Managing Partner at Vistance Accounting, as seen on BNN Bloomberg, Globe and Mail and Financial Post
A Business Commentary by: Daryl Ching
I run an accounting firm that works with small and medium-sized businesses, which means my team spends part of every month inside CRA reviews. Here is what it can look like from our side of the desk. A review that should take months stretches into years. Every so often, the file lands on a new agent, and we start over: re-explain the history, re-send the documents, re-argue points that were settled two agents ago. When numbers finally come back wrong, we refile, and wait months more.
Here is the part that should bother every business owner in the country. While that clock runs, other filings sit in limbo. Refunds are held. Balances under dispute keep accruing penalties and interest.
The delay belongs to the agency.
The metre runs on the taxpayer.
For a long time it was easy to dismiss all this as anecdote. It is not anecdote anymore.
Complaints to the Taxpayers’ Ombudsperson hit 3,558 last fiscal year, up 27 per cent and a three-year high, according to the office’s annual report released in June. That surge landed on top of the Auditor General’s findings last fall: callers to CRA contact centres waited an average of 31 minutes, only 18 per cent of calls met the agency’s own service standard, and agents answered individual tax questions accurately just 17 per cent of the time. Even on business tax and benefits questions, the agency’s own testing found agents were right only slightly more than half the time.
The coverage of these reports has focused on frustrated individual taxpayers, and fair enough. But the small business story is different, and in dollar terms it is worse.
For a business,
a CRA delay is not an inconvenience.
It is frozen working capital.
A refund that sits for months is cash the business cannot put into inventory, payroll or growth. A disputed balance accrues interest on a timeline the business does not control, at rates no owner would accept from a lender. I have watched owners defer hiring because five figures sat in administrative limbo. The money was theirs. The delay was not.
Then there is the cost nobody invoices. When an agency’s own agents cannot reliably explain its rules, businesses stop relying on the agency and start paying professionals for answers the public system was supposed to provide. That is the quiet economics of the Auditor General’s findings: the cost of a public institution’s failure has been privatized. And it lands hardest on the smallest players, because a multinational has a tax department and a twelve-person company does not. It is an invisible tax, and the smallest businesses pay the highest rate.
And there is the distraction. In a small company, the owner’s attention is the scarcest resource on the balance sheet. Every hour spent re-explaining a file to the fourth agent is an hour not spent on customers, staff or strategy.
The owners living this are not mildly inconvenienced. They are angry, and I will not pretend otherwise, because the anger is earned. These are people who follow every rule, remit every instalment and file on every deadline, and who cannot get a straight answer or a settled file in return. This is not anti-government sentiment. It is the specific fury of a customer who pays for a service, receives dysfunction, and is then charged interest for the privilege.
Now ask how long a private company would survive this. A business that answered half of its customers’ questions incorrectly, held their money for months, and made them start over with a new representative every quarter would be bleeding customers within a year. The share price would collapse. The board would clear out management. Competitors would feast on the wreckage.
None of those mechanisms exists here. The CRA’s customers cannot leave, because filing taxes is not optional. There is no competitor to defect to. There is no shareholder meeting, no activist investor, no quarterly reckoning. Every force that disciplines a private business, exit, competition and ownership, is absent. The agency’s revenue arrives whether its service is excellent or dreadful, because its customers are conscripted.
An institution that cannot lose its customers
has stopped counting the cost of failing them.
I spend a good part of my career warning business owners about concentration risk: never let a single customer, supplier or lender hold your company hostage, because dependence without alternatives means the other side sets the terms. Every Canadian business carries one counterparty it can never diversify away from. It is also the one institution with no competitive reason to earn the relationship.
To be fair to the CRA, the volume it handles is enormous, the tax code it administers is genuinely complex, and most of the individual agents we deal with are professional and trying to help. But volume does not explain why nobody owns a file. When reviews routinely pass from agent to agent, with no continuity and no accountability for the outcome, that is not a resourcing problem. It is a process choice, the kind that survives only where the customer has nowhere else to go.
Because the market cannot discipline the CRA, accountability has to be designed in.
Three fixes would do more than any budget increase.
Give every long-running file a single accountable owner, so no business starts from zero with agent number four.
Stop the interest clock when the delay is demonstrably the agency’s, because charging a taxpayer for time the CRA itself consumed is indefensible.
Publish real processing-time performance against every service standard, which the Taxpayers’ Ombudsperson has already recommended, so businesses can plan around reality instead of promises.
