CRA Struggling to Collect All Taxes Due

Federal Auditor General Michael Ferguson released his Spring Report on April 30th, including an audit on the Canada Revenue Agency’s struggling effort to collect tax debts owed by Canadians in the last few years. How bad has their performance been?

The tax debt is growing at a faster rate than cash collected; the total uncollected tax debt has soared about 60% in the past seven years to $29 billion.

In a recent statement on the issue, Revenue Minister Gail Shea said: “All tax debt is in the process of being collected by the CRA, either through repayment plans or other collections measures.”

Troubling for many is the rapid growth of the so-called “tax-debt” and the apparent laxity in the enforcement of the tax code. Budget 2013 included measures aimed at tackling non-compliance with the Income Tax Act, but it is clear that more needs to be done. “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,” stated Minister Shea.

Most information available at this point has been derived from analysis conducted by Postmedia News and published in the National Post on April 25th, but the Report will obviously elicit more clearly the state of the situation. Taxpayers who cannot pay should work with their advisors to make payments over time to avoid exasperating the situation with interest charges. Gross negligence or tax evasion penalties can be avoided by filing tax returns under CRA’s voluntary compliance opportunities (you come forward before CRA contacts you).