Government must engage industry partners to address cyber security.

Government must engage industry partners to address cyber security within our tax filing system.  

By Peter Davis, Head of Government & Stakeholder Relations at H&R Block Canada 

Cyber security is one of the most widespread and daunting issues facing all Canadian industries and government institutions. Statistics Canada reported that around one in six Canadian businesses across multiple industry sectors were impacted by cybercrime in 2023 at a cost of $1.2 billion, of which nearly a third of incidents relate to identify theft.[1] A separate study by TransUnion indicates that more than half of Canadians report being targeted by fraud attempts in 2024, of which 18% related to synthetic identity theft.[2]

Every year, thousands of Canadians from every walk of life fall victim to identity theft; most of whom do not know how, where or when their identify was stolen. But we do know that it can occur in a multitude of ways, including through phishing, skimming, social engineering, and mail theft to name just a few. 

With nearly one in five Canadians being targeted by identity fraud, it is critical that Canada evolves its approach to cyber security with a critical need for the government to work with all industries in addressing cyber security and fraud prevention.  

No industry is exempt from cybercrime attempts, and that includes Canada’s tax preparation industry.

The security of Canadians’ personal data is a top priority at H&R Block Canada. As the largest out of many tax preparation companies in the country, we invest in data security and fraud mitigation and detection technologies and resources. This includes the use of sophisticated encryption technologies, dedicated security personnel experts, and company-wide data security training and policies to protect the millions of Canadians we serve in filing their taxes each year. But while the tax preparation industry has a critical role to play, we need an industry-wide, holistic approach to cyber security. 

More can be done to further safeguard Canada’s tax filing system. This starts with the federal government and the Canada Revenue Agency (CRA) working closer with industry partners to establish a cyber security roundtable to jointly monitor and address cyber security threats and identity theft tax refund fraud. 

This is not an unprecedented concept. And it’s one that has demonstrated incredible success.  

A decade ago, the U.S.’s Internal Revenue Service (IRS) formed the Security Summit, to work with “…state tax agencies and private-sector tax industry officials to tackle a difficult task – fighting back against emerging criminal syndicates, based in the U.S. and overseas, that were filing fraudulent returns for refunds.” [3]

Recommendations from the Security Summit led to the creation of the Identity Theft Tax Refund Fraud Information Sharing and Analysis Center (ISAC) in 2017. The IRS credits ISAC with creating a “…formidable defense against criminals’ ongoing attacks on (the U.S.) tax system,” highlighting how the partnership between government and industry seeks to “…identify schemes quickly, create mitigations, and respond as an ecosystem to move threats out of tax refund fraud, as soon as possible.”[4] 

The impact has been profound. 

The U.S. Treasury Inspector General for Tax Administration reported that the ISAC’s collaborative efforts contributed to an 80% decrease in taxpayers reporting identity theft from 2015 to 2019 (two years prior to the ISCA’s establishment, to two years post). Financially, the IRS estimates that it protected more than US$6 billion in fraudulent identity theft refunds the year following the ISAC’s implementation. [5]  

Canada would surely benefit from an equivalent government/industry partnership model to further protect our tax filing system and protect Canadian taxpayers. 

Leveraging expertise from industry and government, a cyber security roundtable will also help accelerate awareness and adaption of best practices among businesses, public institutions, and taxpayers to combat cyber criminals’ ever-evolving tactics to defraud Canadian tax filers. 

Tax filing is a critical component of a functioning modern society. We file our taxes in order to receive benefits and help fund our public services and institutions. It is incumbent that we collectively take additional security measures to reassure Canadians that they can feel confident and secure when filing. We have the tools to achieve these objectives, but coordinating industry and government efforts must also be part of the equation.

In today’s increasingly digital and highly interconnected world, no system is immune from attempts by threat actors to perpetrate cyberattacks and fraud. Renewed urgency and focus are required to effectively harness government and industry efforts to better combat cybercrime and fraud in tax filing. 

H&R Block Canada will continue to advocate for our industry to work with government stakeholders to achieve this objective. The time to act is now.