Annual Report Appendices

Appendix A: Glossary of Terms

Accounts receivable/debt — amounts claimed by the Province against debtors.

Tax assessment — a written notice from government of an amount owed to the Province. This notice represents monies that should have been remitted or paid to the Province, as well as, any penalty or interest charges imposed by the Province.

Billing — the act of notifying an individual or business of an amount owed to the Province.

Collections — remedial actions employed by the Province to effect a payment from an individual or business on an overdue account receivable.

Incremental revenue — monies identified by, or remitted in response to, audit and enforcement activities.

OneStop Kiosk —the ministry is a partner in the OneStop Business Registration, a web-enabled, electronic service delivery system designed to simplify government registration requirements for business owners. This service allows entrepreneurs to register with multiple participating federal and provincial public sector agencies and local governments through a 'single window'.

Overdue — an account receivable for which no monies have been remitted and is considered overdue according to the legislation at issue.

Recoveries — monies recovered in the course of administering accounts receivable.

Remittance — the payment of monies to meet a financial obligation.

Refund — return of monies remitted in error or in excess of an account receivable.

Revenue — all monies received to meet financial obligations or identified as owed to the Province.

Review and Audit — an examination of an individual's or business' financial records or accounts to ensure the amounts owed have been collected and remitted, or paid as required. This can vary from the review of grants, tax expenditure and exemptions and compliance with legislation, to the examination of financial records and legal documents.

Small business — a small business has fewer than 50 employees or is operated by a person who is self-employed without paid help.

Tax expenditure — the reduction in tax revenues that results when government programs or benefits are delivered through the tax system rather than reported as budgetary expenditures. Tax expenditures are usually made by offering special tax rates, exemptions or tax credits to program beneficiaries.

Transaction — the act of processing a cheque or scannable coupon for the purpose of applying payment to an account receivable.

Voluntary compliance — when taxpayers meet their financial obligations without requiring the Province to effect payment.

Appendix B: Ministry Contributions to the Government's Five Great Goals

The ministry's activities support the achievement of the government's Five Great Goals in the following ways:

Make British Columbia the best educated, most literate jurisdiction on the continent.

The ministry works with municipalities and local service areas to collect property taxes that pay for schools and libraries in communities across the province. The ministry administers a number of tax credits and exemptions that support literacy and access to education.

Lead the way in North America in healthy living and physical fitness.

The ministry collects Medical Services Plan premiums to assist in funding the health care system. It also administers tax exemptions that support British Columbians in living healthier, more active lives. For example, provincial sales tax exemptions are allowed for bicycles, and non-prescription drugs and vitamins.

Build the best system of support in Canada for persons with disabilities, those with special needs, children at risk, and seniors.

The ministry administers tax benefit programs and exemptions on certain products used by seniors and persons with disabilities or special needs. Programs and exemptions include provincial sales tax exemptions on equipment and devices designed for use by a person with a disability, tax refunds for motor fuel for vehicles used by persons with disabilities, and additional home owner grants to seniors and disabled residents.

Lead the world in sustainable environmental management, with the best air and water quality, and the best fisheries management, bar none.

The ministry administers numerous tax exemptions for environmentally friendly products and projects. For example, some alternative fuel vehicles, such as hybrid vehicles, are eligible for a provincial sales tax exemption, as are prescribed materials and equipment used to conserve energy.

Create more jobs per capita than anywhere else in Canada.

The ministry contributes to job creation in British Columbia by:

Appendix C: Service Delivery

Small Business

As many different ministries and levels of government have programs and services that impact the small business sector, the Ministry of Small Business and Revenue works with these organizations and other partners to support small business start-up and growth.

The ministry, on behalf of the Province and in partnership with the federal government, jointly funds Small Business BC, a not-for-profit organization providing support to current and prospective small business operators in British Columbia. Service delivery outcomes are determined through an annual contribution agreement.

Regulatory Reform

The ministry is responsible for leading the regulatory reform initiatives for government. However, success is dependent on the efforts of all government ministries and agencies. Government ministries annually identify regulatory reform activities and report on performance in their Service Plan and Service Plan Report. The Ministry of Small Business and Revenue produces quarterly public reports on cross government regulatory requirements.

