The federal government approved a sharp spike in large corporate writeoffs last year, with 11 companies receiving $1.2-billion in combined writeoffs for tax debt and other financial obligations, new figures show.
The 11 companies accounted for nearly a quarter of the $4.9-billion in writeoffs approved last year, which covered a 1½ million cases of corporate and individual writeoffs.
Citing privacy reasons, the Canada Revenue Agency is not identifying the businesses and individuals who had their debts waived. The CRA can write off debts owed to the government for a wide range of reasons, such as bankruptcy, extraordinary circumstances or financial hardship.
Conservative MP and revenue critic Adam Chambers said Ottawa should name those who are receiving large writeoffs and questioned why they are rising even as the agency’s budget and staffing levels are increasing.
National Revenue Minister Marie-Claude Bibeau recently provided a breakdown of writeoff statistics in response to a written parliamentary request by Conservative Senator David Wells.
The figures show the CRA approved $4.9-billion in writeoffs in the 2023-24 fiscal year that ended in March. That was the highest amount over the past nine fiscal years that were disclosed. The breakdowns indicate that the value of the writeoffs is heavily weighted toward a small number of large cases.
The figures cover writeoffs and waivers of tax debts and other obligations under the Financial Administration Act (FAA), the Bankruptcy and Insolvency Act, the Excise Tax Act and the Income Tax Act. The vast majority of the writeoffs were approved under the FAA.
The minister’s answer to the Senate states that the agency is prevented under legislation in some cases from releasing data where a person could be directly or indirectly identified.
The documents show that the average writeoff for the top five highest amounts under the FAA was $204.4-million, meaning more than $1-billion in writeoffs for just five taxpayers. The CRA would not say whether all five taxpayers were corporations, saying in an e-mail that it is possible an individual is part of the top five grouping but could not confirm for privacy reasons.
Mr. Chambers said Canadians should know which taxpayers have received large writeoffs from Ottawa.
He said the nearly $5-billion in total writeoffs, of which more than $1-billion applies to just five cases, is very concerning. He also questions why such large writeoffs have been approved at a time when the same agency is chasing down small businesses and individuals for ineligible pandemic benefit payments such as the Canada Emergency Response Benefit (CERB) that are much smaller in size.
“We’re talking about corporations that are getting writeoffs to the tune of hundreds of millions of dollars. There should be more transparency about how that is working,” he said.
“It raises questions about who they are. Do they have connections? Are they well represented by lobbyists?“ he asked. “Why are we having record amounts of writeoffs?”
The Canada Revenue Agency has 59,155 employees, a 48-per-cent increase from 40,059 in 2015. The budget for the agency’s tax division was forecast to be $5-billion for 2023-24, a roughly $1-billion increase from actual spending two years prior, according to the agency’s latest departmental plan.
The documents provide the average of the 11 highest amounts by individual and corporation by fiscal year.
The average corporate amount for 2023-24 was $108.5-million, or $1.2-billion in total. That is up from an average of $15-million the previous year, or $165-million in total.
The individual average for the top 11 amounts was $13-million, or $142-million in total. That was up from an average of $10.9-million the year before, or $119-million in total for the top 11.
Canada Revenue Agency spokesperson Kim Thiffault said part of the increase last year is connected to a shift in workflow during the pandemic.
She said the amount of uncollectible debts, and the ratio of uncollectible debts versus amounts collected, fluctuates year-over-year. She also said that during the pandemic, the CRA paused certain collections activities, which reduced both the amounts collected and the amounts deemed uncollectible.
“In 2023-2024, the amount of uncollectible debt was higher than in the pandemic years; however, money collected was also higher than in those years and the ratio of uncollectible debt vs amounts collected was on par with what it was before the pandemic. Additionally, the increase is also due to the growth of the economy,” she said in an e-mail.
She said the decision to deem an account uncollectible is only taken after all means of recovery are exhausted.
“The CRA employs a rigorous process to ensure all collection methods are examined. As there are costs in carrying out collections activities, in certain circumstances the debt should be deemed uncollectible in order to administer public funds properly. Deeming a debt uncollectible is a normal part of established business accounting procedures. Unpaid tax debts represent a small portion of the total receivables, and the vast majority of accounts receivable will be collected over time,” she wrote.
In its departmental plan, the agency said additional funding of its audit programs has allowed the agency to increase its ability to identify and target tax evasion and avoidance. The report said the agency conducted 62,660 audits in 2022-23, which had a fiscal impact of $14.3-billion, meaning it has contributed that amount to federal and provincial finances.