Risks, Challenges, and Opportunities

Setting the context

Our assessment of the conditions prevailing in our operating environment provides us with an understanding of the relative risks, challenges, and opportunities facing the Agency. This also helps us identify and assess emerging trends, shifts in attitudes, and changing behaviours that may affect the Agency.

The key risks, challenges, and opportunities that influence this Plan are:

• Managing financial pressures
• Addressing threats to compliance
• Protecting confidential information
• Fulfilling our fiduciary responsibilities
• Sustaining human resources
• Socio-economic and political trends

In an environment of limited resources, the Agency must continue to manage the challenge of allocating its resources in an effective and timely manner. Managing and prioritizing the many initiatives in our change agenda while maintaining our core business capacity is key to continuing to improve our already high standards of service delivery. This challenge is steepened by the Government’s recent need to transfer savings across government departments in order to support national priorities such as health care.

Our key spending pressures, with respect to maintaining the integrity of existing core programs, are the result of increasing complexity in tax administration, steadily increasing volumes of tax transactions, and the need to increase capacity in our IT processing and storage systems.

Our strategies for effective budget management are outlined on the last page of the previous chapter.

To ensure resources are applied where they will be of most value, we employ a world-class risk assessment system which allows us to design specialized strategies that target areas of highest risk, while ensuring a proper mix of service and enforcement activities. In the coming years, particular attention will be focused on:

• aggressive tax planning
• GST/HST program
• the underground economy
• collections and non-filers

The sheer volume of client data we maintain, whether collected by us or provided by our partners, and our drive to facilitate electronic interaction with clients, increase the importance of protecting confidential client information. Media reaction to the recent theft of taxpayer information and other losses and errors may have led to an increased public perception that the CCRA has to improve the way it handles confidential information.

The Agency must meet this challenge through mitigation strategies, based on a national review of security policies and practices, that focus on protecting taxpayer information and securing our facilities and systems.

In light of several high-profile incidents, Canadians have demanded increased accountability and a new focus on values and ethics by those in a position of public trust. Canadians’ perceptions of the fairness and integrity of the tax system are influenced by these events, as are their attitudes toward compliance. To guarantee fairness and a level playing field, we are committed to ensuring that all Canadians pay their fair share of taxes and receive their rightful entitlements.

We are addressing the challenge of collecting accounts receivable and limiting any future growth of the accounts receivable balance. These strategies help us meet our fiduciary responsibilities and preserve fairness.

The CCRA must balance shorter-term workforce adjustments that may result from efficiency gains and program changes against longer-term workforce considerations such as succession planning, corporate memory, and official language and employment equity goals. According to a recent study, of the 42,791 permanent CCRA employees as of April 1, 2003, 17.7% (7,566) will be eligible to retire by 2007-2008 and 36.6% (15,672) by 2012-2013 1 . In particular, as managers move through their career cycle, the Agency’s ability to meet the demand for knowledgeable and experienced leaders may be challenged.

These statistics are exacerbated by other factors, for example, the language abilities of potential recruits to the public service. As well, meeting employment equity targets is likely to become more challenging depending on the settlement patterns of visible minorities and Aboriginals, who together continue to represent a greater percentage of Canada’s labour force. The risks to the successful management of our human resources are considered to be medium-to longer-term in nature. The Agency must mitigate these risks through improved human resources planning that integrates the requirements of all its human resources policies.

Trends and risks in the operating environment are described in the remainder of this chapter. These factors impact on our priorities in terms of strengthening our core business and building partnerships across governments and other organizations.

The changing demographics of Canada’s population affect the CCRA’s ability to deliver programs and services. As Canada’s population ages, patterns of consumption and income generation change. Close to a quarter of a million people immigrate to Canada every year. Many have limited language abilities in English or French, and approximately 75% settle in our three largest urban centers. These demographic factors influence the mix of services and compliance activities we use.

Shifts in the make-up of the labour market must also be accounted for if we are to continue to provide effective service to Canadians and protect the tax base. In the first 11 months of 2003, 218,000 new jobs were created in Canada, in addition to the 560,000 jobs created the year before. From January 2002 to November 2003, the number of self-employed Canadians increased by 160,000, and the number of those in the construction labour category grew by 80,000. Both of these labour categories are considered areas of compliance risk.

The CCRA serves 22.9 million individual income tax filers annually. In 2003, we averaged 21.5 million hits on our Web site each month during peak tax season. We issue 68 million benefit payments and process 1.4 million corporate tax returns each year. Consequently, we rely on the capacity of our information technology systems to process and track information and on the integrity of our procedures and processes to manage our resources and deliver a large volume of services in a timely, accurate, and confidential fashion. As the volume of our business grows, the Agency must expand capacity. Our challenge is to maintain the integrity of our core operations, while taking a rational approach to capacity enhancements.

Conclusion

Our knowledgeable, experienced staff continue to use sophisticated risk management methodologies to address ongoing operational and strategic risks. The knowledge of risks from both inside and outside the Agency is integrated into our planning, decision-making, and reporting, which leads to better results for Canadians.

The following sections of this Summary describe how the Agency will proactively manage the risks, challenges, and opportunities within its operating environment.

1 Demographic data for 2003 CCRA employees includes Customs.

Date modified:

2004-10-08