THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, May 19, 2020
The Standing Senate Committee on National Finance met by videoconference this day at 2:30 p.m. [ET] to study on a) certain elements of Bill C-13, An Act respecting certain measures in response to COVID-19; b) the provisions and operations of Bill C-14, A second Act respecting measures in response to COVID-19; and, c) the government’s response to the COVID-19 pandemic and its economic consequences.
Senator Percy Mockler (Chair) in the chair.
[English]
The Chair: Honourable senators, and to all participants, I declare the meeting in session.
Senators, before we begin, I’d like to share several helpful suggestions that I feel will assist each of us in having an efficient and productive meeting. Senators are asked to have their microphones muted at all times, unless recognized by name by the chair and will be responsible for turning their microphones on and off during the meeting.
[Translation]
Before speaking, please wait until you are recognized by name. Once you have been recognized, please pause for a few seconds to let the audio signal catch up to you.
When speaking, please speak slowly and clearly and do not use the speakerphone. I also ask that members speak in the language that they have chosen to listen to. If you have chosen to listen to the interpretation in English, speak only in English. If you have chosen to listen to the interpretation in French, speak only in French. If you are not using the interpretation service, you may speak in either language, but please avoid switching from one language to the other in the same intervention.
[English]
Honourable senators, should any technical challenges arise, particularly in relation to interpretation, please signal this to the chair, and the technical team will work to resolve the issue. If you experience other technical challenges, please contact the committee clerk, Ms. Fortin, with the technical assistance number provided.
Please note that we may need to suspend during these times as we need to ensure all members are able to participate in its fullness.
Finally, honourable senators, please note that if the committee decides to go in camera, the use of online platforms does not guarantee speech privacy or that eavesdropping won’t be conducted. Therefore, as such, while conducting committee meetings, all participants should be aware of such limitations and restrict the possible disclosure of sensitive, private and privileged Senate information. Participants should know to do so in a private area and to be mindful of their surroundings so they do not inadvertently share any personal information or information that could be used to identify their location.
We will now begin, honourable senators, with the official portion of our meeting. My name is Percy Mockler, senator from New Brunswick, chair of the committee. I would like to introduce the members of the committee who are participating in this meeting today: Senator Forest, deputy chair; Senator Richards, steering committee member; Senator Boehm; Senator Dagenais; Senator Deacon (Ontario); Senator Duncan; Senator Galvez; Senator Harder; Senator Klyne; Senator Loffreda; Senator Marshall; Senator Smith; and we also have, as ex officio members, Senator Gagné and Senator Martin. I also see that we have additional senators, Senator Pate and Senator Lankin.
[Translation]
I wish to welcome all honourable senators, as well as Canadians across the country who may be watching. As a reminder to those watching, the committee hearings are available online at sencanada.ca.
Honourable senators and members of the viewing public, the mandate of the Standing Senate Committee on National Finance is to examine matters relating to federal estimates generally, as well as Canadian government finance.
Today, we continue our study on certain elements of Bill C-13, An Act respecting certain measures in response to COVID-19, on the provisions and operations of Bill C-14, and on the government’s response to the COVID-19 pandemic and its economic consequences, which were referred to the Standing Senate Committee on National Finance by an order of reference of the Senate of Canada.
[English]
Today we are hearing from officials from Canada Revenue Agency. We welcome Frank Vermaeten, Assistant Commissioner, Assessment, Benefit and Service Branch. He is accompanied by Ted Gallivan, Assistant Commissioner, Compliance Programs Branch; and Geoff Trueman, Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch.
Welcome to the witnesses and thank you for accepting our invitation. The chair will now recognize Mr. Vermaeten to make some comments, to be followed by questions from senators. Mr. Vermaeten, the floor is yours.
Frank Vermaeten, Assistant Commissioner, Assessment, Benefit and Service Branch, Canada Revenue Agency: Thank you for the opportunity to appear before the Standing Senate Committee on National Finance to speak about Canada Revenue Agency’s efforts to support Canadians during this unprecedented time.
I am accompanied today by two other members of the Agency’s senior management team: Geoff Trueman, Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch; and Ted Gallivan, Assistant Commissioner, Compliance Programs Branch.
The CRA has worked quickly over the past two months to administer several important COVID economic measures, including the Canada Emergency Response Benefit, Canada Emergency Wage Subsidy and the Canada Emergency Student Benefit.
Our focus has been on leveraging our proven systems, through which we provide benefits to millions of Canadians every year, in order to deliver emergency benefits to those most in need. At the same time, we have put controls and processes in place to ensure that we are respecting eligibility requirements as set out in legislation.
On April 6, working closely with our colleagues at Employment and Skills Development Canada, we launched the Canada Emergency Response Benefit, or CERB. To make the CERB accessible to Canadians, the CRA developed a fast and simple application process that most claimants can complete online or by phone in just a few minutes.
The agency has now processed more than 10 million CERB applications from more than 4.6 million unique individuals with many claimants receiving payments by direct deposit within two business days after applying. On April 27, just a little over two weeks after Bill C-14 received Royal Assent, we began to accept applications for the Canada Emergency Wage Subsidy. To date, the CRA has paid $5.7 billion in subsidies, supporting over 2 million employees’ wages in period 1, and more than 700,000 employees’ wages to date in period 2.
Finally, just last Friday, the CRA launched the Canada Emergency Student Benefit, or the CESB, using the same simple online and telephone application platform through which we delivered the CERB. The student benefit is available to more than 1 million eligible students, and thus far over 330,000 students have applied.
Mr. Chair, in delivering all of these measures, we are striking an important balance between timeliness and compliance.
We designed the CERB and the CESB application processes as attestation-based. This is similar to the approach that we use in tax filing, whereby individuals attest to the veracity of the information they provide, and the CRA may verify this information at a later date.
However, we do have upfront controls in place and we conduct an initial automated validation for CERB and CESB applications. For example, we check to ensure that the applicant’s Social Insurance Number is valid, that the applicant is at least 15 years of age, and that the applicant is not incarcerated in a federal institution.
We have recently introduced additional upfront controls to identify applications from individuals who may be ineligible. In these cases, claimants must complete additional verification steps prior to being able to submit their applications.
The CRA takes fraud very seriously and Canadians can now report cases of suspected CERB fraud through the Agency’s Informant Leads Program. To date, more than 600 cases have been reported through this program, and we are now reviewing the information we have received.
Early next year, we will undertake further verification measures for reviewing payroll records and T4 information to verify that CERB and CESB claimants were eligible to receive payments. In cases where claimants are found to have been ineligible, we will contact individuals to arrange for repayment.
We also recognize that applicants can make honest mistakes in applying or they have applied for the CERB or CESB but later became ineligible because, for example, they found employment. We have published information on our website to explain how individuals in these situations can repay the CERB or CESB, and on May 11, we introduced a function in our My Account portal to make repayments easy. To date, nearly 70,000 payments have been made through this service.
Mr. Chair, the Agency has also implemented a rigorous verification process for the wage subsidy program. All applications pass through an upfront automated verification. In about 30% of cases, applications pass through a secondary manual verification. We also have an audit and compliance program in place to identify potentially fraudulent claims and to address non-compliance.
Mr. Chair, as we administered these emergency measures, the CRA was in the midst of its busiest season and the regular business of processing T1 tax returns. On March 18, we announced that we were extending the tax filing deadline for individuals, corporations and trusts, thereby relieving Canadians of the need to file their taxes by the end of April. Nevertheless, to date, more than 20 million Canadians have filed their tax returns, and this number continues to increase.
We also announced last week that eligible Canadians who are receiving the GST/HST credit and/or the Canada Child Benefit will continue to receive these payments until the end of September 2020, even if they are not able to file their 2019 returns.
In addition to the emergency measures I spoke about earlier, we have delivered other critical payments to Canadians. These include issuing $5.1 billion in one-time GST/HST credit payments to assist 11.8 million families, and tomorrow we will issue $3.7 million in Canada Child Benefit top-up payments totalling $1.95 billion.
To deliver all these benefits, the CRA was able to mobilize people quickly, including our call centre agents. Shortly after COVID was declared a pandemic, we equipped 3,000 call centre agents to work remotely; 7,500 hundred CRA employees also volunteered to accept new duties as temporary call centre agents, which we are utilizing on a rotational basis.
Through this mobilization of resources, and by adding a dedicated phone line to handle CERB and wage subsidy inquiries, we have kept wait-times manageable to serve Canadians through this important channel.
Mr. Chair, this pandemic continues to have a significant impact on many individuals — not only on their health, but also on their economic well-being. I am proud of the efficiency with which the CRA has mobilized in recent weeks to support Canadians.
My colleagues and I would be pleased to respond to your questions.
The Chair: Thank you for your statement. We will now proceed to questions. I would like to remind senators that the order for questions from members has been pre-set. The steering committee has agreed that each member will have a maximum of five minutes. Therefore, I will ask senators to ask their questions directly and the witnesses to respond concisely. The clerk will make a hand signal to show that the time is over and then we will proceed to the next senator. We will need your full cooperation, honourable senators.
If other senators wish to ask questions of the witnesses, I invite you to indicate that to the clerk using the raised-hand function of the application. Honourable senators, for your information, there will be a 10-minute period at the end for non‑member senators of the Finance Committee to ask questions, if time permits. The order of questions for that portion will be randomly drawn by the clerk.
Finally, I invite all senators when they ask a question to clearly identify which witness it is directed to. If another witness wishes to add something to the answer, I invite him or her to use the raised-hand function to indicate that. If there is time left, I will give the floor to that witness.
Senator Marshall: Thank you, Mr. Vermaeten, for your opening remarks. You referred to compliance, fraud and the informant program. My question relates to the 200,000 recipients or transactions that were commented on in the National Post last week. Were they recipients or transactions?