Tax Administration and Revenue Management

The ministry is the principal revenue collector for the Province, with administrative responsibility for $20.6 billion in 2005/06 or approximately 58 per cent of all provincial revenues. The ministry's strategic focus is on promoting voluntary compliance with the financial obligations resulting from the legislation it administers and that defines the ministry's roles and responsibilities.²³ Successful tax administration and revenue management depend on the ministry's information and education programs to support voluntary compliance, balanced by compliance, audit and debt collection activities.

The ministry represents British Columbia in its relationship with the Canada Revenue Agency (CRA), which administers the Province's personal and corporate income taxes under the authority delegated to the Government of Canada through the British Columbia-Canada Tax Collection Agreement (TCA). This arrangement allows a single administration and collection agency for provincial corporate and personal income taxes, thereby increasing efficiency and simplicity for the Province and taxpayers. Each year, a detailed British Columbia Work Plan is developed jointly by the ministry and the CRA. This work plan and the TCA help to ensure revenue due to the Province is identified and received.

The ministry also works with the Canada Border Services Agency, with respect to the Social Service Tax Act and the Tobacco Tax Act it administers on behalf of the ministry. The agency identifies and collects taxes due on purchases brought into the province by British Columbians. The ministry manages this relationship through an administrative agreement.

23	Refer to Appendix D for a list of legislation administered by the Ministry of Small Business and Revenue.

A Centre of Excellence for Tax Administration and Revenue Management

The Ministry of Small Business and Revenue provides revenue management services to other ministries. The ministry has implemented processes and accountabilities for transferring accounts receivable to the ministry to ensure continued high levels of service to its client ministries and their customers. The ministry also collects taxes and fees for other agencies such as the Greater Vancouver Transportation Authority, local service areas (for example, regional improvement districts) and local governments throughout the province. The ministry's relationship with these clients is managed through transfer and service agreements, and memoranda of understanding.

In late 2004, the ministry entered into an agreement with EDS Advanced Solutions Inc. for the management and delivery of information and technology services, and to work with the ministry to build and operate a centre of excellence for revenue management. The ministry manages the agreement through a benefits and performance-based service contract structured to ensure performance and service levels are sustained and improved.

Property Assessment and Review Processes

The Minister of Small Business and Revenue is accountable for BC Assessment, the Property Assessment Review Panel and the Property Assessment Appeal Board. The Minister is charged with the administration of the Assessment Act and the Assessment Authority Act.

BC Assessment²⁴ operates as an independent, provincial Crown Corporation governed by a Board of Director. Its mandate is to establish and maintain uniform real property assessments, on an annual basis, for all property owners throughout British Columbia in accordance with the Assessment Act. The Minister reviews and approves the agency's annual three-year Service Plan and annual Service Plan Report.

The Property Assessment Review Panels and Property Assessment Appeal Board operate under the Assessment Act. The panels provide property owners in British Columbia with a first level of appeal in an accessible, affordable and equitable forum. Year-end reviews identify opportunities for improvement to process and quality of customer service. The Property Assessment Appeal Board operates as the second level of appeal for property owners who disagree with the assessment of their property. The Board's objectives are to resolve appeals justly and consistently, in accordance with the principles of procedural fairness and natural justice, and to complete appeals as quickly as possible, at minimum cost to all parties. The Board reports on performance to the Minister through quarterly and annual reports.

24	For more information, view online at http://www.bcassessment.bc.ca/.

Appendix D: Legislation Administered by the Ministry

The Minister of Small Business and Revenue and Minister Responsible for Regulatory Reform is charged with the administration of the following enactments, presented alphabetically.

Assessment Act

Assessment Authority Act

Corporation Capital Tax Act

Esquimalt and Nanaimo Railway Belt Tax Act

Home Owner Grant Act

Hotel Room Tax Act

Income Tax Act

Indian Self Government Enabling Act

Insurance Premium Tax Act

International Financial Activity Act

Land Tax Deferment Act

Logging Tax Act

Medicare Protection Act ss. 5 (1) (b), 7 (5), 8 (4), 8.1, 8.2 and 32

Mining Tax Act

Motor Fuel Tax Act

Petroleum and Natural Gas Act ss. 74 – 77

Property Transfer Tax Act

Sechelt Indian Government District Home Owner Grant Act

Social Service Tax Act

Taxation (Rural Area) Act

Tobacco Tax Act

Tourist Accommodation (Assessment Relief) Act

The Minister of Small Business and Revenue and Minister Responsible for Regulatory Reform is charged with the administration of the following enactments, in areas related to revenue management processes only.

