Appeals

Performance results 

The 2016 Fall Report of the Auditor General (AG) included the results of an audit on the CRA's Income Tax Objections program. Specifically, the AG examined how efficiently we manage income tax objections in terms of the timeliness of decisions, and found that the Agency "took too long to process income tax objections, which contributed to a backlog of the inventory of objections". The audit also examined whether performance indicators regarding the redress process were developed and reported, and reviewed whether or not the Agency studied and analyzed objections and appeals decisions, and shared such analyses internally. This audit was important because taxpayers who are not satisfied with their income tax assessments have the right to impartial and timely reviews of their tax returns. Taxpayers and the Agency may incur significant costs in time and resources as a result of undue delays.

The Auditor General's Report – available at http://www.oag-bvg.gc.ca/internet/English/parl_oag_201611_02_e_41831.html^ix – provided 8 recommendations to the CRA:

• develop and implement an action plan to reduce the inventory of outstanding objections
• improve its communication with taxpayers regarding the appeals process including the time frames in which it expects to resolve their objections
• undertake a comprehensive process review
• create and publicize more performance indicators
• review and analyse why objections are allowed
• ensure that decisions on objections and appeals are shared within the Agency in such a way that those performing assessments can use that information to improve future assessments
• add appropriate controls to its objection process and its information systems to ensure the integrity of its data
• define what it considers the timely resolution of an objection and examine other comparable organizations to help it determine what is reasonable

The Agency accepted the recommendations made by the OAG and developed a multi-year action plan with long-term strategies plus short-term goals and targets. During 2016-2017, we took the following steps as part of our action plan.

• We published information on our website to help Canadians better understand the objections processes, the different complexity levels assigned to objections, and the estimated processing times related to redress mechanisms.
• We initiated a review of how we process objections.
• We strengthened collaboration between the CRA's various assessment and audit branches, as well as the Agency's regional offices, with respect to the analysis of the results of objections and appeals to identify where our redress processes and related taxpayer services need further enhancement.
• We contacted our domestic and international counterparts and other stakeholders to identify best practices used in the redress processes of comparable tax administrations.

Our response to the Auditor General's recommendations will help the Agency further improve the manner in which objections are managed and inform redress processes that are more responsive and effective. These improvements will foster greater trust in the integrity of the Agency and promote voluntary compliance with Canada's tax laws.

Income tax/commodity tax objections and appeals to the courts

Every taxpayer who disagrees with a CRA decision about an assessment or determination made under the Income Tax Act or the Excise Tax Act has access to the CRA's dispute resolution process. The Agency receives approximately 85,000 objections each year. In 2016-2017, we received 85,418 income and commodity tax disputes. We ensure each objection is treated impartially and in accordance with applicable laws. To process objections in a timely, impartial, and consistent manner, the CRA segments them by level of complexity and whether they are individual or group objections.

As of March 31, 2017, the CRA had processed 65,701 low- and medium-complexity objections, exceeding the planned target of 59,068 for 2016-2017 by 11%. The Agency's success in resolving a greater number of objections than anticipated was the result of a number of factors, including funding from Budget 2016, workload realignment, and improved internal processes.

The CRA achieved the following outcomes during the year, broken down by type of workload and workload complexity:

Low-complexity income tax workload

• The CRA processed 35,518 low-complexity income tax objections and resolved 65% of them within the target of 180 days^{Footnote 5}
• To further reduce the inventory of low-complexity objections, we put in place a pilot screening system to help improve the timeliness of resolving the objections

Medium-complexity income tax workload

• The CRA processed 30,183 medium-complexity income tax objections within an average of 86 days of being assigned

Group objections inventory

• We processed 20,949 group objections during 2016-2017
• We held 53,723 group objections in abeyance pending court decisions or reassessment at year-end

Commodity tax objections

• During the reporting period, the CRA received 8,811 commodity tax objections, which were added to the opening inventory on April 1, 2016, of 6,931
• Over the course of 2016-2017, the inventory of commodity tax objections was significantly reduced as the CRA processed 9,833 objections, which is 1,022 more than it received during the year