Mr. Vermaeten: Senator, I believe the article you are referring to was about ESDC, Employment and Social Development Canada, and their process. I believe it was about individuals who called, and they effectively put a note to file on them. I don’t think they are about the actual processing of the returns themselves.
Senator Marshall: Within Canada Revenue Agency, when you are talking about compliance, is there something built into the system? How do you identify transactions or individuals that have to be followed up for additional review or additional work?
Mr. Vermaeten: Thank you for that question. There are a lot of processes in place about what we do up front and then what we do to follow up. Up front, as I mentioned in my opening remarks, we do various things. We do basic checks of validity, for example, on their social insurance number and that they are of valid age. We also make sure that they’re not getting the CERB from ESDC, so any type of double-dipping would be blocked. It’s the same thing with respect to internal consistency: You can’t get both the CERB and the CESB at the same time, so we do checks on that. And if there are suspicious activities on the account, we lock the My Account, for example, to make sure that doesn’t happen.
We have another upfront process in place. When we feel it’s high-risk, we ask the applicant to call us to finish the transaction if we feel there are other aspects there. On top of that, the main thing we do — this is what we do with all our programs — it’s really verification after the fact. What we will be doing is comparing earnings of the applicants with their CERB and CESB applications. Essentially, if you’re earning more than $1,000 a month, you cannot collect the CERB or the CESB at the same time. So we will be doing those types of checks, but not until early next year.
Senator Marshall: Have you begun disbursing to the students yet? My understanding was the disbursements under the student program couldn’t take place until the regulations had been completed. Are any disbursements going out to the students?
Mr. Vermaeten: Yes, all the authorities were put in place to allow us to make the disbursements. We opened the application process on Friday. Given that we’ve had the applications as of Friday, we expect to make the payments within two business days if the individuals have direct deposit. That would mean that on Wednesday they will be receiving payments.
Senator Marshall: Thank you.
[Translation]
Senator Forest: I’d like to thank the witnesses for being here today. My question has to do with the wage subsidy program. According to the data released by your department last week, businesses have submitted 132,481 applications for the subsidy program in two weeks and were expected to receive a million. What do you attribute this low participation rate to? Some observers believe that one of the reasons is competition from the CERB, which is more beneficial for low-income workers, and by a delay in the implementation of the wage subsidy. Do you share this view?
Ted Gallivan, Assistant Commissioner, Compliance Programs Branch, Canada Revenue Agency: I’ll answer the question, if I may. We’re working closely with professional accounting firms and the Canadian Federation of Independent Business, and according to their experts in the field, there is a certain degree of complexity. Professional accountants have told us that two-thirds of the applications received haven’t been processed. As for the wage subsidy, I believe a review and an analysis are needed that would explain some of the discrepancy between the forecast and the number of applications that have been submitted.
Senator Forest: I’ve been told by various accounting firms in my community that, with the extension of the tax deadline in September, many businesses with fiscal year ends in December and January are concerned there will be a bottleneck, because they have to be able to submit financial statements. Is this an opinion that’s been shared with you when you’ve consulted accounting firms?
Mr. Gallivan: Yes, the concerns of professionals have been communicated, and changes to the existing deadlines are being actively considered at this time. We’ve heard this, and decision-makers will be considering various options in the coming days.
Senator Forest: Thank you very much. I’ll wait for the second round of questions.
[English]
Senator Richards: Thank you to the witnesses for being here. As usual, Senator Marshall brought up some of my concerns.
In this year’s Main Estimates, the Government of Canada projected $304 billion in revenue. In an April 30 report, the PBO said budgetary revenues will be $33 billion lower in 2021 because of the impact of COVID-19, I suppose. Can you please update the committee on how much revenue the CRA administered on behalf of the government in March and April of this year and what your forecast is for the remainder of the 2020-21 fiscal year based on this trend?
Before you answer that, Mr. Vermaeten, I will just bring up another part of the question because I’m somewhat concerned about retaliation certain people might face if they inadvertently receive money. I know you mentioned this a minute ago, but the average Canadian man and woman will be paying for this in one way or another for years to come. How can we be certain that the burden won’t be too much to bear in the next 5 to 10 years and that the Canadians most in need now will not have to bear the brunt later?
Mr. Vermaeten: Thank you.
I am unable to answer the question in terms of the projected revenues that we have at this point. I don’t have that available to me and I’m quite confident my colleagues probably don’t have that number available.
With respect to tax filing, that process does continue, as I mentioned at the outset; for example, we’ve received about 20 million individual returns at this point. We are making progress in the process of collecting revenues. Naturally, revenues will be lower, both because of filings and also because individuals and corporations are going to have lower profits.
I don’t have any figures on that. I can turn to my colleagues. I’m not sure whether they will have any comments on that.
Mr. Gallivan: I’ll just come in on the last part of the question about the assurance. It’s important to recall that the CERB and the wage subsidy are taxable payments that would require reporting through the tax regime. One of the reasons why we’re confident in being able to track discrepancies and/or fraud is that these amounts will have to be reported to the CRA over time. We’re quite confident in our ability over time to recover what needs to be recovered. So the fact that these are taxable payments is something that’s sometimes lost in the discussion.
The Chair: Yes, Mr. Vermaeten, can you go back to the question of Senator Richards? You made the comment, and if you need to bring in additional information from CRA to that question for clarity, can we agree that you will submit it in writing to the clerk?
Mr. Vermaeten: Yes, I can do that. Thank you.
The Chair: Thank you.
Senator Richards: Thank you very much.
Senator Harder: Welcome to our guests. I would like to pursue two aspects that you raised, Mr. Vermaeten, in your opening statement. First, could you elaborate a little more on the displaced work? In other words, how are you planning on adjusting the workload over the next 18 months at the CRA to ensure that some of the work that has been displaced because of this obvious priority is incorporated into your work?
Second, I would very much like to have additional information with respect to the health and safety of your workforce, particularly the call centres and the centres that perhaps don’t have some of the standard distancing technology that I guess we will come to expect. In that regard, I would like to have a bit of an update with respect to the work that CRA is undertaking with its collective bargaining agents to ensure that the health and safety concerns are being addressed through the appropriate labour relations mechanisms.
Mr. Vermaeten: Thank you for those questions. I’ll do my best to respond to them.
Your first question was with respect to the work that’s displaced because of these extraordinary measures that we had to put in place. I’ll say that this in itself is not the major concern with respect to the work going forward. Certainly resources were required to put in place all these measures, whether it’s the GST, CCB, CERB, CESB or wage subsidy. Those all required resources. They required a lot of my team, as well as other teams throughout the agency. I will say, though, that this was a fairly efficient process. In that sense, it hasn’t created a problem down the road with respect to preventing us from doing a lot of our regular work. For example, as we provided additional phone resources, we were able to use people who were currently not able to do their regular duties; they volunteered to help us with the phones. In that sense, the special measures in themselves did not create a problem with respect to a large amount of work down the road.
We are, of course, thinking about the long-term impacts of COVID. We are thinking about our business resumption plan. We have a committee discussing these items on a very regular basis and certainly in cooperation with the unions, which have been our partners in this. For example, with respect to getting call agents or other individuals to volunteer to work as call agents, the unions have been very supportive of that.
We have a business resumption plan. We’re thinking about the things we can start to do now and the things we can’t do yet, whether because of the safety of our people or because it’s just not appropriate. With respect to the safety, we’ve been very careful with respect to trying to do as much work as is absolutely possible. Case in point here with the call centres, we have about 3,000 call agents that we very quickly moved on to remote working. We were able to do that in a safe way.
In other cases, we’ve had to stand down on some of the work because safety, initially, wouldn’t allow us to do that. For example, work that needs to be done in the tax centres requires enough social distancing. We can certainly have some people in the tax centres but not too many; that wouldn’t allow the right amount of safety distancing. We have been very careful about that. We’ve been in constant communication with the unions, and they’ve been very supportive every step of the way. It has been a good relationship with respect to ensuring safety.
Sometimes safety prevents us from doing the things we want to do, and that creates a workload down the road, but sometimes certain work is just not appropriate. For example, some of our collections activities would not be appropriate at this point while people are unable to work or are financially stressed. The same thing goes with some of our auditing activities. Obviously, you don’t want to be going into firms because of social distancing but also because it may be inappropriate right now if they are under financial stress.
Senator Smith: Maybe I can ask a question to Mr. Vermaeten. Phase one is to get the money out the door. We’ve gone on the attestation approach to get answers from people, to keep it simple and get it going. As you look forward in time now, can you give us a timeline for the next phase? Is the next phase making sure you start to follow up? How many phases do you see occurring in this process, and over what time frame? If you could give us a portrait, that would be helpful.
My last question is about the resources you have, the people working in the office and working at home. Could you give us just a portrait of that and how many people will be affected in terms of your efficiency and your ability to actually achieve your objectives?
Mr. Vermaeten: Thank you very much. I’d be very happy to answer that. I started mapping that out a few minutes ago in terms of the work that we’re doing. I’ll just add a little bit more detail to it. When we look at the process of ensuring that the right people are getting the right kind of support, we look at five elements there with three of them being up front. We do upfront validation in terms of systems checks while individuals are making those applications. As I mentioned before, we’re doing things like ensuring there is no double-dipping with respect to some other benefits, including not just CERB and CESB, but also with respect to Employment Insurance. You can’t get both. There is that upfront validation.
There is also some manual validation that goes on. When we have people applying who we feel are in a high-risk group, we will ask them to call us.
We also do payment validation. Once we’ve created a payment file, there are nightly system checks to ensure these are valid payments. It’s actually quite sophisticated. We’re looking for fraudulent things, like numeric bank accounts to see if there are any that follow a certain order. Is there a number of payments going to the same bank account? We have a range of statistics that we look at with respect to the payment file to make sure it is going to the right person.
