Statement outlining results, risks and significant changes in operations, personnel and program

Introduction

This quarterly financial report has been prepared by management as required by section 65.1 of the Financial Administration Act in the form and manner prescribed by the Treasury Board. This report should be read in conjunction with the Main Estimates.

Further details on the Canada Revenue Agency’s (CRA) program activities can be found in the Departmental Plan.

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the CRA's spending authorities granted by Parliament and those used by the CRA consistent with the Main Estimates for the 2024-2025 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before moneys can be spent by the government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation of statutory spending authority for specific purposes.

The CRA uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

This quarterly report has not been subject to an external audit or review.

Highlights of the fiscal year-to-date (YTD) results

Figure 1 below reflects the CRA's annual net authorities available for use, as well as the CRA’s YTD expenditures as at September 30, 2024.

The YTD spending as of Quarter 2 (Q2), in relation to the annual authorities, is approximately 50% in both years, illustrating that spending is trending as expected and no unusual year-over-year (YOY) variances have been noted.

The CRA’s annual net authorities and YTD expenditures have increased primarily due to the Canada Carbon Rebate (CCR). Further analysis of authorities and expenditures is presented below.

Year-over-year (YOY) analysis of authorities

Summarized Statement of Authorities (unaudited)

Budgetary Statutory Authorities- Summarized Statement of Authorities (unaudited)

Total available for use for the year ending March 31, 2025	Total available for use for the year ending March 31, 2024	Variance in budgetary authorities
$12,926M	$10,360M	$2,566M

The increase in Budgetary Statutory Authorities is mostly related to an adjustment in the estimate from the Department of Finance of fuel charge proceeds to be returned to the province or territory of origin, primarily through the CCR, $2,573M. This adjustment is largely due to revised emission estimates and the addition of New Brunswick to the federal pollution pricing framework.

Gross Vote 1 – Operating Authorities - Summarized Statement of Authorities (unaudited)

Total available for use for the year ending March 31, 2025	Total available for use for the year ending March 31, 2024	Variance in budgetary authorities
$5,565M	$5,713M	Negative ($148M)

The decrease in Gross Vote 1 Operating Authorities is primarily related to the following:

• Increase in authorities related to the signing of the latest collective agreements, $346M
• Decrease in authorities available for use from the prior fiscal year ($362M)
• Decrease in authorities related to Budget 2022 measures, primarily related to contact centre post-pandemic sustainability ($69M)
• Decrease in authorities due to the Refocusing Government Spending (RGS) reductions announced in Budget 2023 ($58M), offset by increases related to Budget 2023 for the expansion of the CCR to new provinces and Automatic Advance Payments of the Canada Workers Benefit, due to timing of receipt in the prior year, $15M

Vote 5 – Capital Authorities - Summarized Statement of Authorities (unaudited)

Total available for use for the year ending March 31, 2025	Total available for use for the year ending March 31, 2024	Variance in budgetary authorities
$143M	$158M	Negative ($14M)

The decrease in Vote 5 Capital Authorities is primarily related to the following:

• Increase in authorities available for use from the prior year, $16M
• Decrease in capital authorities due to a decrease in the vote realignment from the operating vote ($20M)
• Decrease in authorities related to a previous federal budget measure; Goods and Services Tax/Harmonized Sales Tax (GST/HST) Agile Risk Assessment ($11M)

Revenue Credited to the Vote (RCV) - Summarized Statement of Authorities (unaudited)

Total available for use for the year ending March 31, 2025	Total available for use for the year ending March 31, 2024	Variance in budgetary authorities
Negative ($486M)	Negative ($441M)	Negative ($45M)

The increase in RCV is primarily related to the increased pay rates in the new collective agreements.

Total Budgetary Authorities- Summarized Statement of Authorities (unaudited)

Total available for use for the year ending March 31, 2025	Total available for use for the year ending March 31, 2024	Variance in budgetary authorities
$18,148M ($18.1B)	$15,789M ($15.7B)	$2,359M ($2.4B)

YOY analysis of expenditures

Expenditures by vote

Summarized Statement of Authorities (unaudited)

Budgetary Statutory Authorities - Summarized Statement of Authorities (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
$6 538M	$4 948M	$1 590M

The increase in Budgetary Statutory Authorities is primarily related to an increase in the fuel charge proceeds returned to the province or territory of origin, primarily through the CCR, and the addition of New Brunswick to the federal pollution pricing framework, $1,649M.

