A new report from the auditor general of Canada finds that the Canada Revenue Agency (CRA) has improved its ability to collect outstanding tax debts, but that it could do better.

According to the latest report from the auditor general, there is currently $29 billion in outstanding tax debt, and that balance is growing. Moreover, in 2011–2012, it wrote off $2.8 billion as uncollectible.

The federal government says that the amount of tax debt is rising for several reasons, including an increase in the tax base, mounting interest charges on outstanding debts, and more effective measures to combat aggressive tax planning and transfer pricing. It notes that the CRA is working to recover all of these debts, and that most of the amounts owing are secured or under active collection.

Additionally, the government says the amount recovered has grown by 87% between 2005-2006 and 2011-2012. And, it says that over 90% of individuals and corporations paid their taxes on time and without any intervention over the past five years.

The latest auditor general’s report concludes that, overall, the agency has made satisfactory progress on the issues raised in a previous audit (in 2006) of its debt collections. The government says the CRAs collections have improved with the introduction of better strategies to prevent the debt from occurring, and measures to resolve debt before legal action is required.

However, the report makes additional recommendations to further strengthen the administration of the program. For example, it says that the agency still needs to improve its risk scoring and performance measures. “It also needs to develop a way to keep track of its research recommendations more strategically,” it says, and establish more meaningful performance measures. It notes that the CRA accepts all the recommendations and has already taken action to respond to them.

“We expect CRA to aggressively pursue any debts from those that may be seeking to avoid paying their fair share,” said Gail Shea, minister of national revenue; although she added that the CRA uses “a fair and balanced approach” when collecting tax payments.