Innovations

Throughout 2016-2017, the CRA implemented a number of innovative measures to help process all objections more quickly. These included:

• Developing a suite of electronic reports to manage the workload more efficiently
• Automated screening of objections at the intake phase

In addition, we conducted a review of external forms and publications related to the redress process to improve the clarity of language in the documents and promote electronic service delivery. This exercise led to:

• Updates to the CRA website to make information on redress options clearer, to help taxpayers understand the complexity levels of objections, and to provide estimates as to the processing time for objections based on level of complexity
• Revised Notices of Assessment, and other notices to taxpayers, to provide them with greater clarity and detail about where their concerns can best be addressed

KEY RESULTS

In 2016-2017:

• We resolved 97,853 income and commodity tax disputes, compared to 96,098 resolved the previous fiscal year
• 5,289 appeals were filed before the Tax Court of Canada

Canada Pension Plan/employment insurance appeals to the Minister and appeals to the courts

Thousands of Canadians rely on payments through the Canada Pension Plan (CPP) or employment insurance (EI) as their main source of income. Prolonged disputes about eligibility for payments or the insurability of earnings can potentially cause financial hardship for them. During the year, the Agency received 2,386 CPP/EI appeals to the Minister, which were added to an opening inventory of 867. In 2016, the CRA centralized its intake of all CPP/EI appeals to the Minister at the Workload Distribution Centre in the London-Windsor Tax Services Office. This centralization has enabled the Agency to improve how it manages the CPP/EI appeals workload; as a result, processing times for handling the CPP/EI appeals to the Minister were reduced by 34.9% from 2015-2016 to 2016-2017, from an average of 191 days to 125.

KEY RESULTS

In 2016-2017:

• During the year, 2,767 appeals were resolved, compared to 2,695 resolved the previous fiscal year
• 253 appeals were filed before the Tax Court of Canada

Service complaints

The CRA offers taxpayers a process to resolve complaints about the service, quality, or timeliness of our work, as well as complaints related to the Taxpayer Bill of Rights.

The CRA recognizes that service issues raised by taxpayers provide valuable insight and feedback and can help identify areas where service can be improved for all Canadians. To this end, the CRA has begun sending out acknowledgement letters upon receipt of a service complaint. This helps to assure taxpayers that their concerns are taken seriously and that action will be taken as appropriate.

The following two cases are examples of feedback collected through service complaints in 2016-2017 and that led to service enhancements for taxpayers:

• Letters sent to third parties (for example, accountants or lawyers) pertaining to a specific taxpayer are often shared by the third party with the taxpayer. A service complaint was raised in 2016-2017 because correspondence that was sent to the third party was not sent in the taxpayer's language of choice. To address this issue, CRA procedures were updated to recommend that letters sent to third parties be in the taxpayer's language of choice, regardless of the preferred language of the third party.
• Taxpayers voiced their concerns about submitting supporting documents more than once during the review of their individual income tax and benefit returns. We reminded CRA employees that, when conducting a review of a return, they must verify if the taxpayer already sent in supporting documents before sending a letter to ask for them again.

KEY RESULTS

In 2016-2017:

• We resolved 4,480 service complaints, compared to 3,336 resolved the previous fiscal year
• We resolved 83.6% of service complaints within 30 business days

Taxpayer relief

The CRA administers the process under which the Minister of National Revenue may cancel or waive penalties and interest under legislative taxpayer relief provisions. In 2016-2017, the implementation of a number of enhancements to the taxpayer relief process helped improve service to taxpayers:

• A new service standard was developed to help ensure that taxpayers' requests for relief are resolved quickly. The new standard, which became effective on April 1, 2017, states that requests for relief will be resolved within 180 calendar days 85% of the time.
• Electronic reporting and program monitoring were improved. Processes were also improved and included developing new procedures for bulk requests and project-related relief requests. Management of the Taxpayer Relief subprogram is also being improved through a process, currently manual, that is in place to ensure relief requests are treated consistently across Canada regardless of where the initial request was submitted.

KEY RESULTS

In 2016-2017:

• We cancelled and waived $671 million in penalties and interest for 413,474 requests (taxpayer-requested and automated)^{Footnote 6}

Appeals