That is the first block of three types of upfront things, and that happens virtually in real time or near real time.
Then there is the whole voluntary repayment process. That is an important part of our strategy. We know that there are people who applied who, in retrospect, applied to two places, for example, or, later on, they found a job. That’s really what we’re hoping for. That’s what we want the wage subsidy to do if they get rehired and they’re in the middle of their claim. At the time when they claimed, they thought they would be unemployed for four weeks but, in fact, they got a job. We have that voluntary repayment process. We’re trying to make it absolutely easy for individuals to provide that repayment. We really would like them to do it before December 31 of this year so that we don’t end up issuing them a T4 slip. That’s an important part of that.
The final element is really the post-payment verification. That’s a fairly big job, but at the same time it’s highly automated and it’s one we do with many of the types of benefits we pay and also with our tax system.
What we’re asking employers to do is to provide us T4 information that’s a little more detailed than in other years. Usually we only ask for annual data. For example, an employee made $44,000 and we get that on the T4 slip. It’s an annual amount. What we’re asking employers to do this year is to provide us a bit more detail in terms of the monthly income they’re making so that we can take that in February, March and April of next year, and even later, and compare the information we have on file with respect to their earnings to the amounts they got from the CERB and the CESB. This allows us to do that automated validation.
The Chair: Thank you, Mr. Vermaeten.
[Translation]
Senator Dagenais: My question is for Mr. Vermaeten. Unless I’m mistaken, in your presentation you clearly gave the impression that your agency acted quickly and efficiently. All this will create an additional workload for the agency.
What will happen to Canadians’ tax refunds? Will this delay tax refunds?
Mr. Gallivan: Thank you for the question. About 90 per cent to 92 per cent of Canadians file their tax returns electronically. For those who can do it that way, we’re reporting very little backlog. With respect to paper returns, we’ve been gradually getting back to work. If the paper return is late in being processed, we also offer Canadians the option of filing a second electronic return. Volunteer tax clinics are in place to help more disadvantaged Canadians file their tax returns. We’re looking closely at all of this, and we’re very conscious of the need to process these claims for Canadians. We’re providing Canadians with different options for filing their returns.
Senator Dagenais: I’d like to talk about the agency’s revenues. If we take into account the fact that some businesses are at risk of bankruptcy, that some restaurants will close, that people won’t be travelling for some time and that many other commercial sectors will no longer be as lucrative, do you think that the drop in revenue from taxes will be more than 20 per cent over the next year?
Mr. Gallivan: It is too early to speculate on a specific percentage. I would add that even those businesses that survive will incur losses that they could use to reduce their taxable income for that fiscal year. We’re currently refining our approach to the affected sectors to find an efficient way to do our job when necessary to protect the interests of taxpayers. This is a business case, and we have many computerized tools and third‑party databases at our disposal. We have a good understanding of the areas that will be affected and when it will be necessary to audit, to limit the scope of the audit and, if necessary, to audit or not because it is too late. That’s where we’re at. We aren’t in a position to analyze data to give a specific percentage.
Senator Dagenais: Thank you.
[English]
Senator Galvez: When we look at the whole economic response plan of more than $900 billion by the Canadian government, we can easily see that a small portion goes to workers and salaries, but the biggest portion goes to small- and medium-sized enterprises and big corporations.
My question concerns recuperation and tax evasion and tax avoidance, which were growing. This was a very difficult problem before COVID.
For example, we learned from the Panama Papers that Canada was becoming a sort of fiscal haven because it was easy to create tax-planning structures to minimize taxes on things like interest, dividends, capital gains, retirement income and rental homes. That is in a memo within the Panama Papers.
We were happy to hear that more investigators and auditors were going to join the agency. In fact, we heard that 1,300 auditors were supposed to be hired; however, fewer than 200 have been hired so far.
How many investigations, inquiries and prosecutions end up in convictions of tax evasion? Are you ready for what is coming, with all the funds that will be released to corporations during COVID?
Mr. Gallivan: Thank you for the question. First I would say that we were quite active coming into COVID-19 in terms of cracking down on aggressive tax planning. The OAG talked about a 60% increase in audit yield. The billions of dollars that we reassess every year had grown to $14.3 or $14.6 billion last fiscal year. In fact, the fight has left audit and is before the courts. Right now, for offshore, aggressive tax-planning multinationals, we have more than 3,000 cases in front of the Tax Court of Canada and Federal Court of Appeal, and every year we have a dialogue with the Department of Finance around closing those loopholes and which parts of the legislation require tightening or not tightening.
The message had been sent to companies and investors that the CRA was on its game and had the data and auditors to identify aggressive plans, and were willing to push it to the court system, which then brings it to the light of day. The courts will make a decision on whether the planning is legal, as some people call it, or whether tax is payable. Then civil society, parliamentarians and the Department of Finance can react to that. We have a fairly good narrative in Canada around closing loopholes, bringing this planning to the courts, and then making decisions, based on the court record, to further tighten the legislation.
In terms of these emergency measures, somebody’s track record is certainly a factor in terms of how closely we’ll look at them. In terms of the wage subsidy, that’s very much a program flowing, dollar for dollar, the funds to the workers. Within the context of the wage subsidy, the past history of a business would drive how much scrutiny we would give them to make sure they qualify, that the numbers are correct and that they have those employees, but the legislation itself doesn’t allow for a holdback based on whether or not the CRA likes their track record.
With some other programs, there could be greater flexibility and discretion in terms of letting the nature of an entity’s track record influence whether they qualify. That wasn’t the case with the wage subsidy, which goes to workers, or CERB, which goes to the employee, but with other programs, that option could certainly be built in.
Senator Galvez: Why don’t we measure the tax gap, and why don’t we use formulary apportionment?
Mr. Gallivan: We certainly do measure tax gap. The CRA, with support from Finance on sales tax, has produced a series of tax gap reports that are on our website. Canada has moved to publishing the tax gap.
In terms of formulary apportionment versus other measures, I would say maybe even looking at the U.S. model, which the OECD is looking at under Pillar Two right now, as perhaps a form of minimum tax, similar to the American BEAT and GILTI, might be the way to go.
There are many models out there, and if there were an easy consensus model of splitting the revenue for multinationals, I think all of us, including civil society, would have jumped on it.
Senator M. Deacon: Thank you to our guests for being here today. On behalf of Canadians, I would like to begin by expressing great gratitude and thanks for how efficiently you and your colleagues in the public service are able to roll out these programs in a very quick and efficient manner for the most part. Canadians need this money quickly. As we sit here today, it hasn’t been very long but I don’t think any of us can comprehend the immense effort that went into this program, which for the most part has been run with a high level of efficiency.
With that in mind, there is something that has come up in different ways in questions this afternoon. I am also taking a quick look at overpayment of the CERB. I think we can wish and I think it’s true that most cases of overpayment will prove to be accidental rather than motivated by greed, but we can’t avoid situations of overpayment at this time.
Why not track these payments down now? Is it a matter of workplace capacity, automation or integration of a variety of services and programs? Would you give me your insight there?
Mr. Vermaeten: I would be happy to respond to that. As I said previously, I think we are doing some upfront validation. Certainly, we have a series of checks we are doing to ensure that we believe the money is going to eligible recipients, including making sure they’re not getting amounts from other programs such as EI or getting CERB from ESDC. We do those types of checks.
To determine at this point whether they’re making any other income, if we were to try to do that upfront it would take an incredible period of time. Thinking about the volumes, CRA alone has over 10 million applicants. I believe we had 4.6 million unique applicants who are doing this. So in order to know with certainty they’re not making any money we would have to get them to attempt to prove to us in advance that they’re not earning any money, which is a very difficult thing to do, to prove a negative, that they’re not earning this money. Even if they had documentation, to manually go through documentation of 4.6 million people would take an incredible amount of time, more than just weeks and weeks. It’s just not practical to do that.
In the alternative, we could go to their employer and try to find information from them upfront, but, again, we don’t know all of their employers, whether they’re working for multiple employers and who their employers are today, which may be different from where they were last year when we had their information. It’s just not practical to try to find that information today. But what is practical is when we get the T4 information next year we’ll be able to do that through an automated way. We’re comfortable that in most cases we’re going to find those individuals who were earning income at the same time.
Senator M. Deacon: Thank you. While this is not perhaps your leadership, when we look at overpayments I’m still thinking about Canadians who tell me this week they’re still trying to pay back $10,000, $20,000 or $25,000 in overpayments from their Phoenix pay system experience. I have great empathy for that channel and that lane and that story. I do wonder, in the case of overpayments, when you’re looking at that, will that be an immediate payback or will it be phased-in payback? I know folks are told not to spend money but some of them might be entitled to it and need to. Do you have some thoughts on that?
Mr. Vermaeten: Certainly. As I mentioned in my opening remarks, we’ve created a repayment facility within My Account to make it really easy for individuals to repay those amounts. Ideally, they pay the full amount. For example, if they got an additional $2,000 that they’re not eligible for any more because they got a job, they can go into My Account and with several clicks of a button they can pay that back immediately. If they can’t pay the fully amount, they can pay a lesser amount as well.
I think we are doing everything we can to make it easy to repay, and it’s a fully automated process. We believe that will work considerably better than, for example, Phoenix with respect to the repayment amounts. Most people want to repay those.
Senator Klyne: Thank you to our panel and all staff working on the CRA files who have had to work under immense pressure to get the financial support out to Canadians to help them get through these difficult times.
