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Revenue
Annual Report |
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Please note that the Financial Information section is available in pdf format only. If you would prefer to download this annual report as a pdf file, click here. Table of Contents
Go to Part 3: Results Analysis Go to Part 1: Preface
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Overview
Ministry Vision, Mission and Core Businesses"A province where government revenue policy and administration reflect the values of Albertans, balance present and future needs and contribute to a stable environment for the generation of wealth for all Albertans." "To provide prudent and innovative revenue, investment and risk management and to regulate the capital market in Alberta."
Relationship of Revenue Department and Reporting Entities to Core Businesses
Department of Revenue Investment Management Division The Investment Management Division (IMD) was established to act as the investment manager for pools of capital assigned by statute to the Minister of Revenue and for investments of other provincial public sector bodies, where specific agreements have been made. With approximately $34 billion under management, Alberta Revenue is one of the largest fund managers in the country. Assets under management include:
Investment objectives vary for the funds, reflecting different financial requirements and risk tolerances for each fund and its respective stakeholders. To meet the investment policies and goals, IMD has developed a wide range of investment products which can be combined to meet specific financial goals and risk tolerances. This multi-product approach is implemented on a pooled basis. Each product is defined in terms of its return objective and risk profile. Clients buy into the pools by purchasing units based on the current market value of the pools’ investments. This approach is important to managing the funds efficiently and to ensuring that each client is treated fairly. Both IMD and third party external manager expertise are used, ensuring the necessary specialized investment knowledge and skills are utilized in the most cost effective manner. External managers are used primarily for investing in foreign equity and certain domestic equity markets. Results from IMD’s annual investment client survey indicated that satisfaction with IMD’s service levels decreased to 66 in 2002-03 from 76 in 2001-02 ( scale of 100). This performance may have been influenced to some degree by dissatisfaction with the continued poor performance of equity markets.
The Securities Administration and Systems Division (SASD) has three branches - Securities Administration, Investment and Debt Information Systems (IDIS), and Valuation and Fund Accounting. It provides back office support for investment operations including:
SASD works with IMD to ensure that investment data is captured in the appropriate system and the financial transactions are settled with the corresponding brokers and financial institutions. IDIS is responsible for all of the software and system development required within IMD and SASD. The branch also provides assistance to the Treasury Management Division and the Investment and Debt Accounting Group within Alberta Finance. Valuation and Fund Accounting prepares the weekly valuation of the investment portfolios, measures investment performance and processes pool unit transactions.
Tax and Revenue Administration (TRA) is responsible for the collection of revenue, the administration of Alberta Revenue’s tax, revenue and related benefit programs and the development of tax policy. The focus is a fair, competitive, simple and efficient provincial tax and revenue system. The Division has four branches: Revenue Operations, Audit, Tax Services and Business Technology Management. Each branch is responsible for specific business processes. TRA’s branches are designed so that business processes that are similar in nature and require similar knowledge and skills are grouped into one area. Revenue Operations is responsible for registering corporations, individuals, trusts, fuel tax clients, tobacco tax and other clients under the applicable acts or programs, maintaining client accounts, validating and processing returns and claims and processing remittances and providing refunds to TRA’s clients. In 2002, the enforcement of filing requirements and tax debt collection activities were consolidated in Revenue Operations. Audit is responsible for ensuring the compliance of TRA’s clients with the tax acts by auditing the clients' books and records. Audit also works with other tax administrations and other Government of Alberta ministries on initiatives to develop policies, improve compliance and implement educational strategies required for the proper administration of tax and revenue programs. Tax Services is responsible for providing information and technical ruling services to TRA’s clients and staff and the administration of dispute resolution mechanisms with respect to TRA actions. In 2002, a policy group was incorporated into this branch to develop revenue and tax policy. This group was actively involved in the revenue management framework and tobacco tax amendments initiatives. Tax Services also provides central services to other ministries and their agencies with respect to the federal GST. Business Technology Management provides planning, business systems and quality improvement services to TRA. This Branch has the lead responsibility for managing TRA’s product development (e.g. electronic commerce, forms, etc.), change management, budgeting/forecasting and management reporting functions.
