation of First-Time Home Buyers' HST Rebate for Nova Scotia, additional progress on expanding Business Number partnerships in place with Ontario and Nova Scotia to three more jurisdictions, as well as implementation of additional First Nations sales taxes.

Meaningful and transparent accountability with provinces and territories through additional Service Management Framework agreements signed with four jurisdictions (bringing the total number of agreements in place to nine), as well as Commissioner's meetings, and annual reports.

We are still unable to precisely measure the incremental costs associated with new services. This will be addressed as part of our agency-wide Activity-Based Costing initiative.

1. Enhanced enforcement that expeditiously identifies and responds to threats to the security, health and safety of society, and to Canada's economy

We continue to combat the smuggling of contraband such as drugs, firearms, pornography, alcohol and tobacco through the use of intelligence, contraband detection, and most importantly, the skills and abilities of our customs officers.

As a result of the September 11 attacks, our customs officers were mobilized to process the many U.S.-bound planes that were diverted to Canada. We immediately increased our screening of passengers and goods to detect any movement related to terrorism.

Significant new investments made in contraband detection equipment to address emerging and ongoing threats.

We continued to negotiate with several other government departments to strengthen our ability to identify and respond to external threats of all kinds.

We completed eight investigations, which resulted in 41 country-specific actions, to protect Canadian industries from dumped or subsidized imports.

2. Effective compliance management that enhances personal and economic security, and encourages partnerships and sustained compliance.

Random samples suggest that travellers and traders generally comply with border legislation. We expect to have a better sense of overall border compliance levels next year, when the three-year cycle to measure the overall rates of compliance at the border is completed.

We are currently developing a long-term systems solution for analysing the results of post-release verifications. A preliminary review of these verifications indicates potentially significant compliance issues involving the classification and valuation of transactions.

We began implementing the first phase of a new penalty regime–the Administrative Monetary Penalty System (AMPS). It will expand to incorporate travellers in the future.

We have not progressed as quickly as we had anticipated with our Compliance Improvement Plan.

3. Responsible services that encourage voluntary compliance and minimize the compliance burden without compromising security.

Our front line maintained the intense vigilance required and at the same time processed travellers and goods as quickly as possible to minimize any negative impact of backlogs at the border after September 11.

We refined and reintroduced our land border permit programs (i.e., NEXUS and CANPASS) to include heightened security screening.

To assist travellers and traders in planning their route into Canada and travel time, we published regular updates on wait times on our Internet site. This Web page received in excess of 8,000 hits a day.

Our annual survey indicates that about three fourths of all Canadians continue to feel that Customs is doing a good or very good job.

4. Certainty and consistency for international trade and travel.

We continued to demonstrate leadership at international forums such as the World Customs Organization, and to participate in Government of Canada trade initiatives, to help Canadian businesses compete more effectively.

We continued to work with the U.S. on such initiatives as the 30-Point Action Plan under the Smart Border Declaration (December 2001), to ensure the economic well-being of both countries by keeping a more secure border open to legitimate trade and travel.

5. Knowledgeable and skilled workforce supported by the appropriate tools, information and technology to meet current and future program needs.

We completed the first phase of the Customs Human Resources Plan to evaluate and plan for the workforce we will need by 2005-2006.

New training challenges will continue to emerge, including training required to accommodate new tools and technology resulting from the implementation of the Customs Action Plan and the Smart Border Declaration, which will stretch our resource capacity even further

6. Core business is under transformation to better meet our mission

We exceeded our performance expectations for year 2 of our change agenda, as demonstrated by:

We accelerated implementation of a number of initiatives under the Customs Action Plan (CAP) to enhance border security and facilitate trade and travel. In particular, those elements of the plan that provide for greater security and protection through enhanced screening of goods and travellers were revised and accelerated.

1. Transparent, accessible, and consistent redress mechanisms promote fair and impartial treatment

We exceeded our new service standard for updating clients on the status of their disputes within 30 days of filing.

Clients are aware of, and are provided with sufficient information on their rights to redress and on the procedure for filing a dispute at no cost.

Our pattern of year-over-year dispute outcomes is consistent.

2. Our dispute resolution service is provided on a timely basis

Modest progress in turnaround times in largest programs, but disputes still taking too long to resolve.

To achieve further progress in timeliness, process improvements and targets are being implemented.

3. Handling of fairness provisions is consistently applied across programs and regions

Appeals Branch is the functional lead for fairness within the CCRA.

Guidelines and tools for the consistent application of fairness provisions are in place across business lines.

Beyond initiating a review of our fairness registry for tracking requests and decisions related to cancellation of interest and penalties, little progress was made in implementing the systematic fairness monitoring that will allow us to provide greater assurance of consistency.

4. Risk management of dispute and litigation issues is effective

New risk management framework was implemented to provide a more comprehensive approach to assessing and managing risks.

Consistent with our expectations, the vast majority of disputes continue to be resolved administratively, and the CCRA's decision is confirmed in the majority of those cases that proceed to the courts.