Forest Act

Forest and Range Practices Act

Forest Practices Code of British Columbia Act

Forest Stand Management Fund Act

Ministry of Forests Act

Mineral Land Tax Act

Mineral Tax Act

Petroleum and Natural Gas Act

Range Act

School Act

South Moresby Implementation Account Act

Wildfire Act

Appendix E: Ministry Organizational Structure and Key Responsibilities

LINK TO LARGER VERSION

 

Appendix F: Changes to Goals, Objectives, Performance Measures, and Targets

Since the publication of the 2005/06 – 2007/08 Service Plan Update, the ministry has undertaken a review of its goals, objectives and performance measures. The ministry has made changes to better focus the plan on:

These changes are intended to improve service planning and performance reporting, and support increased accountability.

In summary, the ministry has moved from six goals to four. The following table provides the details of the changes made to goal statements and the resulting changes to the objectives aligned with these goals. There has been no significant change in strategic direction.

A summary of changes to the ministry's performance measures is provided below. Measures were removed from the Service Plan where a better performance measure has been identified or where the measure is focused on internal administrative matters primarily of interest to the ministry. Those measures removed from the Service Plan that continue to be of importance to the ministry will be monitored internally as part of a suite of measures the ministry uses to support decision-making. Measures included in the ministry's 2005/06 – 2007/08 Service Plan Update are reported in this Annual Service Plan Report.

Appendix G: Performance Measure Data Methodology

The following section provides an overview of the data methodology and data sources of the performance information provided in this report.

Benchmarking

A key part of performance monitoring and measurement is benchmarking — finding out how the ministry's performance measures, targets and results compare to other jurisdictions with similar mandates. The ministry conducted exploratory work to identify benchmarking opportunities for tax administration and revenue collection programs in other jurisdictions.

The key findings from the ministry's exploratory work are:

Differences in tax structure: Different provinces structure their tax regimes differently. Tax rates and exemptions for sales, income, property and resource taxes vary widely across the country making direct comparison of performance information difficult.

Differences in focus due to organizational structure: Most jurisdictions have very few publicly reported performance measures dealing with tax and debt administration. Tax administration and revenue collection functions usually rest with finance ministries and the ministries managing the specific program (for example, mineral taxes are managed by the ministry responsible for the mining industry). Revenue management is one of a number of responsibilities of these organizations, and published information specific to tax and debt collection is scarce.

Data Methodology

Regulatory Quality

This measure reports on compliance with the Regulatory Reform Policy that requires all proposed legislative and regulatory changes to be evaluated according to the Regulatory Criteria Checklist. The regulatory criteria reflect internationally recognized best practices in regulatory decision-making.

Methodology: Regulatory Criteria Checklists for all proposed regulatory requirements are signed-off by the Minister responsible and submitted to the Ministry of Small Business and Revenue.

Regulatory Count.

This measure reports the progress made across government to reduce red tape and maintain a zero net increase in regulatory requirements. All changes to regulatory requirements are entered into the regulatory requirements database by each ministry. Progress is reported in the Regulatory Reform Quarterly Report by the Minister Responsible for Regulatory Reform.

Methodology: Net change in regulatory count between June 2004 (237,893) and March 31st of the fiscal year reporting.

Percentage of ministry revenue received without enforcement action.

This measure reports on the percentage of revenue identified by the ministry (e.g., issuing a Medical Services Plan premium bill) or self-identified by individuals and businesses (e.g., by filing a tax return for provincial sales tax) without audit or compliance intervention. The measure is calculated for the fiscal year.

For this measure, total ministry administered revenue includes:

This measure excludes personal and corporate income tax collected by the Canada Revenue Agency on behalf of the ministry. All revenue information is available through ministry data systems and is audited as part of the Public Accounts.

A limitation of this measure is the impact of ministry success in identifying incremental revenue on performance. The latter is the amount of monies identified, or remitted in response to audit and compliance activities.