Small businesses are held to hard standards. File on time. Pay on time. Respond promptly, or face penalties and interest. My clients meet those standards every day, while waiting years for the agency to meet its own. There is nothing wrong with those standards. It is time the agency was held to them too.
No One Can Fire the CRA, and It Shows
Managing Partner at Vistance Accounting, as seen on BNN Bloomberg, Globe and Mail and Financial Post
A Business Commentary by: Daryl Ching
I run an accounting firm that works with small and medium-sized businesses, which means my team spends part of every month inside CRA reviews. Here is what it can look like from our side of the desk. A review that should take months stretches into years. Every so often, the file lands on a new agent, and we start over: re-explain the history, re-send the documents, re-argue points that were settled two agents ago. When numbers finally come back wrong, we refile, and wait months more.
Here is the part that should bother every business owner in the country. While that clock runs, other filings sit in limbo. Refunds are held. Balances under dispute keep accruing penalties and interest.
The delay belongs to the agency.
The metre runs on the taxpayer.
For a long time it was easy to dismiss all this as anecdote. It is not anecdote anymore.
Complaints to the Taxpayers’ Ombudsperson hit 3,558 last fiscal year, up 27 per cent and a three-year high, according to the office’s annual report released in June. That surge landed on top of the Auditor General’s findings last fall: callers to CRA contact centres waited an average of 31 minutes, only 18 per cent of calls met the agency’s own service standard, and agents answered individual tax questions accurately just 17 per cent of the time. Even on business tax and benefits questions, the agency’s own testing found agents were right only slightly more than half the time.
The coverage of these reports has focused on frustrated individual taxpayers, and fair enough. But the small business story is different, and in dollar terms it is worse.
For a business,
a CRA delay is not an inconvenience.
It is frozen working capital.
A refund that sits for months is cash the business cannot put into inventory, payroll or growth. A disputed balance accrues interest on a timeline the business does not control, at rates no owner would accept from a lender. I have watched owners defer hiring because five figures sat in administrative limbo. The money was theirs. The delay was not.
Then there is the cost nobody invoices. When an agency’s own agents cannot reliably explain its rules, businesses stop relying on the agency and start paying professionals for answers the public system was supposed to provide. That is the quiet economics of the Auditor General’s findings: the cost of a public institution’s failure has been privatized. And it lands hardest on the smallest players, because a multinational has a tax department and a twelve-person company does not. It is an invisible tax, and the smallest businesses pay the highest rate.
And there is the distraction. In a small company, the owner’s attention is the scarcest resource on the balance sheet. Every hour spent re-explaining a file to the fourth agent is an hour not spent on customers, staff or strategy.
The owners living this are not mildly inconvenienced. They are angry, and I will not pretend otherwise, because the anger is earned. These are people who follow every rule, remit every instalment and file on every deadline, and who cannot get a straight answer or a settled file in return. This is not anti-government sentiment. It is the specific fury of a customer who pays for a service, receives dysfunction, and is then charged interest for the privilege.
Now ask how long a private company would survive this. A business that answered half of its customers’ questions incorrectly, held their money for months, and made them start over with a new representative every quarter would be bleeding customers within a year. The share price would collapse. The board would clear out management. Competitors would feast on the wreckage.
None of those mechanisms exists here. The CRA’s customers cannot leave, because filing taxes is not optional. There is no competitor to defect to. There is no shareholder meeting, no activist investor, no quarterly reckoning. Every force that disciplines a private business, exit, competition and ownership, is absent. The agency’s revenue arrives whether its service is excellent or dreadful, because its customers are conscripted.
An institution that cannot lose its customers
has stopped counting the cost of failing them.
I spend a good part of my career warning business owners about concentration risk: never let a single customer, supplier or lender hold your company hostage, because dependence without alternatives means the other side sets the terms. Every Canadian business carries one counterparty it can never diversify away from. It is also the one institution with no competitive reason to earn the relationship.
To be fair to the CRA, the volume it handles is enormous, the tax code it administers is genuinely complex, and most of the individual agents we deal with are professional and trying to help. But volume does not explain why nobody owns a file. When reviews routinely pass from agent to agent, with no continuity and no accountability for the outcome, that is not a resourcing problem. It is a process choice, the kind that survives only where the customer has nowhere else to go.
Because the market cannot discipline the CRA, accountability has to be designed in.
Three fixes would do more than any budget increase.
Small businesses are held to hard standards. File on time. Pay on time. Respond promptly, or face penalties and interest. My clients meet those standards every day, while waiting years for the agency to meet its own. There is nothing wrong with those standards. It is time the agency was held to them too.
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