Subscribe

Analysis: Taxpayers’ Ombudsman – Is it Actually Effective?

effectiveness of the Taxpayers' Ombudsman

Expectation vs. reality — is the Taxpayers’ Ombudsman really effective?

We have previously discussed the scope of the Taxpayers’ Ombudsman (OTO) and how to use the OTO to file a complaint regarding the service of the Canada Revenue Agency (CRA). This post analyzes the OTO’s annual reports to see how effective they really are at resolving taxpayer issues.

As a reminder, the OTO’s mandate is to provide an “independent and impartial review of unresolved complaints from taxpayers about the service or treatment they have received from the CRA.” 1

Taxpayers’ Ombudsman Annual Reports

Each year, the OTO publishes an annual report that summarizes the office’s work over the past year, including trends in taxpayer complaints, current and foreseeable issues within the office, details of resolved files (with confidential information redacted), and statistics regarding files handled. The Ombudsman then submits this report to the Minister for National Revenue.

Since its inception in 2008, the OTO has published a report at the end of each financial year. Below, we have included charts from the report with file summaries statistics, i.e. number of files resolved, number of complaints handled, number of complaints that fall outside the OTO’s scope and are therefore deemed “non-mandate,” etc.

IMPORTANT: We did not include charts for two of the reports. There simply was no summary chart made for the 2008-09 report,2 and we found the information/wording in the 2010-11 file summary chart too convoluted to be useful for our analysis.3

Trends in the Number of Files Opened and Closed

Recent Annual Reports from the Taxpayers’ Ombudsman

2017

The Annual Report for the 2016-17 fiscal year includes information for the closed files that, similarly to the report for 2010-11, is very convoluted. A simplification of the information included in the 2016-17 report is as follows: 4

2016-2017 Taxpayers’ Ombudsman – File Summaries 5

The phrasing in the 2016-17 report is very similar to the phrasing from the 2015-16 report information shown below. Comparing the figures, it appears there has only been a slight increase (82) in the number of “files opened” from 1,408 in 2015-16 to 1,490 in 2016-17. However, the number of “files closed” increased from 1,352 to 1,611, an increase of 259 files.

Sherra Profit, the Ombudsman in 2017, stated that “outreach, as well as speaking engagements at conferences, has increased the visibility of my Office and the understanding taxpayers have of my role as the Taxpayers’ Ombudsman.” 6 We also reported in June 2017 that the CRA was “cracking down” on SR&ED claims. This may be related to claims made by Profit in December 2017, that the CRA had been rejecting documentation without explanation, and that “issues around validating eligibility for benefits and tax credits are among the top complaints [the Ombudsman] receives.” 7 An increase in the OTO’s visibility, and the CRA’s apparent reluctance to accept valid forms of documentation in an attempt to “crack down” on the SR&ED program and in other taxation matters, may have contributed to the increase in complaints to the OTO in 2017.

2016

2015-2016 Taxpayers’ Ombudsman – File Summaries 8

The table above shows the number of files opened and closed for the 2015-16 financial year. When compared to the tables below, which show the information for the 2014-15 financial year, it is difficult to compare the years due to the differences in how the information is presented.

2015

2014-2015 Taxpayers’ Ombudsman – File Summaries 9

If we assume that the “complaint files opened” from 2015-16 refers to the same information listed for 2014-15, we can see a decrease in the number of files being opened from 1,434 to 1,408. If the other figures from 2014-15 are discounted, and we only refer to the number of “files opened,” the figure in 2014-15 falls to 1,330.

Inconsistencies in the presentation and reporting of information in the reports, regarding the number of files closed for each year, does not allow accurate, direct comparisons to be made between the 2015-16 and 2014-15 years reported.

2014-2015 Taxpayers’ Ombudsman – File Summaries 10

In 2015-16 the number of “complaint files closed within [the Taxpayers’ Ombudsman’s] mandate” was 1,074, and outside their mandate, the number of files closed was 278. It is unclear what is meant by “early resolution” or “investigation completed” as these are not terms used in the report in 2015-16. We can assume “non-mandate” in 2014-15 refers to the same information as claims closed “outside [the Taxpayers’ Ombudsman’s] mandate” in 2016, which would mean that between 2014-15 and 2015-16, the number of files closed, outside the OTO’s mandate, rose from 184 in 2014-15, to 278 in 2015-16.