My question is directed at compliance, or collections at least. The flexibility for businesses filing taxes deferred to September through the support for businesses program is welcome, I’m sure, by those owing taxes. The deferral in the current environment of COVID-19 could, however, have unintended consequences for both business and government. Businesses may have to make the difficult choice of using funds earmarked for income tax and repurposing those funds for working capital and unintentionally be unable to make up the funds for income tax by September. CRA could, as a result, experience more late payment or nonpayment of taxes, which leads to higher costs in attempting to collect taxes and any interest or penalties incurred after September.
Can you share with the committee the projected impact to the treasury as a result of the September deferral in filing business taxes?
Mr. Gallivan: Again, I think you’ve isolated the bad debt issue, but layered on top is the business loss and losses that can be carried back even to prior years. You could have a business that was in arrears with CRA, coming into COVID and perversely have accumulated enough losses to carry it back to prior years and actually reduce that debt they came into the pandemic with. Now that doesn’t help their cash flow and their solvency issue, but because of those complex interactions, we don’t have that hard number yet.
I can assure you that colleagues in the debt management branch made the case about giving a lifeline that could only delay or make worse the solvency issues that businesses face in September. They are called debt management, not collections, because they work over time and can make arrangements over time to help businesses find their feet.
With numerous programs out there putting cash into the economy and into businesses, there is a hope — not in September but through arrangements that start in September and could go on for several years — that will give businesses a chance to catch up.
Senator Klyne: Thank you. Are there any plans to further defer the deadline for filing income tax past September? If there is an extension, are you able to estimate what it will cost for every week the flexibility date is pushed past the September deferral?
Mr. Gallivan: There has been no active consideration for the September 1 deadline. There are some corporate return dates coming up and there are some clarifications sought by practitioners. Under active consideration within the agency now is some clarification around the penalty and interest implications up to September. There are some corporate tax returns due June 30 and some T3 returns in there. That’s what is really under active consideration to bring us up to September but we haven’t turned our minds past September yet.
Senator Klyne: Thank you.
Senator Boehm: I would like to thank our witnesses for joining us today. I never thought, certainly when I was younger, that I would be in a position to congratulate the CRA for the excellent work that it’s doing, but you are doing excellent work so thank you for stepping up.
My question follows one that Senator Harder asked at our last meeting and I had followed up on it then, but it concerns assistance to international students. Many of them are in the same position as domestic students. They’ve paid higher tuition fees, and they need financial relief. They would like to find jobs. They can’t really go back, although in some countries there have been suggestions they do go back, but not in ours. They need an amended Study Permit with a condition that states they are allowed to work on or off campus, which takes about a month to process, and they need a SIN number, which takes about 20 business days to process.
My first question is whether the government is planning on addressing this in the work that you are doing, and whether, with IRCC, you can relax some of the bureaucratic conditions to allow international students to work, given that the revenue to their continued presence at universities, some $6 billion a few years ago, is significant.
Mr. Vermaeten, please go ahead.
Mr. Vermaeten: Perhaps I could turn to my colleague Mr. Trueman who may be more familiar with the intricacies of international students. If not, we may have to get back to you on a couple of those questions.
Mr. Trueman: I think we would have to take that question back about the international students. I apologize for that. We can provide a written response to that question.
Senator Boehm: So $6 billion in revenue comes from international students alone, and there are the barriers that I have mentioned. Maybe this is more of a suggestion. Is the government applying any long-term risk assessment measures when looking at this question? Because if you exclude a certain group that is eligible for the program, this can have impacts on all parties involved, particularly Canada’s universities who are now scrambling trying to figure out how to start the fall semesters and what to do with the international students.
Mr. Vermaeten: With respect to the policy development of the student benefit, that is the responsibility of ESDC. Certainly we can work with them to provide you an answer on that.
Senator Boehm: Thank you very much.
Senator Duncan: Thank you to the guests in attendance today. I truly appreciate it.
May I offer my congratulations to all of Canada’s public servants at all levels for their incredible service to Canadians. I believe they were recently described as “quietly competent.” I would like to publicly and loudly express my thanks to all of you.
My question has several aspects. Perhaps the presenters could respond in a written form.
I’m concerned with the under-served areas and populations of our country, those who may lack internet or telephone access or those who have not dealt with the CRA before and are missing from the rolls. How are we reaching individuals? Is there a tracking mechanism in terms of performance management? Are we aware of the length of time required to respond to these individuals?
I would also like to address the issue of quality assurance. I would like to relay to you what an individual said to me recently — from a social distance of course — about her experience as a small restaurant owner. She had nothing but praise for every time she has called and spoken with Government of Canada employees regarding these programs. I gather it has been several times. In that regard, I’m also aware of professional firms that in the past have received alternate interpretations of Canada’s Income Tax Act.
What quality assurance is being put in place with all of these new employees to ensure everybody has the same message and the same information? That’s not a criticism. It’s a question.
Finally, there is a great deal of information, perhaps inadvertently, being collected in terms of how these programs are reaching Canadians, and I believe it was Mr. Vermaeten who mentioned “going forward.” Going forward, we’ll have all kinds of terrific information in terms of how these programs have assisted Canadians. Is this information being collected in a manner that can evaluate a guaranteed basic income program and is there a group being formulated to evaluate the information and use it to consider a basic guaranteed income program for Canadians?
That’s a very long-winded question. I thank you for your patience and understand if the information is to be provided in writing. Thank you.
Mr. Vermaeten: Maybe I could make a few brief comments and certainly supplement that with writing.
With respect to vulnerable segments and trying to ensure they are going to get the benefits, whether it’s the CERB or CESB or any of our other benefits, I think we are trying to do as much as we can in that area. It certainly is challenging, especially when we are dealing with northern and remote communities. There are all kinds of challenges. For example, they are not going to have high-speed internet access in some cases.
Wherever we can, we have tried to make it as easy as possible to apply for our benefits. I will give you a couple of examples with respect to the CERB. We had initially thought we would only allow applications through My Account, but we decided we wanted to create an IVR, an automated phone system, to be able to apply. It is precisely for the reason that we know not everyone has access to computers or high-speed internet. In fact, the phone applications have been quite popular and roughly 35% of Canadians have been using that. That does allow a wider range of individuals to be able to use that system.
Even if they can’t navigate the IVR, the automated phone system, we allow them to phone us and provide an attestation over the phone. That is another way we have helped.
We have also done things with respect to our Community Volunteer Income Tax Program. This is all across the country, the volunteers that try to support low-income individuals and ensure that they file their taxes so they can get all their benefits. We have provided increased flexibility to the volunteer program to allow them to collect information and submit the taxes virtually. So they don’t need to be there in person in a COVID-19 environment, and it is also to be able to reach remote areas.
We have done a number of things in that area and continue to do more, for example, with simplified tax filing for northern communities and for Aboriginal communities.
We’ll supplement that answer with some additional information.
Senator Loffreda: Thank you to our panel and witnesses. We are going to experience economic challenges going forward. Hopefully we will have a healthy recovery. We are all hoping that will be the case.
Speaking of economic challenges, not only on a corporate level but also on a personal level, have you analyzed the possible writeoffs on tax collection? If so, to what extent do you see that being a challenge? Will your recovery or collection policy change? Could you elaborate based on the challenges you foresee or will meet going forward with bankruptcies on a personal and corporate level? If you do require additional capacity and personnel, has there been any discussion around acquiring possible additional resources because of the challenges the economic recovery will bring? Thank you.
Mr. Gallivan: Thank you. A key point to make compared to 2008-09, which is the last proxy for this kind of economic situation, is we are further along on data and analytics. We are much better at the management of risk. We have adopted a more flexible posture in compliance, in collections, because of both the health and economic risks. It could be the health risks fade ahead of the economic situation.
As we come back, we don’t have a firm projection of the exact percentage, as I said in response to an earlier question, but based on 2008-09, we have a sense of what it might look like. It could be slightly worse; it could be slightly longer.
Where the risk base comes in is that we understand people’s behaviours and the interventions we need to adjust those behaviours better. Coming out of this, we will be able to say with X additional resources or X fewer resources, here is the lift we could have in terms of the government’s fiscal situation.
We are also better at other forms of intervention. Back to debt management, we have more insight as to who responds to a phone call or letter versus a heavier hand and legal garnishments. In the audit space, that’s looking at who might respond to education versus who requires a light audit versus a heavy audit versus a criminal investigation.
You should take comfort in that we have better data and analytics coming out of this. We will have a range of options and treatments that we could use to mitigate the impact, no matter what or how big that economic impact is.
Senator Loffreda: With respect to a lot of the aid packages, speaking again of economic challenges, there have been no deductions at source. Is that a challenge for you? Could you comment on that going forward? Is it a worry for Canada Revenue Agency that there have been no deductions at source? Would it have been more or less complicated? Were you involved in any of those discussions?
Mr. Gallivan: To inform the committee, source deductions are definitely seen as a very high risk fund to dip into for a business. It’s also seen as a trust fund. It’s often seen as unlike, perhaps, income tax, which is a portion of your extra earnings. It’s Crown funds you are holding on behalf of the Crown.
I would say the sensitivity around payroll and source deductions — CPP and EI — is that it’s really the Crown. It’s taxpayers’ money, not necessarily the business’s money. That has often been the last source we would want to go to. We have some experience that once a business needs to dip into that for cash flow purposes in terms of the future viability of that business, it doesn’t bode as well as some other form of debt. We see it as a very risky form of financing.
Senator Loffreda: I’m not referring to the financing formula. I’m referring to the fact that, for a lot of individuals who did receive the payments, there are no deductions at source. They will eventually have to pay taxes based on that revenue. Was there any discussion around the formula and taking those deductions at source before the payments were sent out to facilitate cash flow for Canadians, saying, “Here is, in general, the basic tax income.”
The Chair: Mr. Vermaeten, could you please answer in writing the question that Senator Loffreda just concluded with?
Mr. Vermaeten: Certainly.
