RESEARCH PAPER: Assessing the Canada Revenue Agency: Evidence on Tax Auditors’ Incentives and Assessments

Authors:

Ken Klassen, University of Waterloo, SAF (lead researcher) 

Nick Pantaleo, Executive in Residence, SAF, University of Waterloo


Photo of Ken KlassenAbstract

Authors Kenneth Klassen (pictured) and Nick Pantaleo explore the pressure on the CRA to raise more tax revenues, as well as assess the efficiency of the audit process and the fairness of results.

Incentives to increase assessments were amplified by recent funding for the CRA that carries an expectation that additional tax revenues of $5 will be collected for each $1 spent, a “return” that is much higher than in the past. As well, these additional tax revenues are explicitly linked to closing the “tax gap,” the CRA’s measure of  how much tax revenue theoretically exists versus how much is actually paid voluntarily.

Practitioners express concerns over poor CRA audit-process quality. The duration of CRA audits, the very high proportion of reassessments that are issued in the final two months of its fiscal year, and the rate at which reassessments are eventually ruled in the taxpayer’s favour lend some evidence to these concerns.

Read the full research paper online

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