Prepared for the:
Canada Revenue Agency
March 2012
Contract # 46558-120110
POR 020-11

Prepared by:
Walker Consulting Group

Media Enquiries:
Media Relations
Canada Revenue Agency
4th Floor 555 MacKenzie Avenue
Ottawa ON K1A 0L5
media.relations@cra-arc.gc.ca

Executive Summary

Between October 12-20, 2011, Walker Consulting Group conducted twelve focus groups with individual Canadians from the general public, as well as SMEs and intermediaries in Vancouver, Montreal and Toronto (four groups per city).

Individuals/General Public

Most individuals expressed neutral to moderately favourable impressions of the CRA. In general, impressions of the CRA were more consistently favourable among those in the middle to upper income groups (household income of 70K+). When asked about drivers of these impressions, reasons tended to relate to:

• Satisfaction with the online tax submission (electronic filing) process;
• Efficiency and accuracy in processing and delivering tax statements; and
• Satisfaction with the telephone information service. The telephone information service was found to consistently exceed expectations.

When invited to discuss directional trends in impressions of the CRA some felt little had changed over the past few years, but more tended to believe that the CRA had been moving in a positive direction. This was chiefly ascribed to improvements in the telephone and/or online channels. Virtually none indicated that their impressions had been moving in a negative direction.

While about two in three have converted to electronic filing, the rest have not. Those who paper file were invited to discuss the reasons why they continue to paper file rather than filing electronically. The most consistently mentioned reasons were:

• Mitigation of risk of future contact/difficulty with the CRA. These participants hold a perception that if they paper file, they decrease their chance of being audited. They would rather take any step they can to reduce the risk of having potential difficulties with the CRA, and submitting a paper form with all the accompanying information and slips (even if it takes longer than electronic filing) is perceived to mitigate that risk.
• Discomfort with transmitting any financial information over the Internet. For some, even though they may be very Web-savvy, and very comfortable using the Internet for a range of purposes, they draw a line when it comes to financial transactions of any type, including tax submissions.
• Habit. Put simply, they like doing it on paper. Demographically, this group skews toward the older segment of the population (70+).

The participants were encouraged to suggest measures that might increase the use of electronic filing among Canadians.

Among these, one suggestion was raised unaided in virtually every group, and when raised, struck a very strong and positive chord. This was the creation of a secure FTP-like portal where Canadians could login securely and post their slips and information electronically, which would go hand in hand with their electronically filed taxes. This would essentially be an expansion of the CRA’s current "My Account" function, giving it FTP-type functionality where both the CRA and individuals could post information.

About half of focus group participants recalled visiting the CRA Web site over the past couple of years. Typically, discussions of the Web site yielded mixed impressions. The more frequent users felt that the CRA Web site’s search function worked well, and many were very satisfied with the examples of how different credits or deductions might work for different households – this was arguably the most universally appealing aspect of the site. However, others indicated they struggled with elements of the site. Suggestions for improvement to the site included:

• Simplifying the language;
• Taking steps to improve the site’s format and style, to make it more user-friendly; and
• Increasing the ability of users to populate the PDF online forms the CRA has already placed on its Web site.

Numerous participants in the general public groups recalled having had recent contact with the CRA’s telephone service. Impressions were almost universally positive.

Most were pleasantly surprised by the service provided. Virtually all believed that the service was quick. More importantly, participants consistently mentioned that the person they spoke with at the CRA was courteous, knowledgeable, friendly, and genuinely helpful.

Participants were less enthusiastic about the paper correspondence they receive from the CRA. Prevailing sentiment about this channel of communication tended to be more negative than positive. Three main concerns in the general public groups were typically raised:

• Participants indicated that they often do not understand some of the information expressed in the letters they receive. Many indicated a degree of frustration about not understanding various pieces of information contained in letters from the CRA.
• Many felt that letters from the CRA often do not fully explain the reasons why the CRA had come to certain conclusions impacting their tax payable and/or tax credits.
• There was a broadly held belief that the tone of the language in letters from the CRA is often unduly severe, even when the information does not relate to an audit or like issue. In a few groups, participants juxtaposed the friendly, helpful nature of the telephone service to the less friendly and less helpful tone of the CRA correspondence, suggesting a notable and puzzling difference in tone and approach.

SMEs/Intermediaries

Impressions of the CRA among SMEs and intermediaries were arguably more positive than among the general public. The increased frequency of contact that many of these people have with the CRA allows them to have a more complex and detailed perspective on the strengths and weaknesses of the organization and its interaction with SMEs.