The Chair: Thank you.
[Translation]
Senator Gagné, you have the floor.
Senator Gagné: I’ll add my voice to those of my colleagues in congratulating you and thanking you for your commitment to serving Canadians. Thank you very much.
The Canada Revenue Agency is responsible for administering hundreds of millions of dollars in taxes each year, and it’s important, as you mentioned in your presentation, that the agency demonstrate its efficiency in meeting its objectives in the context of the adjustments you’ve been called upon to make during this pandemic period.
I think you also mentioned in your presentation that you’ve started to think about how to do your evaluation. What kind of tools are you going to use for the diagnosis in order to provide a good analysis of the Canada Revenue Agency’s performance?
Mr. Gallivan: Just one clarification. Are you talking about emergency measures?
Senator Gagné: Yes.
Mr. Gallivan: For me, the timely delivery of cheques, given the volume, is currently the primary objective. It’s something we’re following from hour to hour. In terms of observation, as your colleagues have asked, the next phase is to make sure we know what the risks and issues are, and also what the level of variance is. For the wage subsidy, for instance, we’ll use a statistically valid observation sample to know the actual dollar gap and to be able to understand it. For other programs, it’s a matter of knowing the nature of the observation and whether or not it’s a duplicate claim, to know the gap and to be able to reduce it later.
From another perspective, as one of your colleagues asked me, participation is another performance objective. We’re trying to promote the program. For us, it’s about the level of participation: Have the people who are eligible participated? What’s the error rate? It’s really in this next phase that we’ll be setting the long‑term objectives, to calibrate our efforts in a way that’s commensurate with risk and priorities.
Currently, promoting the program is almost as important an issue as ensuring compliance. In the future, we’ll be more concerned about compliance.
The Chair: Thank you.
[English]
Senator Martin: Thank you to all of the representatives presenting today. I want to associate myself with the remarks made by Senator Boehm regarding the care with which we need to look at the international students, who really are Canadians at heart. They love Canada, and it’s important to look long term in regard to what we will do for these students.
My question goes back to CERB and CEWS and how we want employers to be able to bring their employees back to work. We have heard from various employers how challenging it has been to attract employees back to work and that it’s been a slow process. We want this to happen in order for Canadians to get back to work and our economy to return to some normalcy.
You talked about having a team that’s looking ahead and looking post-COVID-19. What are you doing to encourage Canadians to get back to work, to move from the CERB to the CEWS, as employers are finding this very challenging?
Mr. Vermaeten: Thank you for that question. It’s certainly one that we think about a lot, and not just at the CRA but across the various departments that are looking at this: Department of Finance and Employment and Social Development.
As you pointed out, the intent is [Technical difficulties] the wage subsidy, to get people back to work. We have heard the same thing, that there are pockets or instances where employers are having challenges finding employees. Writ large for the economy, we’re not seeing a lot of labour shortages at this point. There are many people who are still looking for work, so it tends to be the exception rather than the general rule that employers are having a challenge.
With respect to the CERB, it is a temporary measure. We’re in the third period right now, and individuals are eligible for a maximum of four periods. It’s our hope and assessment that the vast majority of people, when they are given an opportunity to return to work, are going to return for the sake of having permanent employment, especially at a time when, presumably, the economy will be going through a rough stretch as we move out of COVID, and the ability to get long-term employment is going to be pretty enticing for the vast majority of people.
I think it will be more the exception than the rule that people will give up long-term employment for the sake of receiving the CERB just a little bit longer. It is, on the one hand, certainly a lot of money — $2,000 — especially when you multiply it by all the people who have it. On the other hand, it does work out to only $500 a week, which would be quite a bit less than the minimum wage. So I think in the majority of cases, you’re going to have Canadians who are looking forward to returning to work and will accept that work.
The Chair: To the Canada Revenue Agency witnesses, thank you for sharing your comments with us and answering our questions. We will certainly wait to get some of the answers in writing that you will be sending. I have seen, in what you have presented and in the questions that were asked, that we have a common denominator. I call that common denominator TAP-R. It is the abbreviation for transparency, accountability, predictability and reliability.
Before we go to the second panel with the same witnesses, I advise that we might call you back later in order to complete our report to be tabled in the Senate of Canada. On this, we continue our study on certain elements of Bill C-13, on the provisions and operations of Bill C-14, and on the government’s response to the COVID-19 pandemic and its economic consequences.
Honourable senators, to the participants and Canadians coast to coast to coast, we are still with the officials from Canada Revenue Agency.
Senator Marshall: I have been thinking about some of the answers to the questions in the previous session. There were two questions there. One was from Senator Richards about the overall impact of COVID-19 on your revenues. There was one from Senator Klyne; he was asking for the financial impact of extending the deadline to file income tax returns and to pay income taxes. You didn’t provide the dollar amounts. Is it because you don’t have them, or do you have them but are not releasing them publicly?
Mr. Gallivan: I think those were both my answers. It’s the case that we just don’t have a precise figure for those.
Senator Marshall: Do you have any number at all?
Mr. Gallivan: In making the decision on the payment deadline, there would have been analysis, so there might be a number. As I tried to explain in my answer, the prediction around the revenue drop will definitely be more art than science. In that case, we just don’t have a number. On the other one, the deadline, we can endeavour to find a number if one was used in making the decision.
Senator Marshall: I think the Parliamentary Budget Officer came up with an answer to Senator Klyne’s question. Has the Department of Finance been asking you for that number? I have been looking for some financial information from them but I have been unsuccessful. Have they been looking for that number from you?
Mr. Gallivan: I want to make sure we are clear. There are two different numbers. One is what might be the impact on the in-year revenue in 2020 because of COVID-19. The second one has to do with the fiscal impact of delaying the filing deadline.
Senator Marshall: Right.
Mr. Gallivan: I feel we may have greater luck finding hard data around postponing the deadline.
Senator Marshall: But the question is: Has the Department of Finance requested that information from you?
Mr. Gallivan: On the first one, the answer is no. As I tried to allude in my answer, it would be very difficult at this point to make an estimate given that the duration of the pandemic is not yet known and given the significant complexity around loss carryforwards, corporate structures, et cetera. I’m not sure whether it’s a lack of interest or if they just haven’t turned their minds to that and we are not at a point where we can come up with a hard estimate yet.
Senator Marshall: Thank you. Have you done any work on the underground economy lately and how that dovetails into the programs now offered under COVID-19?
Mr. Gallivan: Yes. There has been strategic planning around how the self-interest of bringing people onto a payroll to qualify for the wage subsidy may be at odds with past history when there might have been self-interest to pay people. We haven’t yet developed those plans or implemented them, but that’s a live issue right now. From a compliance perspective, people may be telling a different story in qualifying for these programs than they would have previously. We don’t think the time to pounce, per se, is right now but we are doing that analysis.
Senator Marshall: Thank you. I had asked earlier about the program for students. Have the benefits started to go out? My understanding from the answer I got was that it’s open for applications but no benefits have been mailed out yet. Is that correct?
Mr. Vermaeten: The application process opened on Friday. For those on direct deposit, they received those amounts two business days after. Had we opened the application process on Wednesday, they would have received the money Friday. But we opened it on Friday and there was a long weekend, so that means people will see the amounts in their bank accounts, if they have direct deposit, on Wednesday morning.
Senator Marshall: This question is specific to the Canada Child Benefit. I think it’s a program of the Department of Finance, but I think you mail out the cheques. There are additional benefits being given now under COVID-19. If an individual or parent did not qualify last year but now they have been laid off, do they have an opportunity to qualify this year for those benefits? Or are they out of luck because they didn’t qualify last year?
Mr. Vermaeten: Canada Child Benefit payments were made with respect to the 2019-20 entitlement year. That is based on the 2018 taxation information that we have on file. To the extent that an individual’s income was lowered in 2019, that would not result in making them eligible for the Canada Child Benefit because we were looking at the 2018 taxation year.
Senator Marshall: That seems a bit unfair in that these people now have no source of income and they are not eligible for that benefit.
The Chair: Mr. Vermaeten, please provide an answer in writing for Senator Marshall’s last question.
Mr. Vermaeten: Certainly.
[Translation]
Senator Forest: I’d like to come back to a very relevant program, the Canada emergency wage subsidy. I’ve received a lot of comments on this. It’s program that applies in different proportions, since gross revenues must have decreased by 15 per cent in March and by 30 per cent in April and May.
Here’s my question. Many businesses can’t qualify for this assistance program if their revenues haven’t dropped by 30 per cent. Why was no thought given to introducing a proportional program, as in the case of several other government programs? For example, if in April a business had suffered a 20 per cent loss of revenue instead of 30 per cent, it could have received two-thirds of the amount under this assistance program.
Currently, a lot of small and medium-sized enterprises are facing different problems, depending on the market and because of shocks in the production chain. These businesses will qualify for the program and will manage to survive because of this lifeline, but if a business suffers losses of 29 per cent of its revenues for April and May—which is extremely damaging in terms of supply chains because of personnel problems—it won’t be eligible for this subsidy. It seems to me this is a form of inequity.
Why not implement a more progressive program, in line with the proportion of loss of gross revenues?
Mr. Gallivan: I’d say that one of the roles of the agency is to provide feedback to the Minister of Finance. As far as the program is concerned, we know that the Minister of Finance changed the method of calculation to make the qualification criteria more flexible. We know that they also refined the eligibility criteria last week to allow more businesses to qualify. I can’t comment or read the Minister of Finance’s mind, but I know that this feedback has been brought to his attention and was duly received by the minister. As well, we have seen some changes to address these types of comments in the past.