The 2014-15 figures helpfully show the figures for the previous reporting year, 2013-14, however, the difference in the numbers between 2013-14 and 2014-15 are drastic, and claims opened and closed both display falls of over 1,000 claims. The OTO explains the drastic decrease in non-mandate claims as being due to: 11

[…] an influx of complaints from taxpayers or their representatives related to tax-shelter donation schemes and the closure of the CRA’s in-person counter services. We received over 1,000 complaints from taxpayers voicing their frustration toward the disallowance of their donations in a given year as a result of the arrangement they entered into with the recipient organization. However, this issue was legislative, not service-related, and therefore, did not fall within the mandate of our office.

How do these years compare to previous Taxpayers’ Ombudsman’s Annual Reports?

The images for 2013-14 (below) also show the figures for the year before (2012-13). As they are in the same diagram it is easy to compare each year. The figures for 2013-14 suggest that there was an increase in “files opened” from 1,138 in 2012-13, to 2,735 in 2013-14. The figures for “files closed” show a similarly drastic increase; from 1,074 in 2012-13, to 2,651 in 2013-14.

2014

2013-2014 Taxpayers’ Ombudsman – File Summaries 12

2013-2014 Taxpayers’ Ombudsman – File Summaries 13

The Taxpayers’ Ombudsman explains this increase in its 2013-14 report as follows: 14

[The Office of the Taxpayers’ Ombudsman] have seen an increase in complaint volumes, and when combined with the statistics on our website traffic and of our media coverage, it suggests that Canadians are steadily becoming more aware of our presence and relevance to them.

The way figures were presented prior to 2013-14 also differs from year to year. The practice of displaying figures for current and previous years first appeared in the 2012-13 report (below).

2013

Taxpayers' Ombudsman file summaries 2012-2013

2012-2013 Taxpayers’ Ombudsman – File Summaries 15

The 2012-13 report figures (shown above) suggest an increase, though not a drastic one, between 2011-12 (977 files opened and 840 files closed) and 2012-13 (1141 opened, 1074 closed). The 2011-12 figures originally reported (table below) follow their own layout, however, the terminology used in the tables from 2012-13 to 2014-15 seems to have originated here, making it easier to compare the years between 2011-12 and 2014-15.

2012

Taxpayers' Ombudsman file summaries 2011-2012

2011-2012 Taxpayers’ Ombudsman – File Summaries 16

2010

Taxpayers' Ombudsman case summaries 2009-2010

2009-2010 Taxpayers’ Ombudsman – File Summaries 17

Much like the 2015-16 table, the terminology and layout from 2009-10 (above) are unique to the reporting year.

The table does not show how many claims were opened in the year, however, this information is provided in the report and states: 18

For the period of April 1, 2009 to March 31, 2010, we began with 84 files in our inventory and reviewed 1,218 files.

This information indicates that in the 2009-10 year, 1,302 claims were “reviewed”, however, the use of the term “reviewed” does not make it very clear if this is the number of files that were opened. The table above, which shows the number of cases “resolved” is also unclear if this is the number of cases that were also closed in the year.

Vague Language: What is a “Resolved” File?

While these charts are a helpful tool for seeing the influx of complaints received by the OTO and the number of files dealt with, the varying terminology makes it difficult to properly assess the OTO’s effectiveness.

The 2014-15 report featured information regarding the “top complaints heard by the OTO” and stated: 19

These trends […] do not take into account how the complaints are resolved. It is important to note that even though a trend is identified, it does not mean a systemic problem exists or a systemic investigation will necessarily be undertaken.