Methodology: Total ministry administered revenue (excluding personal and corporate income tax collected by the Canada Revenue Agency on behalf of the ministry) less incremental revenue divided by total ministry administered revenue (excluding personal and corporate income tax).

Percentage of client-initiated electronic payments received by the ministry.

This measure reports on the proportion of revenue received electronically by the ministry during the fiscal year. All payments received are recorded in ministry data systems, including the payment portfolio (e.g., provincial sales tax, rural property tax, MSP debt collections), the amount and the method of payment (e.g., cheque, PC banking, electronic funds transfer). Payments include both tax and non-tax payments and can be voluntary, result from an audit assessment (incremental revenue) or debt collection. Electronic payments include those received through electronic funds transfer, electronic data interchange payments from financial systems, credit card payments, personal computer and telephone banking, preauthorized payments, pay direct e-banking and group e-banking and those made at a financial institution or Government Agent offices and transferred to the ministry electronically. Non-electronic payments (referred to as physical payments) include cash, cheques and bank drafts.

Methodology: Total revenue received through electronic payment channels divided by total revenue received through physical and electronic payment channels.

Percentage of on-time payments

This measure reports on the proportion of tax payments received on-time and for the amount owing. Those received on or before their legislated due date are considered on-time. There are three tax areas where the ministry is able to identify both the number of payments that should be received and the payment due date — provincial sales tax, rural property tax and mineral, oil and gas taxes. In 2005/06, these areas represented 76 per cent of revenue paid to the ministry and 19 per cent of the total number of payments received. Data is collected and maintained in ministry data systems and reporting is for the fiscal year. Reporting of this measure lags by three months (i.e., January is reported in April) to give time for late returns to be submitted and included in the calculation.

Methodology: Monthly tax returns filed on or before their legislated due date and for the amount owing divided by total tax returns received for that month filed within 3 months of the due date.

Incremental revenue

Incremental revenue is money identified by ministry action (primarily audit and compliance activities) that would not otherwise have been received. The information for this measure is tracked through ministry business information systems and is reported for the fiscal year. Incremental revenue is identified for ministry tax programs including consumption, income, property, and mineral, oil and gas taxes and others (e.g., Corporation Capital Tax and Insurance Premium Tax).

Methodology: Revenue identified or remitted in response to audit and compliance activities of the ministry.

Debt collections

This measure reports on the amount of outstanding receivables recovered by the ministry through its debt collection programs during the fiscal year. This measure is tracked through ministry business information systems. This measure includes debt collection related to tax statutes administered by the ministry — income and capital taxes, consumption taxes, property taxes and stumpage revenues — as well as the collection of debts associated with Medical Services Plan Premiums, the Immigrant Sponsorship Program, the B.C. Ambulance Service, the British Columbia Student Assistance Program, Employment and the Assistance Program and court fines.

Methodology: Total monies collected on overdue accounts receivable by the ministry and its private sector service provider.

Number of audits performed

The ministry undertakes a variety of audit activities counted as audits. Audits vary from the review of grant claims, tax expenditures and exemptions and compliance with legislation to the examination of financial records and legal documents. Audit data is collected and maintained by ministry staff in business information systems that report on the total number of audits performed during the fiscal year.

Methodology: Number of audits conducted by the ministry.

Annual tax assessment per audit position

The ministry has allocated specific positions to the audit function and determines the average number of audit positions occupied on a rolling monthly basis. Tax assessments are a subset of incremental revenue generated by ministry audits, and is available through ministry business information systems and reported for the fiscal year.

Methodology: Incremental revenue identified through audit assessments for the fiscal year divided by the average number of audit positions filled over the year.

Average payment recovered per tax collection position

The ministry has allocated specific positions to the tax collection function and determines the average number of collection positions occupied on a rolling monthly basis. The payments recovered by these collection positions make up the tax portion of the ministry's debt collection result and are tracked through ministry business information systems and reported for the fiscal year.

Methodology: Tax debts collected for the fiscal year divided by the average number of tax collection positions filled over the fiscal year.

Percentage of total government accounts receivable more than 90 days overdue

This measure reports on the percentage of debt owed to government that is over 90 days past due. The ministry is not directly responsible for all government receivables, but the success it achieves in overdue debt contributes to the improvement of this overall measure.