Net Vote 1 – Operating Expenditures - Summarized Statement of Authorities (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
$2 661M	$2 477M	$184M

The increase in Net Vote 1 Operating Expenditures is primarily related to the following:

Salary

The increase in salary expenditures is primarily related to:

• Higher employee pay rates related to the most recently signed collective agreements for all bargaining units, and the reduction in prior year salaries due to the Public Service Alliance of Canada (PSAC) strike, $262M
• Offset by the PSAC retroactive payments made in the previous fiscal year ($131M)

Operations and maintenance

• Increase in the transfer to Revenu Québec for the administration of the GST, $31M
• Increase related to a full-year software subscription, $13M
• Increase due to higher billings from the Department of Justice, $4M

Vote 5 – Capital Expenditures - Summarized Statement of Authorities (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
$36M	$42M	Négatif($6 M)

The decrease in Vote 5 Capital Expenditures is primarily related to major project investments.

Total Budgetary Authorities - Summarized Statement of Authorities (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
$9 235M ($9,2B)	$7 467M ($7,4B)	$1 768M ($1,8B)

Expenditures by standard object

Summarized Departmental Budgetary Expenditures by Standard Object (unaudited)

Transfer Payments - Summarized Departmental Budgetary Expenditures by Standard Object (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
$6,147M	$4,476M	$1,671M

The increase in Transfer Payments is primarily related to an increase in the fuel charge proceeds returned to the province or territory of origin, primarily through the CCR, and the addition of New Brunswick to the federal pollution pricing framework, $1,649M.

Personnel - Summarized Departmental Budgetary Expenditures by Standard Object (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
$2,778M	$2,668M	$110M

The variance explanation noted in the Net Vote 1 salary section is also applicable to the Personnel standard object, in addition to variances in other items, including the Employee Benefit Plan.

Other Standard Objects - Summarized Departmental Budgetary Expenditures by Standard Object (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
$556M	$544M	$12M

$16M increase is related to the professional services standard object:

• Increase in the transfer to Revenu Québec for the administration of the GST, $31M
• Decrease in information technology (IT) consultants due to an active effort by the CRA to meet RGS commitments ($10M)
• Decrease in IT services from Shared Services Canada due to the timing of billing, which is out of the CRA’s control ($5M)

$14M increase in the acquisition of machinery and equipment standard object is primarily due to:

• a full-year software subscription; a partial year subscription was paid for in period 9 of the previous year.

$13M decrease in the other subsidies and payments standard object is primarily related to:

• a court award paid in period 6 of the previous fiscal year.

$6M decrease in the rentals standard object is primarily related to:

• a lower billing agreement with Public Services and Procurement Canada for the CRA’s annual rent.

Revenue Credited to the Vote - Summarized Departmental Budgetary Expenditures by Standard Object (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
Negative ($246M)	Negative ($221M)	Negative ($25M)

Total Budgetary Authorities - Summarized Departmental Budgetary Expenditures by Standard Object (unaudited)

YTD expenditures at September 30, 2024	YTD expenditures at September 30, 2023	Variance in YTD expenditures
$9,235M ($9.2B)	$7,467M ($7.4B)	$1,768M ($1.8B)

Risks and uncertainties

The CRA strives to be a world-class tax and benefits administration that is trusted, fair, and helpful by putting people first. As such, the CRA continually monitors its internal and external environments for events that could affect whether it achieves its strategic priorities and objectives. The Board of Management monitors, and senior management receives, quarterly updates on the CRA’s Corporate Risk Profile, which involves regular monitoring of the entire risk portfolio. The CRA’s key risks and mitigation strategies are outlined in the 2024-2025 Departmental Plan.

The CRA recognizes that all of the key risks identified in the Departmental Plan could have financial impacts should they materialize. The key risks and associated mitigation strategies outlined in the Departmental Plan relate to the CRA’s 2024-2025 strategic priorities, which are:

• Deliver seamless client experiences and tailored interactions that are digital first
• Combat aggressive tax planning and tax evasion
• Strengthen security and safeguard privacy
• Nurture a high-performing, diverse, and inclusive workforce in a modern, flexible, and accessible workplace

Significant changes in relation to operations, personnel, and programs

This year, the CRA has funds related to priorities that were announced in Budget 2024 for which funding decisions are expected later in the fiscal year. If funding for these initiatives is not approved, it could constrain the CRA’s financial position. Mitigation measures are being implemented to reduce this financial risk.

The CRA’s 2024-2025 contribution to RGS, $58M, includes reductions for travel, professional services, and operating expenditures. In the coming years, the CRA will also be proactive in implementing the second phase of RGS, announced in Budget 2024.

Approval by Senior Officials

Approved by:

Ottawa, Canada

Date:

Canada Revenue Agency - Quarterly Financial Report for the quarter ended September 30, 2024

Statement of Authorities (unaudited)

Fiscal Year 2024-2025

Fiscal Year 2023-2024

Departmental Budgetary Expenditures by Standard Object (unaudited)

Fiscal Year 2024-2025

Fiscal Year 2023-2024