Risk Management and Insurance Division The Risk Management and Insurance Division (RMI) of Alberta Revenue administers a program to protect, secure and preserve public assets against risk of accidental loss. RMI provides services to client ministries and agencies throughout government to help them identify, measure, control and finance risk. The program is responsible for all entities subject to the Financial Administration Act. There are two branches within this division, Risk Management Operations and Claims. Risk Management Operations assists the Crown to identify, minimize and, where appropriate, finance adverse effects of accidental loss. The Claims Branch administers all claims covered under the province’s Risk Management Fund and makes recommendations aimed at reducing risk.
The Alberta Securities Commission (ASC) is an industry-funded provincial corporation responsible for maintaining the efficiency and integrity of the capital market in Alberta through the administration of the Alberta Securities Act, the Securities Regulation and the Alberta Securities Commission Rules. As a member of the Canadian Securities Administrators (CSA), an organization consisting of the 13 provincial and territorial securities regulators, the ASC plays a vital role in developing and operating a national system of harmonized securities regulation, policy and practice. The ASC is an administrative tribunal with quasi-judicial powers. Panels of members hear enforcement proceedings and consider applications for discretionary exemptions from the requirements of the securities legislation. The ASC also sits as an appeal body to hear appeals from decisions of the Executive Director, TSX Venture Exchange and the Alberta District Council of the Investment Dealers Association of Canada. In November 2002, the ASC centralized operations in its Calgary office.
Looking Forward - the Heritage Fund consultation More than 77,000 Albertans shared their thoughts on the future of the Alberta Heritage Savings Trust Fund by completing the Looking Forward: Planning for the Future with the Alberta Heritage Savings Trust Fund survey. This province-wide survey was one part of an extensive savings review initiative, to ensure policies will help meet the province’s needs into the future. Results of the survey can be found by clicking here. It is clear Albertans value the Heritage Fund and want to ensure it will be around to benefit future generations. Future changes will focus on strengthening the Fund as an endowment and preserving its value over the long-term.
Developing the Revenue Framework Alberta Revenue is developing a framework that considers broad characteristics, trends and issues in the province’s revenue structure. This framework will ensure decisions can be made to benefit all Albertans over the long-term. Revenue is working with other ministries that are responsible for forecasting and collecting revenues to ensure a cohesive provincial approach to revenue management.
Strengthening Investment Operations During the year Alberta Revenue took a number of steps to strengthen investment operations. Work commenced on a medium-term strategic plan for the investment operation, which includes four goals:
Meanwhile the internally managed Canadian equity portfolio was restructured to improve investment results and a Fund Management Group was established to help pension, endowment and other client funds better achieve their investment objectives. Alberta Revenue is responsible for the investment management and administration of approximately $34 billion of assets. These investments include the Alberta Heritage Savings Trust Fund, other provincial endowment funds, public sector pension plans and other investments for government related clients. As the fifth largest investment organization in the country, the division continues to provide high quality service to government clients at low cost. Clients pay 10 basis points less than they would pay by outsourcing management to the private sector. Ensuring the division provides high quality management cost-efficiently continues to be a key objective.
Straight Through Processing and T+1 Trade Settlement To meet changing standards in the investment industry, Revenue is acquiring new trading and data integration systems to enhance straight through processing and enable trades to be completed one day after trade date, compared to the current standard of settling three days after the trade date. The project will be completed by 2004-05.
