2012 Spring Report of the Auditor General of Canada
Exhibit 4.1—Process for pursuing individual non-filers, using the 2009 tax year as an example
This flow chart shows the process for pursuing individual non-filers, using the 2009 tax year as an example.
The first step in the process is the filing deadline, which was 30 April 2010 for the 2009 tax year. The following step is T1 matching. In this step, 2.5 million potential non-filers were identified. The next step is risk assessment (or T1 risk scoring). Potential non-filers are selected for action at this point. The files considered to be low risk are not pursued in the current year and may have no obligation to file a tax return. This leads to some positive results, since some of those not selected for pursuit will file a return. Returns may be filed at any time during the process.
The following steps represent an escalation of enforcement action. After the risk assessment, automated strategies start. A “Request to File” letters is sent. Next, after 40 days elapse, a second “Request to File” letter or a “Demand to File” letter is sent. Strategies after 45 days elapse include assigning staff to follow up; assessing tax payable based on the Income Tax Act, subsection 152/7; and prosecution.
These steps led to a positive result in 2009, since returns filed amounted to 1.3 billion dollars in tax assessed. This amount was calculated from net tax owed of 1.5 billion dollars, or 57 percent of returns, minus the net tax refunded, which amounted to 215 million, or 36 percent of returns. For 7 percent of returns, no tax was owed or refunded.
A negative result occurs when returns are not filed or the file is discontinued. The Agency did not provide figures for this result in 2009.
At the bottom of the chart, a note states that the total taxes assessed does not match the annual report, because the process shows the T1 (individual) process and does not include corporations, trusts, or GST/HST.