Senator Forest: We’re well aware today that, if a business doesn’t qualify, it’s all or nothing; even with the flexibilities that will make it possible for more businesses to be eligible, the fact remains that, if the 30 per cent threshold for April and May isn’t reached, that is, if a business suffers revenue losses of 29 per cent, it doesn’t qualify. However, at 30 per cent, that’s the jackpot.
Mr. Gallivan: The scenario where some businesses have a revenue cycle that puts them at a disadvantage is well-known and has been examined. I can’t read the Minister of Finance’s mind, but it’s a known scenario, and this feedback has been shared by the stakeholders.
Senator Forest: With the emergency response benefit, we know that currently, in terms of the $2,000 amount, recipients are often people in a precarious financial situation. There are no deductions at source. I congratulate you very much for your effectiveness and efficiency, but how will the agency follow up with these people so that they realize that they’ll have to file an income tax return at the end of 2020, and that they’ll have received income that may be significant without any deductions at source? Are these people aware of this?
Mr. Gallivan: I’ll start by saying that yes, an awareness program is being considered, as my colleague mentioned. For people who have taken advantage of the duplicate program, there are many who want to repay the amount immediately. We know that many citizens find themselves in a credit position every year, for an average of $1,800, and so there is already a cushion to protect them. When we were discussing our collection programs, we talked about the possibility of repaying payments over a longer period. Our agency is working to make people aware well before December so that they don’t have any nasty surprises in April.
Senator Forest: Thank you to the witnesses.
The Chair: Thank you, Mr. Gallivan.
[English]
Senator Richards: Thank you again, witnesses, for being here. In terms of the Canada Emergency Wage Subsidy, there seems to be a bit of a discrepancy in what is paid out so far, retroactive to March, and what was said was going to be paid out. I think $1.7 billion a month had been paid out, and there was an approximation of $12 billion per month that would be paid out.
If that’s true, can you tell me why this discrepancy is so huge and what might happen to those billions of dollars in the future?
Mr. Vermaeten: Thank you for that question. It is extremely difficult to estimate the take-up rate of these measures, certainly in an evolving situation. I know for myself that when this situation started in early March, I was very much hoping we would have a normal and successful filing season, that it would meet all the metrics and that we would be able to say this was our best filing season whatever. Then came along COVID-19, and the government responded very quickly and put in place these measures, and continues to put in place these measures to deal with the evolving situation.
The fact that take-up of these measures was higher than expected — and indeed so far, from the CRA side alone, approximately $20 billion in payments for CERB — is no surprise, given the financial situation turned out to be much worse for Canadians than people had anticipated. So the program is there, and it’s there to respond to the needs of Canadians.
Senator Richards: You are saying that the Canada Emergency Wage Subsidy is paying out more than they originally thought it would be, or less? Because I have heard that it was much less. That was my question, sir.
Mr. Vermaeten: I’m sorry; I misheard. I thought you were taking about the CERB. With respect to the wage subsidy, when the CRA was preparing for the launch of this program, we looked at the maximum number that may apply and made sure our systems were ready.
For example, when we launched the CERB, we anticipated that in the first week we should be ready for 4 million applications and make sure our systems can handle that volume. We prepared for 4 million applications for that first week and made sure we had everything in place for that. We received about 2.5 million applications in that first week.
In terms of the wage subsidy, we looked at the total number of small and large employers. We looked at that universe and determined that we should prepare ourselves for receiving up to 1 million applications. We wanted to put those systems in place to make sure that, when people go into their My Business Account or they phone us or they use the IVR, the Interactive Voice Response, the system can manage that. The number we went on, 1 million, was based on system requirements to make sure we’re there. The take-up has been considerably lower than that, but it continues.
A lot of work is going on in terms of determining what more can be done to support employers to make sure they are able to apply. We continue to do that. We continue to put more tools on the website, for example, such as the wage calculator and additional Q and As. Of course, the Department of Finance has been looking at eligibility. If you combine those factors, we are seeing a continual uptake in the program, and you are absolutely right that the numbers are lower than the 1 million we prepared for, and we continue to monitor that.
Senator Richards: Thank you.
Senator Harder: Thank you, officials. I would like to follow up on the answer that I believe, Mr. Vermaeten, you gave to Senator Galvez’s question on tax fairness.
You referenced the cases before the Tax Court of Canada. If my memory is correct, you indicated there were over 3,000 cases that CRA has brought to the Tax Court. My recollection is that the Tax Court has become somewhat of a bottleneck in overall tax system fairness because of the slowness of the court and the capacity of the court to deal with the volume before it. If that is the case, do you expect any impact to further deteriorate that overall systemic robustness that is necessary as a result of the cases that might come forward in response to the COVID measures?
Mr. Gallivan: Thank you for the question. Narrowing it to the COVID measures, our view is to provide whatever assurance we need to, as quickly as possible, and not linger on. I think there is a hope shortly after payment to get into these programs to see how much risk there is and then develop the best way to address it. Our hope is that it wouldn’t have a systemic, long-term impact on those court cases.
We are also doing a lot to try to mitigate. At audit, we’re trying to bake in the quality by working with Justice lawyers right at the beginning and assuming we are headed toward court right from the outset to see if we can mitigate it. I think we are mindful that we have a responsibility as well to try to reduce that pressure.
But if you look at it as a response to a more hawkish CRA that is going to go after loophole exploiting, to some extent, we don’t want to relieve that pressure because we do need to bring these cases to the court and let the judiciary decide what is and what isn’t a loophole under Canadian law.
Senator Harder: Thank you, Mr. Gallivan. I have a quick follow-up question. Would CRA be concerned about the capacity of the tax court given its existing size and deliberation schedule in terms of bringing greater efficiency to the measures of compliance that you are bringing forward?
Mr. Gallivan: I would say two things. First, I mentioned 3,000 files around aggressive tax planning and multinationals. There are an additional 8,000 cases of small- to medium-sized enterprises and individual taxpayers. I think we have to make sure that ratio is correct.
Within my responsibility in audit, for example, I think we are trying to look at some of the 8,000 files that maybe are in the small- and medium-sized enterprise case and determine whether we really need to litigate all of these and if the compliance message has been sent or not.
I do think there can be an effect with volume around settlement. Even though settlement is rational from the perspective of the bench and the Department of Justice — it’s common in many aspects of law — when you look at the deterrent value of our actions, certainly a settlement, even though efficient and reasonable, does erode that deterrent impact of the CRA compliance effort. I think that’s the concern. If there is too much pressure to settle and resolve things for efficiency purposes, we might lose some of the effectiveness impact of the compliance bill.
Senator Harder: Thank you.
[Translation]
Senator Dagenais: My questions are for all our witnesses.
Could you give us a picture of the situation, by province or by region, so that we can assess which ones have benefited the most from the government’s programs?
[English]
Mr. Vermaeten: Thank you for the question. That is certainly available. As a matter of fact, we are making a lot of that information publicly available on a regular basis, and we can provide that to the committee.
[Translation]
Senator Dagenais: Would you be able to give us an idea of how much it will cost the Canada Revenue Agency to manage all these programs?
[English]
Mr. Vermaeten: I certainly don’t have a clear sense of how much this is going to cost to manage. Let me just make a couple of remarks.
On the one hand, it’s a lot of money. On the other hand, if you calculate generally what we spend administratively on administering large programs like that, as a percentage, it’s extremely small. That is one of the benefits of being highly automated and having the economies of scale. When we are dealing with millions of clients, the actual per-transaction cost does become extremely small.
Second, we have managed to contain the costs in part because what we’ve found is throughout the COVID period, we haven’t been able to continue all of our regular activities. As a result of that, we were able to utilize people who were currently unable to work doing their regular business. For example, auditors and collectors, who at this point had to stand down, were able to help us with the call centres, for which we would ordinarily have had to hire additional people. In this case, we didn’t need to do that.
So we are trying to do it the absolute most efficient way. It will take us a while to get the costing of all these programs as they evolve.
[Translation]
Senator Dagenais: Thank you.
[English]
Senator Smith: Thank you. I was looking at the utilization of resources within CRA, as you folks have made a great adjustment to mobilize yourselves to handle the various changes, hiccups and challenges you faced in implementing the program for monitoring the COVID-19 pandemic. It also appears that you have moved some of your staff outside into more remote locations because of the problem with physical distancing.
Is this going to become a more permanent reality of the new world that we are going to be faced with? How does that affect your efficiency and your resource planning? I know it’s more of a general question, but can you give us an overall look at where you could be moving in the next period of time that will affect the mid- to long-term operations of CRA?
Mr. Vermaeten: Thank you for that question. That is an issue we think about on a daily basis. We are planning for the future and thinking about what the long-term impacts of COVID will be and how that will change how we work.
What we have found is that we are able to deliver many of our services quite efficiently remotely. For example, we can answer calls remotely. Much of the IT work can be done remotely. That took us a while in terms of getting people to be able to have that connectivity and capacity in an efficient way.
Now that we are there, we are seeing some of those benefits. We are certainly seeing that a significant share of our workers are actually very happy with the arrangement in that they like lower travel time and they feel they can be more efficient at their jobs. When we look at what percentage of our workforce is currently working, roughly two thirds are working remotely. We have been able to adapt. Now we are thinking about what the long-term impacts will be.
I don’t think we are different than any other employer thinking about the right mix: How many people can be working remotely and how many can be working on site? I think we still have a lot of work to do on that front, but I think that long term, we are going to have a larger share of employees working remotely. Indeed, there were a significant number who already were, but I think you will see an increase.
Senator Smith: What about service levels in terms of human interaction and the interpersonal element of service levels? Do you feel that your staff is being properly trained to deal with people in a fair and honest way? It is like you’re not guilty until proven innocent. I’m reversing it out. Some people have said it is tough not only to get contact but to get the type of human interaction needed to address their issues.
Mr. Vermaeten: Yes, that’s a fair question.