Data reflects input from all ministries with debt administration responsibilities. Data are provided by the Office of the Comptroller General on a quarterly basis. The annual figure is a point in time measure as of March 31st of the fiscal year.

Methodology: Total government receivables more than 90 days overdue divided by total government receivables.

Elapsed time from receipt of tax appeal to final decision

This performance measure reports on the average elapsed time from the receipt of an appeal to the final decision as of March 31st of the fiscal year. The ministry appeal process involves:

Appellants may withdraw from the appeal process at any time. The progress of an appeal through the administrative process is tracked electronically and the data for this measure is calculated by this system.

Elapsed time to resolve a tax appeal includes the total number of days from the day the appeal is received in the ministry up to and including the date of decision on the appeal. This excludes those days when an appeals file is on hold for reasons beyond the ministry's control. For example, the days a taxpayer has requested an extension to submit further information to support their appeal are excluded from the calculation.

Methodology: Sum of elapsed time for all resolved appeals divided by the total number of appeals resolved during the fiscal year.

Receipt to deposit turnaround

The receipt to deposit turnaround is a point in time measure at March 31st of the fiscal year. Performance is measured based on the physical monitoring of transaction volumes and estimated time for deposit of payment following account update. This measure includes all payments made by cheque for Medical Services Plan premiums and provincial sales tax. In 2005/06, these areas constituted 77 per cent of all cheques processed by the ministry and are the only payment streams experiencing a continuous high volume of payments over the year. Turnaround time is calculated from the date a payment enters payment processing until it is deposited.

Methodology: Sum of (day money is deposited minus day it entered payment processing for each transaction) divided by number of transactions.

Cost to collect $1 of debt

This measure reports on the average cost to recover $1 of overdue tax accounts receivable during the fiscal year. Costs include salaries and benefit costs associated with tax collection activities, and building and infrastructure costs, excluding data system maintenance or amortization which cannot accurately be attributed at the business unit level. Costs are based on actual expenditures, while debt recoveries are recorded in ministry business information systems.

The ministry has transitioned payment/transaction processing and non-tax collections functions to a private sector service provider where the terms of the contract provide for payment on a consolidated, transformed suite of services, not on a service by service basis. Therefore, in 2006/07, the ministry has revised the cost to collect $1 of debt measure to include only the tax-collection portfolios managed by ministry staff.

Methodology: Cost of tax debt collection divided by tax debt collected.

Appendix H: Taxpayer Fairness and Service Code Standards

Twelve service excellence standards have been identified to monitor the ministry's progress in meeting the commitments set out in the Taxpayer Fairness and Service Code. This first set of standards focus on the timeliness and accessibility of ministry services. Over time, the ministry will add to and improve these standards based on consultation with the small business community and feedback from taxpayers.

Prior to determining the ministry's service excellence standards, research was conducted to review similar work in other jurisdictions. The ministry did not adopt specific standards from other jurisdictions due to differences in business processes, technology and level of resources applied, but made efforts to include common service aspects. Based on this research, standards were developed in partnership with several small business organizations to reflect those standards the small business community felt were most important to them.

The following table lists the service excellence standards and their performance targets. The 2006/07 targets reflect baseline data available for nine of the twelve standards, with future years' targets reflecting the ministry's commitment to maintaining high levels of customer service with a focus on continuous improvement. Baselines for the remaining three standards will be established in 2006/07.

The ministry will monitor performance using existing ministry business information systems, with reporting beginning in 2006/07. A standard will be considered to 'be met' if, over the twelve months of the fiscal year, the performance meets or exceeds the established target.

1	The statement in the service standards dealing with Service BC-Government Agents was provided to inform customers that information about ministry programs is available from Service BC. This was excluded in the above list as the ministry is not accountable for service provided by Service BC, but the ministry will ensure they have the information required to fulfill this commitment.
2	A significant increase in account registrations and clearances are anticipated due to the upcoming 2010 Olympic and Paralympic Winter Games in Vancouver. The goal is to maintain a high level of performance despite a significant increase in workload.
3	The Consumer Taxation Programs Branch (a key contributor to the standard) is currently streamlining its refund process to improve response times. It is anticipated future targets will be higher.
4	Based on a Common Information Technology Services standard of 24/7 service, which excludes scheduled downtime for system maintenance on Sundays between 6:00 a.m. and 9:00 a.m.