The 2016 Auditor General Report 2 – Income Tax Objections looked at a number of areas to assess whether CRA was efficiently managing income tax objections in non-group objections for personal and corporate tax returns only.
They looked at the time the Agency took to provide taxpayers with a decision on their objection, they reviewed the various stages of the objection in order to identify where delays occurred. Also examined was how the Agency used information and how this was communicated to taxpayers. Taxpayers have the right to impartial and timely reviews of their tax returns, thus the importance of this report.
Delays in resolution of income tax objections were delayed due to inefficiencies in CRA’s process. These inefficiencies include:
- CRA did not communicate with taxpayer early in the process to obtain necessary additional information from them.
- An appeals officer was not assigned to the case until, on average, 150 days after the notice of objection was mailed.
- Technical assistance, when required by an appeals officer, was not provided for months or years by another area of the Agency.
- The Agency’s method of measuring timeliness was inconsistent and often incomplete, thus not an accurate measure of how long it took to process an objection.
Another interesting point - To assess “timely” this report looked at Canada’s performance in this area versus six other countries. Sadly, it was found that Canada took the longest time to resolve objections. The data from the international bench-marking study reported in 2011 by HM Revenue and Customs, UK was the source of this finding.
Conclusions from Report:
- CRA did not process income tax objections in a timely manner.
- There are no indicators or targets in place to advise a taxpayer how long they should expect to wait for a decision on their objection.
- There is insufficient sharing with results of objection and court decisions within the Agency; the Agency did not analyse or review such decisions.
The complete report from the Office of the Auditor General is available here.
Response from CRA:
- The CRA has agreed that there should be an action plan with defined timelines and targets to reduce the inventory of outstanding objections to a reasonable level. A strategy will be developed and finalized in early 2017.
- CRA has agreed that a complete review of the objection process should be taken. Suggestions to identify and resolve delays and planned enhancements received in 2015 to 2016 from appeals officers will be taken into consideration. Beginning in the 2017 to 2018 fiscal year taxpayers will be contacted, when needed, to ensure the file is complete when assigned for resolution.
- In 2017-18 fiscal year, CRA will implement and publicly report a new service standard for the resolution of low-complexity objections. This standard will use 180 days, 80% of the time as the goal. New goals for medium-complexity objections will also be developed. Time frames will be continually improved with input from other organizations.
- CRA is currently introducing new indicators on how they measure timeliness. This will be reported on their website by the end of the 2016-17 fiscal year.
- CRA is currently developing a systems modernization proposal that will address gaps in data needs and validities plus linking to other agencies. The latter will reduce the need for manual entry thus improving overall data integrity.
- CRA agrees that the analysis of why assessments are overturned in order to identify opportunities to improve service to Canadians. The Agency will continue to communicate with tax preparers with the emphasis on the importance of providing complete and accurate information at the earliest stage possible.
- CRA agrees that decisions on objections and appeals will be shared within the Agency so that the individuals performing the assessments can improve future assessments by having access to this information.