In response to certain questions raised during the hearing of 22 November 2022, the CRA provided the following responses in a written submission to the Committee.

GST and Corporate Tax Write-off Provisions

During the meeting, the TBS officials were asked for information on the factors driving the increase in Good and Services Tax (GST) and corporate tax write-off provisions noted in the Public Accounts of Canada 2022. TBS has asked the CRA to respond.

As noted in the CRA’s 2021–22 Departmental Results Report - Statement of Administered Assets and Liabilities as at March 31:

• The allowance for doubtful accounts (ADA) is management’s best estimate of the collectability of amounts that have been assessed or benefits that have been paid, including the related interest and penalties. The allowance for doubtful accounts has two components.
• A general allowance is calculated based on the age and type of tax accounts using rates based on historical collection experience.
• A specific allowance is calculated based on an annual review of all accounts over $25 million.
• The allowance for doubtful accounts is adjusted every year through the doubtful accounts expense and is reduced by amounts written off as uncollectible during the year. The annual expense is reported in the Statement of Administered Expenses and Recoveries. Except for the portion related to CPP contributions, which is charged to the CPP account, the provision is charged to expenses administered for the federal government because the CRA assumes all collection risks, as stated in the terms of the tax collection agreements with the provinces, territories, and First Nations.

Corporate Income Tax Receivables (See Notes):

Regarding Corporate income tax receivables, total CRA taxes receivable increased by 16.5%[1] to $28,292 million. Most of this growth[2] was in amounts less than $25 million.

The 44% growth in this population is commensurate with the 46% growth in revenues.

The high-value receivable population remained stable.

Overall, the ADA rate was stable year over year.

Goods and Services Tax (GST) Receivable:

Regarding Goods and Services tax (GST) receivable:

• The CRA reported $27,392 million from the total reported in the Public Accounts of $31,188 million.
  • This is in comparison to $23,640 million reported by CRA in 2020–2021 from the $26,756 million total reported in the Public Accounts of 2020–21.
• The related ADA reported was $4,766 million from the total reported of $5,414 million.
  • This is in comparison with $3,370 million reported in 2020–2021 from the $3,849 million total reported in the Public Accounts of 2020–2021.
• The increase in the ADA is due to a combination of growth in GST revenues and higher allowances on a limited number of accounts over $25 million.

Potential Effects of Delays to Canada Emergency Response Benefit Post-Payment Verification

During the meeting, TBS officials were asked if delays to Canada Emergency Response Benefit (CERB) post-payment verification had resulted in added costs in terms of higher write-offs of CERB overpayments and/or difficulty in collecting CERB overpayments. TBS has asked the CRA to respond (as follows):

Plans for post-payment verifications have always been “evergreen” due to the unpredictability of the pandemic and its affect on Canadians. Though post-payment reviews were planned to begin in late 2021, the arrival of the Omicron variant in Canada meant that Canadians were again placed in dire financial straits, similar to those exhibited at the start of the pandemic. This forced the CRA to re-evaluate all ongoing benefits and compliance efforts.

The resulting extension to the existing benefits and creation of a new benefit led the CRA to extend and increase pre-payment reviews, as they are designed to function alongside ongoing benefits, and to delay the start of post-payment work to January 2022.

This decision is not expected to impact overall compliance, as pre-payment reviews, ongoing since the summer of 2020, in general may reduce the need for post-payment reviews.

The CRA started sending out its Notices of Redetermination in May of 2022. It is premature at this point to try to make a determination of how many people will be unable to repay their debt.