Quality assurance and monitoring programs are not yet in place, but were piloted, with implementation beginning in 2002-2003.

When areas requiring further clarification are identified, proposals for legislative or other changes are initiated.

5. Knowledgeable and skilled workforce is in the right place at the right time

Staffing shortfall was reduced from last year.

Workloads were reassigned to better utilize available resources, contributing to improved processing times for income tax files.

6. Fairness principles are applied and integrated across all programs

With the 7-Point Plan for Fairness now implemented, Appeals has successfully concluded on its innovation agenda and exceeded expectations with respect to voluntary disclosures. Our next step is to monitor our progress in applying the fairness principles.

Voluntary disclosures continue to increase, with related assessments increasing by 61% over the prior year.

The 7-Point Plan for Fairness is implemented and no longer forms part of our innovation agenda. The principles of fairness contained in the plan are now part of core operations.

Inventories for the Voluntary Disclosures Program are growing; to address the issue a stable funding source for the Program is being secured.

1. Effective governance regime that provides management oversight and leadership

Overall, we are on track for the implementation of a mature and fully integrated governance regime:

Our sucesses include appropriate accountability through our Corporate Business Plan and an innovative first Annual Report, backed by enhanced internal audit and accountability contracts with all managers.

Oversight by the Board of Management is disciplined and demanding, bringing the interests of Canadians and business-like approaches into our management processes.

We must better integrate financial and non-financial information into our governance practices.

2. A cultural shift under way and growing that puts decision-making in the hands of managers

On balance, we believe that we met or exceeded our expectation in shifting the corporate culture towards values and empowerment:

Decision-making was placed more squarely in the hands of managers, who will power the cultural change.

Results-based management expectations are now embedded in performance agreements with almost 600 executives and over 3,000 MG group members.

We have introduced greater delegation of authorities in the areas of human resources, real property, financial management and administrative policies, but more training is needed in these areas.

3. Leadership in human resources (HR) reform that is in tune with business objectives

During the first two years of our five-year human resources reform and renewal plan, we achieved some breakthroughs and met all the other key project expectations. We anticipate completing the plan on time:

A breakthrough was achieved in the creation of a MG group, of about 3,200 managers, previously managed through 20 classification standards. Last year we completed negotiations of unique performance rewards for people management with the Public Service Alliance of Canada and with one bargaining unit of the Professional Institute of the Public Service of Canada. All negotiations with PIPSC were concluded as of July 2002.

Commitments in the Corporate Business Plan flow through executive cadre performance agreements to more than 70% (28,749) of permanent employees' performance expectations.

25,000 individual learning plans were developed by employees, exceeding expectations.

Piloted the implementation of pre-qualified pools of candidates within the competency -based resourcing system.

Many employees are facing delays in receiving acting or overtime payments.

Some HR data in the Corporate Administrative System (CAS) is still unreliable, reducing the benefits of CAS.

4. Modern comptrollership regime that fosters management and service excellence

We progressed on all aspects of the transparent results-based management approach, but have had some performance shortfalls. Efforts are not sufficiently integrated to provide a holistic approach:

An Agency Comptroller, at the Deputy Assistant Commissioner level, was appointed, and the Modern Comptrollership Office was established.

The Balanced Scorecard will improve reporting, but is behind schedule.

Insufficient priority given to investment in modernizing some of our financial systems and practices.

5. Confidentiality of client information is protected

6. Canadians' desire for transparency in public administration is addressed

We have had significant improvement since last year in our compliance with Privacy Act legislated time frames, from 89.5% to 98.4%.

We have had significant improvement since last year in our compliance with Access to Information Act legislated time frames, from 84.5% to 93.7%. This improved our grade given by the Information Commissioner from “C” to “B”

Our business plan and annual report, and our open response to the T3 issue, demonstrate our commitment to transparency

7. Sound financial and treasury management

Error in allocation of capital gains refunds earned by mutual fund trusts (T3). Corrective measures taken.

We exercised prudent fiscal management, by staying within our budget, identifying about $50 million of expected savings due to administrative reform and renewal, and enhancing our asset management and investment plan.

We exercised sound cash management of $239 billion of receipts, meeting the 24-hour standard for deposits 98% of the time (up from 97% last year). A monitoring management system is still needed to cover the $62 billion in customs duties, GST/HST, and excise duties and tax receipts, and legacy costing systems limit our financial management capability.

Financial Information Strategy (FIS) Phase II was initiated.

Continued timely implementation of the Sustainable Development (SD) Strategy.

8. Operational excellence and solutions leadership in information technology

We have provided high levels of operational performance of approximately 200 critical applications supporting the operational business lines, including during the period following September 11. IT support for modern comptrollership, financial management, and HR are discussed above in AR 3, 4 & 7.

We provided solutions leadership through new business applications for the Tax Services and Customs business lines, for example the Tax on Income and Intelligence Management Systems.