Both intermediaries and small businesses agreed that, by and large, the CRA seems to understand the world of SMEs. The most important drivers of favourable impressions among those audiences are the electronic filing process, the Web site, and the knowledge and friendliness of the CRA’s 1-800 telephone service line.

Every intermediary, and most of the SME participants, had visited the CRA Web site – many intermediaries visit their version of the site weekly or more often. Impressions of the site were very positive. Many felt that the CRA site’s search function worked well, and many were very satisfied with the examples of how different credits or deductions might work for different households. Many expressed how impressed they were at how easy it is to navigate the site.

Similarly, virtually all of the intermediary and SME participants had contacted the CRA’s telephone service, usually on a fairly regular basis (weekly or monthly). Impressions of this function were almost universally positive. They all felt that the service was quick, and that they were always able to get to experts on specific complex topics. More importantly, participants consistently expressed that the people they speak with are well informed, courteous, knowledgeable, friendly, and helpful.

As was the case with the general public, owing in large part to impressions of the telephone service, most participants in each group have the impression that customer service at the CRA has been improving over the years.

As was found in the general public groups, SME/intermediary focus group participants were less impressed by the paper correspondence they received from the CRA than the Web or telephone service. Two main concerns were consistently raised:

• Participants indicated that they often do not understand the information expressed in the letters they receive.
• Many felt that letters from the CRA often do not fully explain the reasons why the CRA has come to certain conclusions impacting their tax payable and/or tax credits.

However, one area where the research revealed some unfavourable impressions had to do with CRA’s audit process. Three issues were most consistently raised:

• A belief that audit processes sometimes do not reflect the customer service orientation demonstrated in other aspects of the CRA. There is a prevailing belief that CRA audit staff can be unreasonably aggressive at stage 1 of the audit process, when it is unclear whether the person has truly committed an illegal act.
• The impression that some auditors may be uninformed about certain types of complex or emerging business issues.
• Auditors taking an unnecessarily aggressive tone toward intermediaries, when their (the intermediaries’) role is to help the CRA achieve its goal of encouraging SMEs to file their taxes and related information.

In addition, a handful of improvements were suggested about CRA processes and procedures:

• The length of time to get the forms approved for an intermediary to represent an SME in interactions with the CRA. Many intermediaries felt that these processes took far too long to complete, often 4-6 weeks.
• Paper correspondence being delivered to intermediaries instead of their clients, or vice versa, but not both.
• The way in which secondary reviews are sometimes handled, after initial review suggests a positive outcome.
• Long review processes. In several groups there was frustration about review processes that seemed to take unnecessarily long over relatively minor issues.
• IT infrastructure. Concerns were raised in a couple of the intermediary groups about the current state of the CRA’s IT infrastructure. The perception was that the CRA’s internal systems are old, and may become increasingly antiquated.

Participants were invited to discuss the reasons why people paper file rather than filing electronically. The most consistently mentioned reasons were very consistent with what was found in the general public groups:

• Mitigation of risk of future contact/difficulty with the CRA. Many intermediaries have a perception that more audits occur among those who electronically file versus paper file, and as such, continue to paper file.
• Habit/Age. As found in the consumer groups, there are SME owners who are more comfortable paper filing.

The participants were encouraged to suggest measures that might increase the use of electronic filing. As was the case in the general public groups, the idea of an FTP-type site where the CRA posts correspondence and SMEs and individuals could post receipts and other relevant information (i.e. an expansion of the "My Business Account" function emerged spontaneously in discussion).

Conclusions

CRA was given good marks by the vast majority of participants in this research. The organization’s interfaces with these key stakeholders typically reflect a positive impression, with the electronic filing system and the telephone service in particular making a positive contribution to public impressions. While there are opportunities for improvement, it is evident that impressions are becoming more favourable over time. Among the areas where improvement would be most beneficial, the tone and language of paper correspondence, applying a less aggressive approach during early phases of auditing, and simplifying the language and style on the consumer Web site would all contribute. Some of these suggestions would be beneficial for individuals, and others beneficial for SMEs/intermediaries.

In terms of increasing the frequency of e-filing, the expansion of the My Business Account function was found to be the most potentially effective. Functionally, this would allow for the CRA posting of correspondence, as well as individual/SME posting of receipts or other information would help to reduce potential impediments to change, and potentially reduce the current level of reliance on paper.