With respect to the training, we’re doing our best in this situation. If I go back to the call centres, we had 120 people working remotely prior to this. We went through quite a bit of evaluation of that. We were measuring efficiency and we were using our call recording to make sure that the quality of service was right. It was not only the quality of service but also the interactions of the staff with their managers. We have evaluated that carefully. Then along came COVID. For what we did in six months to bring on 120 people, we had 3,500 people working remotely on the call centres within several weeks.
Are we providing good service right now and human services? I think overall we are. Are we perfect? Are there things falling through the cracks at times? Certainly. But I think overall it is working well. There is a lot of communication both with our clients and our individual workers with their managers. I think overall it’s going well.
Senator Smith: Thank you.
Senator Galvez: Thank you for all the important information you are providing.
I am concerned about the different ways that ordinary Canadians are treated in comparison to corporations when it comes to verification of revenue. The Office of the Auditor General, in its 2018 report on the Canada Revenue Agency, found that the agency had given preferential treatment to rich individuals and corporations as compared to ordinary Canadians. The report said:
For other taxpayers, such as those with offshore transactions, we found that the time frame to provide information was sometimes extended for months or even years.
You mentioned that there are 3,000 cases for corporations in front of the courts versus 8,000 cases for individuals. I would like to know what the problem is. Is there different treatment or is there a problem with the court?
Last fall, the Saskatoon-based uranium producer Cameco won against the Canada Revenue Agency in its last round at the Tax Court of Canada. It avoided over $2 billion in taxes by shifting profits to a subsidiary in Switzerland where it had only one employee.
These are preoccupying things. If we think the work of the CRA is to send it to the courts, and then the courts are letting things go, I would like an explanation for this discrepancy.
The second point is regarding communication, data matching and data sharing between CRA, Department of Finance and EDC — the account from which the corporations get the money. Can you comment on the fact that on May 7 Minister Lebouthillier said abuses of the CEWS program will have a sanction of 220% if there is fraud? Why is there not a clawback provision on the other programs administered by EDC or BDC?
Mr. Gallivan: I’ll take that question on compliance.
On the OAG report, I think what you have to realize is that the longer the auditor spends on your premises collecting information and the more information we can obtain, the worse it is, because we’re trying to build a case to reassess you and send you a tax bill. The fact that we were giving more time to sophisticated taxpayers was because we really wanted that information or to document that we didn’t get it before court. It was in no way lenient. It was instead us trying to get ready for court on these contentious issues and to get as much evidence as possible. That’s the driver for the extension. It is because we wanted to bill them for more.
The second point is that you’re right: When you see 3,000 versus 8,000, you think the CRA must be really cracking down on regular taxpayers. Except we have 1,200 multinationals and 2 million small- and medium-sized enterprises. So 3,000 pieces of litigation on affluent taxpayers and multinationals as a ratio versus 8,000 court cases for 2 million would show that we’re dramatically focused on wealthier taxpayers, more sophisticated taxpayers and multinationals. So you are right, 3,000 to 8,000 looks like we’re focused on the small guy, but when you realize there’s a 1000:1 ratio in the population, it’s not the same story at all.
In terms of Cameco, that’s exactly the point I was trying to illustrate about the strategic importance of the court cases. A matter like that goes through the courts. The CRA has an obligation to pick the right fights and to have the right evidence and to work with colleagues and justice to put the best case forward. The judges have an obligation to interpret the legislation as they understand it. Then all stakeholders, whether it’s the government, the Department of Finance or parliamentarians, have to look at that result and decide if that is a space in the legislation that needs to be closed. If the courts don’t think it is offside, then the alternative is a legislative tightening and removing that loophole.
You referenced the minister’s remarks with respect to the wage subsidy. I have responsibility for criminal investigations, and a number of significant issues in both programs have come to our attention. I think we were more explicit about the wage subsidy because it is being administered directly and properly by the CRA, so we are clear that it is ours to lead with.
With respect to the wage subsidy, as with the CERB, for example, and some of those potential criminal matters, it is still not clear whether we have or need the authority or need to pass it on. I assure you they will be addressed. It’s a little less clear who will address it, and under whose authority, but that’s a top‑of‑line question to resolve. Both matters will be taken seriously. Thank you.
Senator Galvez: Thank you very much.
Senator M. Deacon: As we listen this afternoon, one of the things that’s becoming clearer and clearer is that your teams of over 3,000 people have had to respond to significant and huge organizational disruption while, at the same time, rewriting your path of how you’re going to lead every day and moving into the future. I continue to be very impressed and somewhat in awe of that, given the size and scope of the people working with and for you.
I would like to come back to a question that Senator Boehm asked earlier — and perhaps Senator Harder — around our international students and the Canada Emergency Student Benefit.
You’re collecting data and you’re going to get back to us, and I believe the number mentioned earlier was that you have had 30,000 applications come your way so far for this need. When you report back, I would love to have a sense of the percentage that are applying that are international students that are ponying up and putting in their application in support. It’s a bit of a mystery. They are huge supporters of our economy, but we are not sure who is here and who is tapping into what service. Could you add the relationship of the number of international students to the information that you’re going to put together for us?
My question related to the Canada Emergency Student Benefit comes around the aspect and the continued conversation that students need to prove that they’ve looked for employment to qualify for the CESB. It’s also my understanding that they will be awarded the money if they attest and respond in the appropriate way that they meet the qualifications. Then they have to prove that they’re looking for work retroactively. What would be needed to prove that they have looked for work? What is it that your team is looking for in the way of application, job search and proof? How can they prove they have tried to exhaust all possibilities to be working, which is ultimately what they wish to be doing?
Mr. Vermaeten: Thank you for your comments about the work we’re doing here with the CRA. It certainly has been a challenge and there was a stretch of about 60 days where we worked 12 to 14 hours every day. It was certainly a challenge, so I appreciate the comments you made on that.
With respect to the Canada Emergency Student Benefit, as of the end of yesterday we’d had just over 328,000 applications, so a little bit more than you had alluded to. I’ll have to verify whether we, in fact, have that data in terms of international students who may have tried to apply because they may simply not get accepted in the system, so I’ll have to check on that.
With respect to whether Canadians and students are making enough effort to look for work, what they need to do and what we can verify is that they’ve registered themselves with the Job Bank, which can demonstrate that they’re looking for work. They get job alerts and then we and ESDC will have the ability to ask them for proof such as whether they actually followed up with those employers.
Are we going to be doing that for all employees? Certainly not, as that’s not realistic, but we will certainly be using our auditing approaches and identifying which individuals will be considered high risk and will be verifying with them, just like we verify virtually everything we do within the CRA.
Senator M. Deacon: Thank you.
Senator Klyne: Thank you again to our panel.
How will the CRA verify recipients’ eligibility when some will have difficulty demonstrating a comparative loss of income due to COVID-19? I’m thinking about First Nations status people who live, work and are paid on reserve; international students who are marooned here; and the homeless or upward mobile.
Mr. Gallivan: If you were talking about 30% in the wage subsidy, that’s the employer who’s claiming it on behalf of the employees.
Senator Klyne: No, I’m thinking about CERB.
Mr. Gallivan: So I’ll pass that to my colleague Frank around the CERB and the criteria, but the 30% is for the wage subsidy.
Mr. Vermaeten: In order to qualify for the CERB you need to have earned a certain amount of income. It’s $5,000 in 2019 or in the six months prior to that. We’ll have that on record in terms of their employment income prior to that. I think we can verify, in fact, that they did meet that $5,000 threshold in most cases. And then, if we don’t have any other evidence that suggests they made income during that period — for example, a First Nations individual — they’re going to be eligible for the CERB and we have no reason to undertake any kind of compliance action unless we have some direct evidence to suggest they made income during that period.
Senator Klyne: There are some people who are partially on income assistance, but not always. They’re perhaps nomadic or even gig workers who are doing things that have — well, they probably would be filing income tax, though.
Let’s leave it, then, at the question more focused on treaty status, living on reserve, working on reserve and getting paid on reserve.
Geoff Trueman, Assistant Commissioner, Canada Revenue Agency: The earnings on reserve and any employment income would and could qualify as part of the CERB. The CERB would be treated in the same manner as that income earned on reserve, so that is applicable.
We’ve been adding to our frequently asked questions on our website and are addressing that issue of Indigenous Canadians and the income they’ve earned.
The Chair: Thank you.
Senator Boehm: My questions have been asked. I’m waiting for responses, and they will come, I am sure. I want to thank our witnesses for joining us and I would like to donate the remainder of my time to Senators Pate and Lankin, who have joined us today.
Senator Duncan: Good afternoon and thank you again to our witnesses and to my colleagues for their questions.
I’d like to advise the Finance Committee that I will be forwarding to the clerk written submissions for tabling with regard to air transportation in the North. These written submissions are messages from Air North and include reference to the programs that the witnesses have discussed today: the wage subsidy, as well as the northern air carriers subsidy and how it has impacted upon them and their use, so I draw that to your attention.
I would also like to close with a question. Earlier this afternoon, in response to other discussions, one of our witnesses — and, I’m sorry, I didn’t note precisely whom — referred to a subject as a “live issue.” I’m wondering if the presenters could advise whether a basic income guarantee is considered a live issue by CRA. Thank you very much.
Mr. Vermaeten: The issue of basic income would be a policy issue that is looked at by the Department of Finance or Employment and Social Development Canada. Those would be the two departments that would look at that. We certainly could be involved in the delivery of something like that, but with respect to the actual policy development, that would be done outside of the CRA.
Senator Duncan: I appreciate that you’re deferring to your colleagues in Finance and Social Development, however, I also recall today that we discussed a mountain of information that is being collected as you deliver these programs to Canadians and students — the CERB and the employment subsidy. There’s a great deal of information. Is there not a funnel by which that information can be forwarded in the development of a policy on a guaranteed basic income?
