In broad terms, we will have met our expected outcome if:

• reviews of disputes and requests under the fairness provisions are, and are perceived to be, fair and impartial;

• clients find our services accessible and are kept informed of the progress of their disputes and requests;

• disputes are resolved in a timely and consistent manner; and

• our collective efforts promote an environment of trust for our impartiality and fairness that encourages voluntary compliance.

• 72,826 disputes resolved, compared to 85,618 received

• 75,960 of 108,158 requests granted under the fairness provisions

• 4,732 voluntary disclosures received, with related assessments estimated at $230 million

• Budget of $82 million

• Some 1,141 full-time equivalent employees

Current-Year Performance: We strive to provide a dispute resolution process that is transparent, accessible, and consistent. These attributes help to promote the fair and impartial treatment of our clients.

Regarding accessibility, it is our expectation that all clients are notified of their right to redress, and how to access Appeals' services. To achieve this goal, we proactively advise potential clients of the appeals process and their appeal rights through our major tax, customs, and benefits forms (Fig. 1-2). Our CCRA Annual Survey indicates that the majority of Canadians (71%) continue to be aware of their right to file a dispute should they disagree with our decisions.

To enhance transparency, a new service standard was introduced to contact 75% of all clients who filed disputes with a meaningful status update within 30 days of filing. We exceeded this standard in all of our five program areas (Fig. 1-1; also Schedule B ).

Accessibility was enhanced through changes in legislation that give clients more time to file appeals in certain cases related to our Customs business line. While overall performance on accessibility is strong, we recognize that in some cases the appearance of accessibility may be impacted by the length of time it currently takes to resolve disputes (see Anticipated Result 2 on ) and the perceived cost of filing disputes.

The percentage of disputes decided, either partly or entirely, in favour of the client at the administrative level has remained fairly constant (about 50% for our main income tax and trade administration clients), which we believe is a reflection of our fair and consistent treatment of disputes over time (Fig. 1-3). We discuss our decisions with our income tax and GST/HST/excise tax clients, and at least 60% of them agree with the decisions we make, including a fairly high percentage of clients whose disputes are either not at all or only partially successful.

Year-to-Year Change: In 2001-2002 we substantially exceeded our new service standard for contacting 75% of clients about the status of their disputes within 30 days of filing, by notifying 82% of them within this timeframe. We have raised our standard from 75% across all program areas to 85% for each program area in 2002-2003.

* Note: To report on timeliness more clearly and meaningfully, we have divided last year's first anticipated result into two parts (see Anticipated Result 2 on ). We have adjusted last year's performance rating for transparent, accessible, and consistent redress mechanisms from “not met” to “met”, to reflect what performance would have been like in this area without considering timeliness.

Current-Year Performance: While we reduced turnaround times in our largest programs, disputes continue to be resolved too slowly. In fact, turnaround times deteriorated in two program areas, and improved only modestly in the other three. Appeals Branch takes, on average, 102 to 304 days to complete its review of disputes when in workable status (Fig. 2-3). To address timeliness, we undertook a comprehensive study that identified some 130 improvements to decrease processing times. The study confirmed that in all program areas, improvements in inventory and turnaround times are possible. In 2001-2002, we developed new targets for case completion, which if met, will lead to a substantial improvement in almost all program areas as compared to today (Fig. 2-3). These targets address timeliness as far as it is in our control; they cannot address any delays we experience in getting necessary information from clients. We are working to make clients and their representatives more aware of how our turnaround times are affected by the time they take to provide information in support of their dispute. Aside from turnaround times, the age of our caseload also remains an issue (Fig. 2-4). The proportion of our inventory that is in non-workable status while we await court decisions or other information is rising (Fig. 2-2). This adds to the length of time it takes to resolve a dispute and has a negative impact on our clients' perception of the appeals process. We completed about 6% more cases than last year, but our intake of new cases rose by 29%, largely because of the large number of income tax objections we received related to the federal government's pay-equity payments (Fig. 2-1).

Year-to-Year Change: Between 1999-2000 and 2001-2002, turnaround times have decreased in the majority of program areas (Fig. 2-3). In customs programs, however, the moving of backlogged inventory from non-workable to workable status caused turnaround times to grow. We believe that modest improvements made in the last year are due in large part to the more efficient allocation of workloads, and this improved trend appears to be continuing into 2002-2003, suggesting that we are well positioned to achieve our targeted performance.

Inventories in 2001-2002 decreased in all programs except income tax as referred to above. Due to factors beyond our control, primarily the litigation-bound status of pay equity objections, the percentage of cases in non-workable status increased to 68% (Fig. 2-2). The value of amounts in dispute in non-workable cases increased to 80% of the total value, or $6.5 billion.

* Note: To report on timeliness more clearly and meaningfully, we have divided last year's first anticipated result into two parts. While last year's performance rating has been adjusted for transparent, accessible, and consistent redress mechanisms (see Anticipated Result 1, ), the rating for timeliness remains unchanged at “not met.”

Current-Year Performance: It is our opinion that we are consistently applying the fairness provisions throughout the CCRA, but this opinion is largely based on a qualitative assessment. We issued a reference guide on the provisions to field office staff to promote consistency and accuracy in the processing of requests at service points throughout Canada. In addition to giving tools and guidelines to officers across the CCRA, we initiated a review of our fairness registry for tracking requests and decisions relating to cancellations of interest and penalty assessments. We are now considering options for implementing systematic fairness monitoring in an efficient and effective way. As lead branch on fairness issues, Appeals will co-ordinate the implementation of this monitoring across all business lines. When the fairness legislation was first implemented, no additional resources were dedicated to the initiative. The growth of the program has consumed an increasing share of our resources, contributing to delays in processing dispute cases. A roll-up of the costs of this program has been completed, and the results will be examined.

