Video—Spending through the tax system is subject to less scrutiny and oversight than other government spending

Audit at a Glance—Tax-Based Expenditures

Video Transcript

In this audit, we looked at how the Department of Finance Canada, working with the Canada Revenue Agency, has managed benefits such as the First-Time Home Buyers’ Tax Credit and the Children’s Fitness Tax Credit.

The tax system is used to deliver important programs, and the resulting expenditures account for billions of dollars annually. Though tax-based expenditures are similar to direct program spending, we found that less information is provided to Parliament about tax-based expenditures than about direct program spending.

We found that Finance Canada does a good job of analyzing new tax measures and of monitoring existing ones. However, unlike direct expenditures which are subject to regular evaluation under Treasury Board of Canada Secretariat policy, Finance Canada does not systematically evaluate tax-based expenditures to ensure that they continue to achieve the intended results.

We believe that Parliament needs comprehensive and consolidated information to effectively oversee these expenditures and understand not only total government spending, but also what money spent through the tax system is accomplishing.