1600 - 250 Bloor Street East Toronto, Ontario M4W 1E6 Tel: (416) 487-3380 Fax: (416) 487-3384 Toll Free: 1-800-387-4693 payroll.ca December 23, 2019 The Honourable Diane Lebouthillier P.C, M.P. Minister of National Revenue Ministry of National Revenue Government of Canada House of Commons Ottawa, Ontario K1A 0A6 Via email: [email protected] Re: Helping you achieve your mandate Dear Minister Lebouthillier, On behalf of the Canadian Payroll Association, I would like to congratulate you on your re- appointment to the position of Minister of National Revenue. The Canadian Payroll Association is eager to aid you in the fulfillment of your mandate. We applaud your Government’s stated commitment to modernizing government services and regulations in a manner that improves transparency and efficiency, and simplifies how individuals and organizations interact with government. Over the past few years, our collaboration with the Federal Government has resulted in many significant advances in these areas1 and we look forward to working with you and your staff to make living, working, and doing business in Canada easier and more affordable. REPRÉSENTATION LA DE ET FORMATION LA MOYEN DE AU PAIE LA DE CONFORMITÉ Our membership is intimately aware of the opportunities and challenges presented by the various ● government services and regulations affecting workers and employers. While processing $970 billion in wages and taxable benefits and remitting $272 billion to the federal government last year, Canadian payroll professionals work with the Canada Revenue Agency (CRA) and numerous federal government programs including Employment Insurance and Canada Pension Plan. Payroll ADVOCACY impacts and intersects with Canada’s economic and social development in countless ways: payroll is involved with the administration of employment benefits, tax collection, labour data collection, AND workforce training and productivity development all while contributing to the modernization of business administration in Canada. Payroll professionals are also experienced when it comes to analyzing economic regulations. The administration of payroll is subject to over 200 federal across Canada. It is our hope that we can work and provincial/territorial regulatory requirements EDUCATION together to leverage our members’ unique perspective and expertise on economic and employment policy to modernize government services and regulations to the benefit of all Canadians. Minister Lebouthillier, many of the initiatives that have been identified in your mandate letter align THROUGH with, or relate to, the Canadian Payroll Association’s goals: 1 Electronic T4s relieving firms of $100 million in paper costs with no expense to government is one such example. COMPLIANCE More recently, the Payment on Filing initiative will save employers millions of dollars in in interest, penalties, salaries, and other administrative costs. PAYROLL [2] “Reduce burden on Canadians by leveraging data and emerging technologies” This goal could be achieved with respect to Canadian employers via the implementation of a voluntary real-time e-payroll system. Under the current system, payroll professionals must manually translate payroll data (which exists in various forms and formats within different payroll software programs) into forms and formats used by the Federal Government. This current process imposes time consuming and redundant tasks on employers. A well-constructed e-payroll system would leverage the data that payroll professionals already have available to report accurate and timely information to the Federal Government. “Work with the Minister of Digital Government on additional steps as required to meaningfully improve the satisfaction of Canadians with the quality, timeliness and accuracy of the services they receive from the CRA” Simplifying the administration of the Income Tax Act would improve both individual taxpayers’ and employers’ satisfaction with the CRA’s services. From time to time, tax changes are introduced that are unclear or untimely in that they are introduced and enforced before payroll professionals and payroll service providers have the time to amend their systems accordingly. For example, the recent late introduction of a complex basic personal income tax exemption has created significant operational uncertainty and confusion for employers at a time of year when they are already busy processing their last payroll of this year and first payroll of the next. The manner and timing with which this change was introduced will also require over 18 million working Canadians to complete new and confusing TD1s during the last week of the year. When these such changes occur, tax compliance can become difficult. As a result, employees and employers may experience significant difficulties, including the possibility of facing audits. Unclear or untimely changes can also generally cause significant operational uncertainty and administrative costs for employers. The Canadian Payroll Association has a productive and longstanding working relationship with the CRA and we would be glad to assist with any steps that may be taken to improve Canadians’ satisfaction with the agency’s services. “Support more Canadians who wish to file taxes using no paper forms” In 2017, the CRA worked with the Canadian Payroll Association and other stakeholders to implement an e-T4 solution that enabled employers to provide electronic T4s to employees by default. This initiative saved employers an estimated $100 million annually in paper burden costs, plus an additional $40 million for Quebec employers because of harmonization with Revenu Québec. Now that your government has made it its mandate to develop an e-Payroll system, the prospect of digitizing or even eliminating many major tax forms is within reach. A well-constructed e-Payroll system has the potential to eliminate the need for T1, T4, T4A and Record of Employment forms. The Canadian Payroll Association stands ready to assist the CRA in repeating the success of the e- T4 initiative by applying the same modernization strategy to other forms in a way that balances potential cost savings with the needs of employers, employees and individual tax payers. “Look for more opportunities to invest resources that help crack down on tax evaders” The Canadian Payroll Association was proud to be part of the CRA’s consultations on reducing participation in the underground economy. Throughout the consultation it became apparent that some who evade paying their taxes do so out of a lack of understanding of their compliance obligations rather than out of maliciousness. The Canadian Payroll Association submitted four recommendations that were oriented towards increasing tax compliance awareness. Our full submission has been included in the appendix to this letter for your convenience. [3] “Work with provinces and territories to identify new ways of simplifying federal and provincial tax forms for individuals and businesses” A significant proportion of payroll professionals’ day-to-day work is consumed by tax compliance and working with federal and provincial tax forms. Needlessly complicated tax forms can lead to costly errors and an increase in labour hours required to remain tax compliant. That is why the Canadian Payroll Association has always made the simplification of tax forms one of its highest priorities. Committees and membership outreach initiatives often results in the production of viable suggestions on the simplification of federal and provincial tax forms. For example, we have identified that cost savings and the elimination of redundancies would result if the provinces and territories followed Nova Scotia’s lead in entering into an agreement whereby the CRA administers the collection of employer workers’ compensation premiums. Nova Scotia’s model has increased government revenue and capacity, raised compliance rates, and reduced administrative burden on employers We would be happy to share these insights with your ministry at any time to help you achieve this component of your mandate. Accurate and timely payroll administration is integral to ensuring that Canadian workers enjoy financial wellbeing and Canadian employers enjoy operational stability. Payroll professionals have valuable insights on how your Government’s initiatives can improve services, reduce administrative burden, simplify regulatory requirements, and modernize government’s tools and processes all while elevating the financial condition of everyday Canadians and unleashing the productive capacity of Canadian businesses. Congratulations again on your re-appointment as Minister of National Revenue. We look forward to continuing our productive working relationship with you and your ministry. Please do not hesitate to contact me or our Director of Government and Legislative Affairs, Rachel De Grâce at 416.487.3380 x 126 or [email protected] Peter Tzanetakis President The Canadian Payroll Association Tel: (416) 487-3380 ext. 101 Toll Free: 1-800-387-4693 ext. 101 Fax: (416) 487-3384 [email protected] http://www.payroll.ca [4] Appendix May 29, 2019 Mr. Ted Gallivan Assistant Commissioner for Canada Revenue Agency Assistant Commissioner’s Office Canada Revenue Agency 344 Slater Street Ottawa, ON K1A 0L5 Via email: [email protected] Re: 60-Day Challenge: Innovative ways the Canadian Payroll Association can work with the CRA to help reduce participation in the Underground Economy Dear Ted, Thank you for the opportunity to provide input on how