The HST Blog : Canada Harmonized Sales Tax Lawyer Cyndee Todgham Cherniak for Assessments, PST & RST Issues in Ontario, British Columbia & Quebec

• Email This
• Print
• Comments
• Trackbacks
• Share Link

This post is likely to get me in trouble with a certain Pierre that I know.  But, as a blogger, I have to be credible.  I have to report on this news story and tell the truth. 

The Canadian Press has reported in an article entitled "Tax agency gives itself 'A' for service, but grading rigged" that:

"The Canada Revenue Agency has been giving itself an A in its report card on service to taxpayers — but a new audit suggests the grading scheme was rigged. The agency says it has been answering written questions about the GST and HST within its self-imposed deadlines more than 90 per cent of the time."

The Globe & Mail reports in a similar article entitled "Revenue Canada gives itself an A for service but auditors say grading rigged" that:

"Since 2006, officials have promised to get responses out within 45 days at least 80 per cent of the time. And in a recent annual performance report to Parliament, the agency said it met the 45-day deadline 93 per cent of the time.  But that claim has withered under the scrutiny of internal auditors, who did their own independent grading — and gave the agency an anemic 74 per cent, well below the minimum standard."

I have to weigh in on this.  Based on my experience, the CRA has given itself marks that are way too high.  I am a sales tax lawyer and an adjunct law professor.  If I allowed my students to mark their own papers, they would not write anything and they would all give themselves and "A+".  It is self-serving to grade yourself.

The CRA report card relates to GST/HST rulings.  That is, the taxpayer writes the CRA for an answer to a GST/HST question.  Some rulings are binding (when they are specific to a taxpayer or transaction).  Some rulings are not binding (called interpretations) are more generic in nature (such as, Do I charge HST when I sell goods to Alberta?)

I have a simple GST/HST ruling that I filed with GST/HST Headquarters last June prior to HST implementation.  I still do not have an answer.  I provided a complete GST/HST ruling request and a binder with supporting documents.  I called GST/HST rulings in January 2011 to find the name of the CRA officer handing the GST/HST ruling request and was told the file had not been assigned, but would be assigned within 5-6 weeks.  I called again in March 2011 and asked about the status of my client's GST/HST ruling request and was informed that the CRA, GST/HST Rulings Directorate was short on support staff and the file would be assigned in 5-6 weeks.  I called again in April 2011 and was told that I would be receiving a call by May 27, 2011.  I called again last week (because I did not receive a call by May 27th) and my telephone call has not been returned.  This is just one example from a GST/HST lawyer.

Other GST/HST lawyers I know have similar stories of GST/HST rulings taking 1-2-3 years.  GST/HST lawyers help businesses that need answers fast.  Apparently our requests for rulings were not included in the CRA's methodology because our requests were sent to GST/HST Headquarters (where the really smart GST/HST CRA officials are located).

Internal auditors within the Canadian government have determined that the CRA's methodology leaves something to be desired. The news reports indicate that the CRA's methodology for calculating turn-around time starts with the date that the GST/HST request is booked in the system and not the date the request is received by the CRA. The methodology also looks at the turn-around time in local offices and not the GST/HST Rulings Directorate.

The news reports also indicate that the CRA receives 100,000 telephone calls per year and does not monitor the quality of the answers.  A quick turn-around time giving the wrong answer is not helpful to taxpayers who are making an effort to be compliant.  I can give many examples of clients receiving incorrect answers from the CRA (or the clients did not understand the verbal answer provided or the clients heard what they wanted to hear). 

All this being said, I acknowledge that the number of GST/HST questions received by the CRA in the last 18 months created a difficult workload for good workers.  GST/HST implementation in Ontario and British Columbia was difficult on the CRA. I also acknowledge, as a GST/HST lawyer, that the Department of Finance has proposed and passed complex amendments to the Excise Tax Act and regulations thereto.  Some of the questions being asked concerning changes to the financial services rules and the pensions rules are very difficult (and I would even go so far as to say the CRA may not be able to answer the questions because the law is void for incomprehensibility).

That being said, I believe that the CRA should not pat itself on the back with high grades for service.  The CRA is an independent agency and should not mislead the public in its reports.  Taxpayers are expected to be perfect and are criticized by the CRA when they stretch the truth --- the CRA should expect the same scrutiny in return.