Mr. Vermaeten: Certainly, we are collecting a lot of information in terms of who is applying for the CERB, the student benefit, and even the wage subsidy and that connection to the CERB and the CESB. Detailed information is being collected on demographics, for example, by region, and who’s using this. Clearly a lot of people are using the CERB. That information is being shared with ESDC on a regular basis, and the same thing with the Department of Finance. So certainly that would be available to study a guaranteed annual income if that’s what they choose to do.
Senator Duncan: Thank you.
Senator Loffreda: Thank you once again to the panel from the Canada Revenue Agency for being here.
What is your current assessment of Canadians that will be late in filing? It is already May 19 and many economies are still in lockdown. Many are virtually challenged even on a technological basis. It’s still unsafe to see many of our seniors. It is still unsafe for them to see their accountants. Will there be a rush toward our advisers and accountants to file on time?
What would be the financial or the economic impact if we extend the deadline by one month, allowing Canadians the month of June to meet their accountants, allowing our seniors to meet their advisers, meet their accountants and get back safely so our economies can reopen safely? Would that be a huge economic impact and would it be something you can consider and that we could recommend, especially if the impact is not major, for the safety of all Canadians?
Mr. Gallivan: Talking directly to CPA Canada and other stakeholders, they’ve given us a firsthand impact. One point for the committee to appreciate, Mr. Chair, is that in extending the payment deadline to September 1, we removed any consequence from filing past June 1. So, really, the June 1 deadline is really more from a moral suasion perspective to encourage people to get their returns in because many people qualify for benefits, whether federal or provincial. There are a number of programs that are income-tested and driven off that return, so it is in many taxpayers’ best interests to endeavour to get that return in by the June 1 deadline. When the CPAs talk to us — and perhaps the CRA can clarify — there is no negative consequence, no penalty, no interest and no flag in your dossier as long as you get it in by September 1, which would relieve the stress and anxiety that would force people to risk their health.
But we still want the return in by June 1 because it will be in their best interests and help them qualify for benefits. That’s where some of the thinking is now. As I alluded to in an earlier response, the agency hasn’t yet landed on that thinking, but those are some of the considerations that are under way now and that’s the thinking being debated right now.
Mr. Vermaeten: We are cognizant that individuals are having challenges to meet the June 1 deadline. Both the CRA and the ESDC have taken action to protect the benefits that people receive. For the CRA, the minister just announced a couple of days ago that GST credit payments and CCB payments will continue right up to the end of September based on their 2018 tax return in the cases where they haven’t filed.
As Ted said, we really encourage people to file because we’d like to pay out benefits based on the latest income information [Technical difficulties] so that they get the right amount as soon as possible. There are certainly provisions in place.
They have until September 1 to pay, so there is some time on that front, and if they don’t file, that’s okay too because there are no penalties or interest, but it’s definitely ideal if people can file. We’re trying to make that as easy as possible on a number of fronts, especially the work being done on the Community Volunteer Income Tax Program to help low-income people file their taxes.
Senator Loffreda: I’m glad. Congratulations and thank you for all the work you’ve been doing. I’m glad to see there is flexibility. The collection policy and procedures have changed and we all have changed and there will be a new normal.
I’m glad to hear that the impact, health and morale of your employees haven’t changed despite the COVID-19 challenges and the Canada Revenue Agency challenges going forward. Maybe you can elaborate if we have time. The morale of your employees is still high and they will be able to meet all the challenges going forward, because they will be enormous, as we know. Thank you for all that you do, and I’m glad to see there is some flexibility on that June 1 deadline, so our professionals can breathe a little easier once they do know that.
Senator Lankin: Thank you very much. I echo the comments of my colleagues who have expressed appreciation for the incredible way in which your department has responded and has stepped up to a huge challenge. I won’t go on, but I wanted to echo those comments that all Canadians are appreciative of what we have seen unfold.
I want to thank Senator Boehm and Senator Gagné. I’ve never been given so much extra time, so I won’t waste it on introduction. I have three questions about the machinery of operations of how you have proceeded with the benefit programs as they exist and as they have been adapted over time. I have a lot of policy questions, but I understand that’s not appropriate for CRA.
My first question is with respect to CERB. As we have seen, there have been opportunities over the course of government understanding that certain people were falling through the cracks to correct that situation. We supportively refer to them as patches being put on, and we appreciate the agility that we have seen.
Was the application of these patches a difficult thing for CRA to implement or was it a matter of new criteria and just testing the applications against the new criteria?
Mr. Vermaeten: I’d be happy to answer that question. For the most part it was a relatively straightforward process. As the policy evolved, there was generally a broadening of eligibility; for example, would individuals who had exhausted their EI be eligible for the CERB? There were some discussions early on, and the eligibility was broadened to allow for those individuals.
The type of system changes that were required to broaden that eligibility were relatively minor. It was in some cases changing the attestation and the rules of the attestation. It involved changing the portal and the display there, and the same thing to put in place the IVR automated phone system.
In other cases it was a matter of providing that information on our website when people went to the Q and A section to ask if they were eligible. There is other work associated with that; for example, call agents need to be trained to know those people are now eligible and they need to be able to answer those questions intelligently. Was it a tremendous amount of work? No, I think we were fairly nimble in that sense.
Senator Lankin: Okay, thank you. The top-up programs for seniors in receipt of OAS or GIS or for Canadians in receipt of the Canada child benefit would appear to be a straightforward thing. There is no application. If they are eligible for those programs, they receive the COVID-19 top up.
I have been hearing from people with disabilities, many of whom are in receipt of CPP disability payments. If the government chose, from a policy perspective, to apply such a supplemental amount as they have for seniors or for the Canada child benefit, would it be a difficult thing to do administratively to provide people who are currently eligible for CPP disability to receive a COVID benefit top-up?
Mr. Vermaeten: Thank you for that question. While a top-up like the CCB, GSTC or OAS/GIS seems simple, it’s actually quite challenging. These are [Technical difficulties] and they’re complex in terms of making those changes in short time frames, testing that and sending those payments out. So while it does sound simple, it is, in fact, quite challenging, and there is always a risk of mistakes when you do that.
With respect to the CPP Disability Benefit, I don’t think in that sense it’s unique compared to the OAS/GIS or CCB top-ups. It is very similar in process, but you are dealing with large systems and trying to make sure you are getting the right population to get those amounts. Is it only the person who is getting the CPP Disability Benefit, or it is some other people who may also think they are entitled to it? The policy part does become more complex, and again, that’s an area for ESDC.
The Chair: Thank you.
Senator Pate: I also echo my colleagues’ comments. Thank you for all the work you have been doing. It’s a tremendous shout-out to Canada that we have been able to respond so quickly and efficiently for so many people. I want to also thank my colleagues for sharing their time as well.
Many of my questions have been answered, but one stems from one that Senator Lankin and Senator Duncan asked: In addition to the gaps you have already identified and have tried to patch or address, what other vulnerable groups are you anticipating you will hear from? Senator Lankin mentioned some of the disability groups. I’m wondering about other groups you’re anticipating you’ll hear from.
I’m a bit confused, because at one point it sounded like you found it easy to nimbly add on groups, but then the response to the suggestion of adding something to the disability group would be more difficult. If you are able to answer that, I have a follow‑up question. Thank you.
Mr. Vermaeten: Let me start out with the second part of your question, which I can answer. With respect to broadening eligibility, I was referring to the CERB. We had a basic model in place that we developed. The IT systems were in place. Over time, that policy did evolve with respect to adding things like people who had exhausted their EI benefits and fishing benefits, and a number of modifications were made in that respect. We were able to be quite nimble in responding to that. It didn’t require significant system changes, but certainly it required a range or, as I said, the call centres had to be informed of that.
With respect to something like the OAS/GIS top-up being done by ESDC, while it is, on the one hand, relatively simple, it’s a significant amount of work when you are dealing with large systems — often legacy systems — and large numbers of clients to get that payment in place, to test those systems and make sure you get the right amounts. Of course, there is always supporting work that comes with that. You need to have phone agents in place for those people who don’t feel they got the right amount or have had a change of address or want to change their direct deposit information. You need to have supporting systems in place. Conceptually, the policy itself is relatively straightforward, but it is actually quite a bit of work.
I don’t really have any insight into what other areas are being looked at in terms of support for some of the other measures.
Senator Pate: Thank you for that. Some of the groups that we are hearing from include those who still didn’t make enough, didn’t qualify or may have children at home and so have reasons they cannot return to work in terms of child care or education options for those children. We’re amassing that. Would that be helpful information for you to have in terms of the vulnerable groups that are still not being served or is that something we should reserve for the policy-makers?
Mr. Vermaeten: It would be best to reserve that for the policy-makers.
Senator Pate: Thank you. Finally, in some of the discussion of the benefit that is going out to seniors through the GIS and the OAS top-up, there has been some concern raised that it may result in some seniors receiving less next year because of the impact it will have on their income. Have you examined how many that might be? We are talking about individuals who have significant need. If they’re spending this money and then it’s potentially clawed back next year, it could have a fairly devastating impact for those seniors.
Mr. Vermaeten: I’m sorry, I can’t answer that question. The OAS/GIS is being delivered by ESDC and Service Canada, so I think they’d be best placed to answer that question.
Senator Pate: Thank you.
The Chair: That brings this meeting to a close. On behalf of the Finance Committee, to our witnesses from Canada Revenue Agency, thank you for your professionalism in answering our questions. There might be a time when we will ask you to come back.
Honourable senators, our next meeting will be on May 26 at 2:30 p.m. EST.
To all senators, participants and viewers and listeners across Canada, thank you. We will see you on May 26.
(The committee continued in camera.)