The Canada Revenue Agency (CRA) is taking steps to improve the services it provides to taxpayers, particularly in the way it handles tax objections.
Changes at the agency stem from two sources: recommendations of the auditor general of Canada (AG) addressing inefficiencies in the tax objections process; and the CRA’s consultations with small and medium-sized businesses (SMBs) and accountants across the country.
The CRA’s moves are long overdue and are a step forward, says Dennis Howlett, executive director of the Ottawa-based advocacy group Canadians for Tax Fairness. “I’m encouraged,” he says, “although we still have some way to go.”
The AG’s report, released in November 2016, notes that inefficiencies in the CRA’s objection resolution process have caused a huge backlog of unresolved cases.
The report states that the CRA takes too long to deal with objections and that its method of measuring the time spent on the process is inaccurate.
Dealing with objections is a lengthy, frustrating process, says Derryn Burtenshaw, tax accountant with Harvey Cantor Professional Corp. in Markham, Ont. “The system has been broken for several years now,” she says.
Burtenshaw adds that there are no easy fixes, and raises doubts that there will be any significant improvements to the objections resolution process in the near future.
Although the CRA’s intentions might be good, achieving a uniform level of effectiveness will be difficult, Burtenshaw says. Some staff members are flexible, she says, but others are difficult to work with.
Based on the review, the AG’s report makes eight recommendations to the CRA, including: developing performance metrics to assess timely resolution; sharing decisions on objections and appeals within the agency to improve future assessments; and providing taxpayers with time frames for resolving objections.
“The CRA agrees with the eight recommendations of the auditor general’s report and has begun implementing a multi-year action plan to review the objection process and improve service to taxpayers,” says Zoltan Csepregi, senior media relations advisor with the CRA in Ottawa.
For example, Csepregi says, the CRA has updated its website to provide taxpayers with more information about the objection process and to define complexity levels and time frames for assigning low- and medium-complexity objections.
Effective this past May, he adds, the CRA changed its methodology for calculating resolution time frames to include the entire time a dispute is within the government’s control, which provides taxpayers with a more accurate estimate of time for resolution.
In addition, the CRA introduced a service standard: low-complexity objections will be resolved within 180 days 80% of the time. In December, the CRA will publish time frames for resolving medium- complexity objections.
The CRA is conducting process reviews on key steps in the objections process where delays have been identified, and is streamlining the processes whenever possible. For example, according to Csepregi, at the end of 2016, the CRA began a new triage process for some objections, so that taxpayers are contacted earlier in the process.
To demonstrate that the new CRA objection process is working, Csepregi points out that the CRA allocated monies to resolve 60,089 regular income tax objections for the period from April 2016 to March 2017. The CRA exceeded that target by resolving 67,064 objections – 12% above the target and an improvement of 18% over the previous fiscal year.
The CRA also aims to ensure national consistency by communicating collection procedures to audit branches and offering training for auditors.
“This is an important step because different auditors often appear to be adhering to different rules on the same issues,” says Aiman Dally, chief financial officer and chartered professional accountant with Copia Financial Solutions in Toronto.
Burtenshaw suggests that the CRA’s collections process currently is two-tiered. “If under objection, collection measures are on hold for personal and corporate taxes but not for trust accounts,” she says. “And due to the delay in objection processing, taxpayers are forced into [submitting] payments on these accounts.”
Burtenshaw acknowledges that trust accounts have different legal obligations, but she is concerned about the way the collections process is handled: “There is little scope for negotiation.”
Dealing with reassessments is another area in which the CRA is slipping rather than improving, Burtenshaw says: “Normally, getting a reassessment would take six to eight weeks. Now, it’s closer to 23 weeks.”
Following cross-country consultations with SMBs and accountants in the autumn of 2016, the CRA developed a service improvement action plan for 2017-2019, dubbed Serving You Better. It lists more than 50 actions to improve services for businesses.
Key features of the plan include a dedicated telephone service for tax preparers and enabling businesses to provide T4 slips and perform other tasks electronically.
Csepregi says the CRA plans to modernize its digital services and make tax information easier to access and understand. The CRA also plans to create a mobile app for businesses to help manage interactions and enhance the agency’s telephone service to include call-back and secure “chat line” features over the next four years.
But, Burtenshaw points out, inquiry lines and phone apps can deal with simple inquiries only: “Getting access to staff who can handle more technical issues is what matters.”
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