The CRA has, however, also significantly increased its collection of other tax debt in recent years — resolving $40-billion in 2011-12 — demonstrating it’s having mixed results in snaring the tax dollars owed by Canadians.
Federal Auditor General Michael Ferguson will release his spring report on Tuesday — coincidentally, the deadline for Canadians to file their taxes — that includes a follow-up audit on the CRA’s collection of tax debts.
The agency has been under fire recently for not doing enough to crack down on tax evasion and collect the revenue it’s owed, as the Conservative government plans to cut about 3,000 jobs and more than $300-million from the agency’s budget over the next three years.
Next week’s auditor general report on the CRA follows up on a scathing 2006 audit on the agency’s tax collection strategies, that highlighted a number of concerns and recommendations for improvement, including how to better collect the tax debts owed by Canadians.
An analysis conducted by Postmedia News finds the CRA’s total tax debt has grown more than 60% since the last audit to $29-billion in 2011-12, from $18-billion in the 2004-05 fiscal year. (The former Liberal government also struggled on the file, as total tax debt grew 88% between 1996-97 and 2004-05).
Total tax debt includes taxes and other revenues assessed or estimated over several years by the CRA but not yet collected.
Also, the ratio of tax debt to total cash receipts, which is a trend indicator of how well the revenue agency is managing tax debt, increased to 6.9% in 2011-12, compared with 5.4% identified in the last audit. That means the agency’s tax debt continues to grow at a faster rate than the cash collected.
“It’s a shocking thing, especially to be reporting now as Canadians are gearing up to pay their taxes,” NDP national revenue critic Murray Rankin said about the tax debt data.
“This government is not taking care of one of the basic functions of government, which is to collect revenues, and that cascades indisputably into service cuts.”
While the uncollected tax debt has grown, so, too, has the amount of tax debt collected or resolved by the agency. For the 2011-12 year, the CRA resolved $40-billion in outstanding tax debts (including billions of dollars in write-offs) — an increase of more than $10-billion in debts resolved over the past few years.
Both the tax debt collected in one particular year and those debts still uncollected can date back several years, allowing both amounts to increase in a fiscal year.
“Our government is firmly committed to ensuring the CRA is equipped with the tools it requires to maintain the integrity of the tax system. All tax debt is in the process of being collected by the CRA, either through repayment plans or other collections measures,” Revenue Minister Gail Shea said in a statement.
“The CRA takes a balanced approach to collections that maintains the integrity of the tax system and ensures taxpayers are treated fairly and with respect.”
Canada Revenue Agency officials say the growth in tax debt in recent years can be attributed to a number of factors, including: an increase in overall revenues due to a higher population and more businesses; new harmonized provincial taxes in Ontario; and combating aggressive tax planning, which increases the amount of tax assessed.
Also, the size of the CRA’s “allowance for doubtful accounts” — tax debts viewed as having little potential for recovery — has grown more than 150 per cent since the last audit to about $11.9-billion, compared with $4.7-billion seven years ago, according to CRA data.
In the 2006 report, the auditor general highlighted concerns with more than one-quarter of the government’s tax debt being considered doubtful accounts that were likely uncollectable. Today, more than 40% of the tax debt is from doubtful accounts.
The 2011-12 doubtful accounts included approximately $6.1-billion from individuals, more than $1-billion from employers, $1.8-billion from corporations and $2.8-billion from GST/HST.
Total CRA write-offs were more than $2.8-billion in 2011-12, up slightly from almost $2.7-billion in the last audit, but a significant increase from the $1.9- billion in write-offs in 2005-06.
Original Article
Source: nationalpost.com
Author: Jason Fekete
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