  • Taxpayers felt they were treated unfairly or unprofessionally by the CRA during the tax collections process;
  • Taxpayers felt confused or frustrated about which documents were needed to prove their marital status or eligibility for the Canada child tax benefits;
  • Taxpayers were frustrated they could not get through on the CRA’s general enquiry (1-800-959-8281) telephone line; and,
  • Taxpayers were frustrated with the delays in the CRA’s completion of audits, appeals, and taxpayer relief requests.

As noted in our “when to use the Taxpayers’ Ombudsman” post, taxpayers are expected to clearly state their ideal resolution when filing their complaint, however, what constitutes a resolution on the OTO’s terms? Resolutions may include an apology from the CRA, access to a service that was previously denied/withheld, etc. This makes the potential range of possible “resolutions” rather large and stating that complaints were “resolved early” is vague. Are there metrics to assess how satisfied a taxpayer is with the resolution? How often is one type of resolution reached versus another type of resolution? 

One of the few examples of specificity regarding types of resolution can be found in the 2008-09 annual report: 20

532 complaints resulted in investigation (160 Requests for Information and 91 Requests for Assistance to CRA, 281 reviews resulted in upholding the CRA’s original action without requiring input from the CRA). 

Formatting inconsistencies between the OTO’s annual reports mean that the types of statistics provided in one year are not necessarily provided or expressed using the same terminology the next year.

Issues with the Taxpayers’ Ombudsman

While the OTO is, in theory, an excellent resource available to taxpayers frustrated with the CRA’s complaints process, the OTO is also aware of discrepancies between their mandate and what taxpayers interpret their mandate to be.

The following are excerpts from various annual reports:

  • “[…] many Canadians think – incorrectly – that we operate as part of the CRA. On the other hand, the CRA does see us as outsiders but often assumes – incorrectly – that we are advocating for complainants.” 21
  • “We have heard many anecdotes about such occurrences and other allegations of unfair treatment by the CRA from taxpayers or tax professionals who would not file a formal complaint with our Office. Yet we can only intervene in an individual case and assess whether the CRA has met its obligations pursuant to the Taxpayer Bill of Rights if we have a complaint to investigate.” 22
  • “[…] reluctance of some taxpayers to file a complaint with my Office because they fear that doing so might result in harsh treatment from the CRA.”23

As these excerpts indicate, taxpayers may confuse or even conflate the roles of the CRA and the OTO, while the CRA may feel they are in a disadvantaged position (i.e. “the bad guy”) if the OTO investigates a complaint.

In 2010 the OTO conducted research to investigate why more taxpayers were not filing formal complaints. Its results showed that the number one reason (28% of respondents) found that there was too much “hassle” involved in complaining about tax issues.24

taxpayers formal complaints Taxpayers' Ombudsman

Why aren’t taxpayers filing formal complaints with the OTO? 25

In 2016, however, the Auditor General, Michael Ferguson, stated that the CRA was, “failing to deal with income tax objections from hundreds of thousands of Canadians in a timely manner and that taxpayers [were] never told how long it will take to make a decision on their file.” 26 This could be one of the primary factors in the stagnation in the number of cases brought to the OTO, as taxpayers must exhaust the CRA’s complaints process before bringing the issue to the OTO.

Observation Paper: Issues of Service and Fairness Within SR&ED

In December 2011, the OTO released an observation paper on service issues within the Scientific Research and Experimental Development (SR&ED) tax incentive program. Rather than being an official report, the OTO had to issue their informal findings as an observation paper based on the following recurring issue in their public opinion research: 27

Although we heard numerous accounts of discontent with the SR&ED program among claimants, we were unable to validate many of the criticisms due to a lack of complaints to investigate.

[…] despite our best efforts to encourage these claimants and their representatives to file complaints so that we could investigate the merits and potential causes, most did not do so.

One obvious reason for this unwillingness to file complaints is that the OTO’s mandate simply does not address the concerns that many SR&ED claimants have: 28

Many of the complaints and representations we received from claimants focused on the CRA’s interpretation or application of the legislation and policies governing the SR&ED program.

Taxpayers were concerned that the CRA was focusing too much on auditing rather than on supporting innovation, that there appeared to be inconsistencies in review policies between different regions of the country, etcetera.