Year-to-Year Change: Requests under the fairness provisions increased again this year, as did the value of interest and penalties waived (Fig. 3-1 and Fig. 3-2). This increase reflects the higher profile that the program has achieved over time. Nevertheless, the overall proportion of requests granted to requests processed remained stable from last year. Out of 108,158 cases Agency-wide, relief was provided in 75,960, for an estimated total of $191 million, not counting automatic waivers of penalties or interest (which totalled an estimated $97 million). Little progress has been made in instituting Agency-wide monitoring to provide greater assurance of consistency.

Current-Year Performance: Risk management is essential to promoting the consistent and fair resolution of disputes and litigation within a reasonable time. Our key goals are: resolving most cases at the administrative level; pursuing appropriate cases to the courts; prevailing in a majority of those cases that do go to court; monitoring the consistency and fairness of our decisions; and identifying desirable legislative changes arising from court decisions. As well, we seek to minimize the potential impact of those cases that could lead to a broader, unintentional erosion of the tax base, or to other societal implications, through early identification and proposals to the departments of Finance and Justice to address needed clarifications.

In general, we believe that our risk management is largely effective in relation to these goals. The percentage of cases resolved administratively remained very high (above 90%) in 2001-2002 (Fig. 4-1) for all programs except CPP/EI; the unique role of the CCRA in CPP/EI disputes makes comparisons with these other programs difficult. For those cases that proceeded to the courts, the CCRA's decision was confirmed in the majority of cases, a finding which is consistent with our goals (Fig. 4-2). As promised, we introduced a risk management framework to bring coherence to our practices, and an orientation manual was designed for roll-out next year. New programs addressing quality assurance and monitoring of consistency in case decisions were successfully piloted at one Tax Services Office. Implementation of these programs will begin in 2002-2003. Once they are fully implemented, we will be able to confirm the actual level of consistency overall in our appeals case decisions. We regularly review cases in dispute and court decisions to identify possible areas for legislative change. This year, in response to our input, an amendment was enacted to clarify who could claim the GST/HST credit in certain situations.

Year-to-Year Change: While our success rate in the courts dropped slightly this year (by 6%), slight fluctuations in case outcomes are not indicative of litigation management issues. It is expected that our risk management strategy and our quality assurance and monitoring programs, once instituted, will contribute to stable performance in risk management for both non-complex and complex files.

Current-Year Performance: In 2001-2002, all Appeals staff positions were reviewed and profiles of required competencies were established as part of the CCRA's new competency-based human resources regime. In addition, a new position of branch learning agent was established and staffed to co-ordinate Appeals training, and to identify current and future learning needs. These initiatives are expected to help ensure that the workforce we have is knowledgeable and skilled. Our primary difficulty continues to be having sufficient staff in the right place at the right time. We plan to review our corporate structure and our staff positions, with a view to enhancing the profile of the work done by Appeals staff. We were again unsuccessful in staffing at planned levels in 2001-2002, which had a somewhat negative impact on our ability to provide timely dispute resolution. In an attempt to improve turnaround times despite the staffing shortfall, some workloads were transferred both inter- and intra-regionally. As anticipated, processing times for Income Tax files improved following this change.

Year-to-Year Change: An aggressive approach to human resources management enabled us to reduce our staffing shortfall from 10% in 2000-2001 to 7% this year (Fig. 5-1).

Current-Year Performance (Year 2 of 5): The principles of fairness are generally applied and integrated across the CCRA, although a monitoring and reporting framework is necessary to ensure that fairness continues to be addressed in future years. The 7-Point Plan for Fairness, begun in 1999, describes the actions that were taken to achieve greater fairness in the CCRA's dealings with Canadians. This plan has now been implemented CCRA-wide (Fig. 6-1). In accordance with this plan, major publications across all business lines communicate the fundamental right to appeal to potential clients, and the Voluntary Disclosures Program provides clients with an opportunity to correct past errors and omissions without penalty. Continued efforts are made in areas requiring the use of discretion, such as in the application of the fairness provisions. These efforts demonstrate our commitment to the application and integration of fairness principles throughout the Agency.

Year-to-Year Change: One outcome of the implementation of the 7-Point Plan for Fairness is that the Voluntary Disclosures Program continued its significant expansion, with related assessments reaching an estimated $230 million, compared to $143 million last year (Figs. 6-2 and 6-3). This increase is indicative of the effectiveness of our program communication which aims to improve voluntary compliance. However, the increase is not expected to continue at this rate. The higher workload has resulted in a growing inventory of voluntary disclosure applications carried over from one year to the next (Fig 6-3). Inventories in 2001-2002 increased to 2459 files, up by 28% over the year before. Nevertheless, the proportion of cases in inventory to cases completed fell from last year's levels. To address the issue of increasing workload, a stable funding source for the program is being secured.

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• Targets for case completion times were established during 2001-2002, for all but two program areas. These targets will run until 2004-2005.

The Road Ahead – 2002 and Beyond

1. Implement selected timeliness improvement recommendations, including progressively more aggressive case completion targets, and continuing support for the ongoing implementation of the CCRA's performance measurement framework (Anticipated Result 2).

2. Implement programs for quality assurance and for monitoring the application of the fairness provisions and the principles contained in the 7-Point Plan for Fairness (Anticipated Results 3 and 6).

3. Implement the remainder of the training framework (Anticipated Result 5).

4. Conduct a pilot study of file complexity factors to better predict turnaround times and required resources (Anticipated Results 2 and 4).