News in Brief

CRA call centres not always accurate: Report

› OTTAWA — The agents working in the Canada Revenue Agency’s (CRA) call centres only provide accurate information to callers about 70 per cent of the time, a new audit finds.

The audit by the Office of the Auditor General of Canada looked at whether the centres provide individuals and businesses with timely and accurate information. It covered a period from April 1, 2012 to March 31, 2017.

“This finding matters because callers assume the information they get from call centre agents is accurate. This could lead to callers paying too much or too little tax and later being subject to reassessments or objections. It might also result in taxpayers not receiving benefits they are entitled to,” said the report.

The audit also found that the CRA blocked more than half of the calls to its call centres because it could not handle the number that it received. Of the 53.5 million calls that came in, the audit found that the CRA blocked 29 million by giving callers a busy signal or providing them with a message to call back later or go to its website for information.

“This means that each caller made an average of three or four call attempts per week. Even after several attempts, some callers did not always reach an agent or the automated self-service system,” the report said.

It also found that the CRA exaggerated its call centres’ results in its public reporting. Although the CRA states that about 90 per cent of callers reach an agent or its automated self-service system, the report said when blocked calls are included, the number drops to 36 per cent.

The report urged the CRA take steps to improve the call centres’ timeliness and accuracy, including giving callers information on wait times so that they can choose whether to wait, go to the website or call back. It also recommended the agency review its quality assurance practices and monitor staff’s training needs.

The CRA said it is working to improve its technology and plans to move its call centres to a new telephone platform this year. The agency also said it plans to implement a new way to train and evaluate its agents.

MSP task force working toward March deadline

› VICTORIA — A task force studying ways to eliminate Medical Services Plan (MSP) premiums in British Columbia is giving residents, businesses and other stakeholders until the end of this month to submit their ideas.

The provincial government has said it wants to eliminate the premiums by 2021. It set up the task force last fall to identify and recommend options for replacing the revenue that MSP premiums generate, estimated at about $2.2 billion this fiscal year.

In evaluating options, the government has mandated the task force to look at issues such as fairness, efficiency, business competitiveness, simplicity and revenue stability. The recommendations must include a strategy and timing for implementing the suggestions.

The task force’s final report to the government is due by March 31. 

Quebec reduces lowest tax rate

› QUEBEC CITY — The Quebec government has reduced the lowest rate for personal income tax from 16 per cent to 15 per cent, retroactive to the 2017 tax year.

In an economic update released in November, Finance Minister Carlos Leitão announced that individuals would see the change when filing their 2017 income tax returns. For employers, the rate change is built into the 2018 income tax deduction tables and formulas.

The 15 per cent rate is also now used to calculate various personal tax credit amounts claimed on a Source Deductions Return (TP-1015.3-V). The government announced in its budget last March that beginning with the 2017 tax year, it would use the tax rate for the first taxable income bracket for the calculations instead of the 20 per cent rate it had been using, which applies for the second tax bracket.

The change also affects the tax rate employers use to calculate income tax deductions for lump-sum payments such as retiring allowances. The tax rate for lump-sum payments of up to $5,000 is now 15 per cent. It remains 20 per cent for amounts exceeding $5,000.

Paper calls for changes to executive compensation

› MONTREAL — The current standardized methods that corporate boards use to set executive compensation in publicly listed corporations are “deeply flawed” and should be replaced, said a recently released policy paper.

The report by Yvan Allaire, executive chair of the Institute for Governance of Private and Public Organizations (IGOPP), said the compensation process is based on a number of false assumptions and dubious hypotheses. These include thinking that management skills are transferable from one organization or industry to another, compensation motivates high performance, and overestimating the relationship between stock price and individual executive efforts.

The report, called Executive Compensation: Cutting the Gordian Knot, states that this process “locks corporations in a mold devised by consultants, generating long descriptions and large compensations, which may satisfy critical observers, but does not achieve what compensation programs should.”

It advised corporate boards to stop looking to peer groups of companies when determining CEO compensation, adding that this has contributed to a marked increase in executive pay.

The paper stated that the ratio of Canadian CEO compensation to the average worker increased from 62:1 in 1998 to 140:1 in 2016, with the median compensation package for executives valued at $8 million in 2016.

The difference was even starker for the CEOs of Canada’s banks, with a ratio of 184:1 and a median compensation package of $10.5 million in 2016.

The paper made a number of recommendations, including calling on boards to design executive compensation packages tailored to their organization and its stakeholders.

“The responsibility for change rests primarily on the board,” said Allaire. “Board chairs and compensation committees must remain entirely accountable and responsible for establishing the system of executive compensation designed for their specific company and their particular industry.”

“The goal is to design compensation programs that are fair, sensitive to stakeholder concerns and aligned with the long-term interests of the corporation,” he said.

The report also advised against boards regularly granting stock options to CEOs, except for exceptional circumstances. Instead, it suggested that they grant options only when hiring or promoting an executive and that they review the level every three years.

It also recommended that boards include in their proxy management circular a statement verifying that they were formally informed of the ratio between their CEO’s compensation and the median compensation of their organization’s workers and of society in general and that they consider the ratio appropriate.

The report also called for the creation of a forum where board chairs and chairs of compensation committees for the 60 largest companies on the Toronto Stock Exchange could meet to discuss compensation issues and agree on fundamental changes.

Average weekly earnings up in September

› OTTAWA — Average weekly earnings of non-farm payroll employees were $985.95 in September, up from $976.53 in August, Statistics Canada reports. The agency revised the August amount from the previously reported $974.61.

On a year-over-year basis, weekly earnings were up 3.1 per cent from September 2016.

Changes in weekly earnings reflect a number of factors, including wage growth, changes in the composition of employment by industry, occupation and level of job experience, as well as average hours worked per week.

Non-farm payroll employees worked an average of 32.7 hours a week in September.