Despite the fact that most complaints were about SR&ED legislation and policy, the OTO can only investigate complaints that involve one of the eight service-related rights under the Taxpayers’ Bill of Rights, including “the right to expect the CRA to be accountable.” (For a full list of service-related rights, please see our post on the OTO’s mandate.)

Final Thoughts 

As stated above, the Taxpayers’ Ombudsman is, in theory, a useful, worthwhile institution that can serve as a last resort for frustrated taxpayers. However, the varying presentations of published information make it difficult to truly analyze the work of the OTO and how they benefit taxpayers. While the Taxpayers’ Ombudsman has done some public outreach to inform Canadians about their rights as taxpayers and the role of the OTO, it is clear that a great deal of work still needs to be done to increase public confidence.

This article is based on Office of the Taxpayers’ Ombudsman (OTO) policy documents available at the date of publication. Please consult the OTO website for the most recent versions of these documents.

Have you had any first-hand experiences with CRA reviews or filing a complaint against a reviewer/the CRA?
Have any experience with the Taxpayers’ Ombudsman?
Comment below or add to the conversation on our LinkedIn group, Facebook page or Twitter to share your experiences or insights.

Our Comprehensive Guide to SR&ED includes more information on how to survive a review with CRA examples and much more – sign up today!

Show 28 footnotes

  1. Government of Canada. (December 14, 2016.) Office of the Taxpayers’ Ombudsman: About Us – Mandate. (Accessed: Stepmber 27, 2017.) Retrieved from: https://www.canada.ca/en/taxpayers-ombudsman/corporate/about-us/mandate.html.
  2. Government of Canada. (2009.) ARCHIVED – Annual Report 2008-2009. (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/en/taxpayers-ombudsman/programs/reports-publications/annual-reports/archived-annual-report-2008-2009.html.
  3. Government of Canada. (2012.) ARCHIVED – Annual Report 2010-2011. (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/en/taxpayers-ombudsman/programs/reports-publications/annual-reports/archived-annual-report-2010-2011.html.
  4. Government of Canada. (2017.) Annual Report 16/17. Office of the Taxpayers’ Ombudsman. Fairness: A Right, Not a Priviledge. pg. 15-17. (PDF document). (Accessed: December 18, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/special-reports/7102_oto_annualreport_en_web.pdf.
  5. Government of Canada. (2017.) Annual Report 16/17. Office of the Taxpayers’ Ombudsman. Fairness: A Right, Not a Privilege. pg. 15-17. (PDF document). (Accessed: December 18, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/special-reports/7102_oto_annualreport_en_web.pdf.
  6. Government of Canada. (2017.) Annual Report 16/17. Office of the Taxpayers’ Ombudsman. Fairness: A Right, Not a Privilege. pg. 7. (PDF document). (Accessed: December 18, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/special-reports/7102_oto_annualreport_en_web.pdf.
  7. Roman, K. (December 15, 2017.) CRA service issues are systemic, says taxpayers’ ombudsman. CBC News Online. (Accessed: December 18, 2017.) Retrieved from: http://www.cbc.ca/news/politics/cra-systemic-issues-causing-harm-1.4449320.
  8. Government of Canada. (2017.) Taxpayers’ Ombudsman Annual Report 2015-2016. (PDF document). (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/migration/rprts/nnl/rprt1516-eng.pdf.
  9.  Government of Canada. (2016.) Taxpayers’ Ombudsman Annual Report 2014-2015. (PDF document). (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/migration/rprts/nnl/rprt1415-eng.pdf.
  10.  Government of Canada. (2016.) Taxpayers’ Ombudsman Annual Report 2014-2015. (PDF document). (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/migration/rprts/nnl/rprt1415-eng.pdf.
  11.  Government of Canada. (2016.) Taxpayers’ Ombudsman Annual Report 2014-2015. (PDF document). (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/migration/rprts/nnl/rprt1415-eng.pdf.