Reviewing and Reforming Securities Legislation The securities regulatory system promotes confidence in capital markets, enables businesses to access the financing they need to grow, and assures citizens they will be treated fairly when they invest. In February 2003, provincial and territorial ministers from across the country agreed to study the securities regulatory framework and make improvements that will modernize the system, make it more efficient, and inspire investor confidence. Alberta is leading this initiative. Ministers are studying a passport approach that will allow businesses to operate in all jurisdictions if they are recognized by one. An action plan will be developed by fall 2003. In addition, securities administrators from across the country have made a strong commitment to eliminating differences in provincial and territorial securities law by participating in the Uniform Securities Legislation (USL) Project. The Alberta Securities Commission is chairing this initiative, and a national framework for securities legislation will be presented to provincial and territorial leaders by the end of the 2003-04 fiscal year.
Competitive tax rates encourage investment, and reductions in Alberta’s corporate tax rates continue to make the province globally competitive. This fiscal year, the general rate fell to 13 per cent, the small business rate was reduced to 4.5 per cent, and the small business threshold increased to $350,000. These reductions saved $81 million for businesses, in addition to the $286 million that has been cut from corporate income taxes since 2001. Additional reductions will be made, as affordable, in coming years.
Ensuring Alberta’s health care system continues to provide high quality health care for generations to come is an important government priority. A significant contribution to these efforts is Alberta’s tobacco reduction strategy, which is encouraging Albertans, especially young Albertans, to stop smoking, or, better yet, to never take up the habit. Studies prove that increasing tobacco taxes reduces tobacco use. To support the reduction strategy, tobacco taxes were increased for the first time in 10 years, by 125 per cent. The strategy is working – tax-paid tobacco sales have dropped by nearly 18 per cent. Additional resources were dedicated to enforce legislation and combat smuggling. An information campaign was implemented in stores at border crossings to educate Albertans about tobacco legislation and raise awareness that tobacco can only be purchased for personal use. .
Alberta supports a broad-based, low rate tax system, and will consult with key stakeholders on changes to the tax system. For example, while the Business Tax Review Committee recommended eliminating the rebate portion of the Tax Exempt Fuel Use (TEFU) program, initial consultations found these benefits to be important in some industry segments. Further consultation with key industry associations began in February 2003 and will continue to the next fiscal year, with a view to simplifying the system.
The Future Summit’s Report to Government, Imagine our Tomorrow, was released in May 2002. Through the Summit, Albertans told government they were committed to a strong fiscal plan that balances fiscal responsibility with sustaining core programs and services - also the goal of Alberta’s new fiscal framework. Many of the ideas suggested through the Summit already form part of government business, and government has begun to take action on others. For example, delegates at the Summit supported the creation of a sustainability fund, and Summit findings served as the basis of the recently completed Heritage Fund consultation.
The Risk Management Fund provides insurance-like coverage to ministries, managing the risk of significant accidental loss to public assets. Following the events of September 11, 2001, insurance premiums have been rising. Over the year, Revenue has reviewed financing strategies for the Fund, including the mix of self-insurance and purchased insurance. Revenue continues to ensure the government’s self-financed insurance coverage is cost-effective and efficient.
Alberta implemented an NHL Players’ Tax that applies to all NHL players for all regular season games played in Alberta. Revenue from this tax will be used to provide a grant to Alberta-based NHL teams that is equal to the revenue raised (minus administrative costs.) This is the first tax designed for electronic, web-based filing and NHL teams have commented on its ease of use.
As of January 1, 2002, certain municipal-owned electricity companies must make payments equal to what would otherwise be paid in federal and provincial corporate taxes to the Alberta Power Pool. These payments level the playing field with the other companies paying corporate income taxes in the deregulated electricity industry. Alberta Revenue administers this program and has received and assessed its first returns.
as at March 31, 2003 The following Acts are the responsibility of the Minister of Revenue:
The following Acts are the combined responsibility of the Ministers of Revenue and Finance:
The following Acts are the combined responsibility of the Ministers of Revenue and Finance and other Ministers as noted:
Go to Part 3: Results Analysis Go to Part 1: Preface |
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