  12.  Government of Canada. (2015.) Taxpayers’ Ombudsman Annual Report 2013-2014. (PDF document). (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/migration/rprts/nnl/rprt1314-eng.pdf.
  13.  Government of Canada. (2015.) Taxpayers’ Ombudsman Annual Report 2013-2014. (PDF document). (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/migration/rprts/nnl/rprt1314-eng.pdf.
  14.  Government of Canada. (2015.) Taxpayers’ Ombudsman Annual Report 2013-2014. (PDF document). (Accessed: September 27, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/migration/rprts/nnl/rprt1314-eng.pdf.
  15. Taxpayers’ Ombudsman Annual Report 2012-2013. (PDF document).(Accessed: September 27, 2017. Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt1213-eng.pdf.
  16. Taxpayers’ Ombudsman Annual Report 2011-2012. (PDF document). (Accessed: September 27, 2017. Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt1112-eng.pdf.
  17.  Taxpayers’ Ombudsman Annual Report 2009-2010. (PDF document).(Accessed: September 27, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt0910-eng.pdf.
  18.  Taxpayers’ Ombudsman Annual Report 2009-2010. (PDF document).(Accessed: September 27, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt0910-eng.pdf.
  19.  Government of Canada. (2016.) Taxpayers’ Ombudsman Annual Report 2014-2015. (PDF document). (Accessed: September 28, 2017.) Retrieved from: https://www.canada.ca/content/dam/oto-boc/migration/rprts/nnl/rprt1415-eng.pdf.
  20. Government of Canada. (2010.) Taxpayers’ Ombudsman Annual Report 2008-2009. (PDF document). (Accessed: September 28, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt0809-eng.pdf.
  21. Government of Canada. (2014.) Taxpayers’ Ombudsman Annual Report 2012-2013. (PDF document). (Accessed: September 28, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt1213-eng.pdf.
  22. Government of Canada. (2014.) Taxpayers’ Ombudsman Annual Report 2012-2013. (PDF document). (Accessed: September 28, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt1213-eng.pdf.
  23. Government of Canada. (2013.) Taxpayers’ Ombudsman Annual Report 2011-2012. (PDF document). (Accessed: September 28, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt1112-eng.pdf.
  24.  Taxpayers’ Ombudsman Annual Report 2009-2010. (PDF document).(Accessed: September 27, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt0910-eng.pdf.
  25.  Taxpayers’ Ombudsman Annual Report 2009-2010. (PDF document).(Accessed: September 27, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/nnl/rprt0910-eng.pdf.
  26. Fekete, J. (November 29, 2016.) Auditor general says Canada Revenue Agency takes too long to respond to tax complaints — and it’s costing us – Ottawa Citizen. (Accessed: September 28, 2017.) Retrieved from: http://nationalpost.com/news/politics/auditor-general-says-canada-revenue-agency-takes-too-long-to-respond-to-tax-complaints-and-its-costing-us.
  27. Taxpayers’ Ombudsman. (December 2011.) Issues of Service and Fairness within the Scientific Research and Experimental Development Tax Incentive Program. (PDF document). (Accessed: September 29, 2017.) Retrieved from: http://www.oto-boc.gc.ca/rprts/bspprs/sred-rsde-eng.pdf.
  28. Taxpayers’ Ombudsman. (December 2011.) Issues of Service and Fairness within the Scientific Research and Experimental Development Tax Incentive Program. (Accessed: September 29, 2017.) Retrieved from: https://www.canada.ca/en/taxpayers-ombudsman/programs/reports-publications/observation-papers/issues-service-fairness-within-scientific-research-experimental-development-incentive-program.html?=undefined&wbdisable=true.

Leave a Reply

Authors

This website is sponsored by:
ingenuity group
Working with SR&ED since 1986.

Contact Us!

100 Gloucester Street, Suite 482
Ottawa, ON K2P 0A4
Phone: 1-844-447-7733
Website: www.sreducation.ca
Email: info@sreducation.ca
Join the SR&ED Education & Resources Mailing List!
error: This content is Copyright The InGenuity Group Solutions Inc. Please contact the site administrator if you wish to use this content.