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ARCHIVED - External Charging Policy - Archived Version of 2003

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External Charging Policy

Table of Contents

Effective Date



Policy Statement


Policy Requirements


Annex A - References


Effective Date

The External Charging Policy replaces the Cost Recovery and Charging Policy (1997) and comes into effect August 12, 2003.


The federal government has engaged in external charging since Confederation, and today, like most other jurisdictions, applies external charges to a diverse range of activities. External charging differs from taxation in that the charge is linked to what an identifiable external party receives, over and above what the general taxpayer receives, or to the costs of regulating an activity or providing a service.

External charging is a sound management tool that can foster good governance. By making departments and stakeholders aware of the full costs of products and services, the value and associated costs of rights and privileges granted and the value of access to, and use of government resources, departments can promote more effective and responsive service delivery and encourage sound stewardship of resources.

This policy outlines:

  • the conditions under which external charging is appropriate and the requirements for establishing, amending and managing external charges;
  • requirements for conducting open, transparent and informative consultation with stakeholders; and
  • requirements for monitoring the implementation of the policy and for reporting on revenues derived from external charges and associated information.

This policy reflects the findings of a review of the 1997 policy, led by the Treasury Board Secretariat. It sets out the expectations of the Treasury Board with respect to the way departments manage external charging with the aim of strengthening accountability and fostering open and transparent communication.

The provisions of this policy are consistent with the commitment made in the 2003 federal Budget to set out the principles and enhanced implementation requirements for improved management practices relating to external charging.

The principles upon which the policy is based have not changed. The policy does, however, ensure that greater accountability and management rigour is applied to the establishment, amendment and on-going management of external charges. This is accomplished through increased emphasis on open, transparent and on-going stakeholder consultation, as well as through more comprehensive monitoring and reporting requirements.

The requirements of the policy are described in generic and principles-based terms in order to provide departments with the flexibility to tailor the implementation of the policy to specific external charges and to accommodate the diverse range of government activities and the environments in which they operate.



Benefit refers to the value of those products, services, rights or privileges or access to or use of government-owned and controlled resources, tangible or intangible, that is directly conferred upon identifiable external recipients.

Department (departmental)

"Departments" includes all departments as defined in section 2 of the Financial Administration Act.

External Charging (External Charges)

External charging refers to the process of establishing fees and collecting revenues for the direct provision or granting to identifiable external recipients (e.g. individuals, businesses, corporations and other non-federal institutions) of products, services, regulatory activities, use of a government facility (if not otherwise a real property transaction excluded by the policy), rights or privileges or access to or use of government-owned or controlled resources.

External charges refer to the actual fee established or the revenues collected.

External charges result in non-tax revenues, whether generated in Canada or abroad. They do not include other types of non-tax revenues (see the Application section of the Policy).

Identifiable External Recipients

All individuals, groups or entities not defined as departments are considered "external". This includes Crown corporations, associations, as well as municipal, provincial and foreign governments and international organizations.

"Identifiable recipients" are those who can be reasonably viewed as distinct from the general public and either derive a benefit or are those whose actions require the federal government to incur regulatory costs.


Stakeholders are all external parties with a self-expressed or perceived interest in a federal program. This includes paying users and their associations, as well as individuals and groups who have an interest in the core functions or activities of the program.

Policy Statement

 The Government’s purpose in promulgating the External Charging Policy is:

  • to promote an equitable approach to the funding of government programs by fairly charging those who derive benefits beyond those enjoyed by the general taxpayer or by fairly charging those whose activities generate the need for regulation;
  • to permit the government to earn a fair return, for Canadians, for rights or privileges granted and access to or use of resources owned or controlled by the government on their behalf; and
  • to promote the efficient allocation of resources by subjecting programs to a market test of supply and demand, thereby reducing or eliminating the demand for products or services that are perceived as "free".

The objectives of the policy are to strengthen accountability, through consultation, monitoring and reporting, as it pertains to the establishment, amendment and ongoing management of external charges.

Through this policy, Treasury Board sets out the conditions under which external charging is appropriate; the requirements for establishing, amending and managing external charges, and the respective roles and responsibilities of Ministers, Deputy Heads, the Treasury Board Secretariat and departments.


The policy applies to all departments defined in section 2 of the Financial Administration Act, regardless of the authority used to establish or amend external charges.

This policy applies to fees departments charge external parties (e.g. individuals, businesses, corporations and other non-federal institutions) in return for granting or providing directly:

  • products or services (including regulatory services),
  • rights or privileges, or
  • access to or use of government-owned resources.

This policy also applies to charging for the use of government facilities (e.g. campgrounds), when this is done as part of the department’s core services to the public.


The policy does not apply to the following types of transaction:

  • Real property transactions which are incidental to a department’s core services.
  • Revenue contracts formally signed and negotiated with external parties, so long as the contract oversees a particular, unique relationship (rather than a routine transaction made widely available to users on demand); and the transaction is optional (i.e. not required by legislation).
  • Arrangements or accords negotiated with other domestic governments (e.g. municipal or provincial), foreign governments, or international organizations (e.g. United Nations, North Atlantic Treaty Organization).
  • Transactions which are subject to the objectives and provisions of other, more specific federal policies and instruments applicable government-wide. These situations include:
  • transactions between and within departments, as well as undertakings within the ambit of the Common Services Policy;
  • transactions between departments and federal employees as part of collective agreements or terms and conditions of employment (e.g. parking, clothing, uniforms, housing);
  • real property transactions entered into under the ambit of the Federal Real Property and Federal Immovables Act and Federal Real Property Regulations;
  • the pricing of publications (which is subject to the Communications Policy of the Government of Canada);
  • transactions subject to the Government Contracts Regulations or the Treasury Board Contracting Policy;
  • access to and disposition of Crown assets;
  • royalties arising from Crown-owned intellectual property; and
  • transfer payments (e.g. grants or contributions to external beneficiaries).

Policy Requirements

General Requirements

At least one of the following conditions must be met before an external charge can be established:

  • a product, service or the use of a facility is provided by the government to identifiable external recipients with benefits beyond those enjoyed by the general taxpayer;
  • a service is delivered by the government, the purpose of which is to regulate;
  • a right or privilege is granted, or access to or use of a government owned or controlled resource is provided to identifiable external recipients.

In conjunction with the charging condition, departments should evaluate the charging decision within the context of whether:

  • the advantages to the government outweigh the start-up and on-going costs of administering the charges;
  • the external charging initiative significantly compromises the achievement of broader federal policy objectives; and
  • the activity in question is a legitimate and necessary function of the government and cannot be provided adequately by other sectors.

Note: Where competitive situations exist, but there is a requirement for the government to continue to perform the activity, departments must refrain from competing unfairly (i.e. by setting prices that undercut the private sector as a result of understating costs, such as sunk capital costs).

Proposals to establish or amend an external charge must be supported by the best available, relevant information. This information must be communicated in an open and transparent manner to stakeholders, and stakeholders must be given a reasonable opportunity to provide their input, have it considered and receive feedback.

External charges will be based on either the cost of the underlying activity or the value of what is obtained by the identifiable external recipient, as consistent with the policy requirements for Establishing Charges (see below).

The revenues derived from external charging and associated information must be openly and clearly disclosed.

All external charge revenues collected are public monies governed by the Financial Administration Act. Authority to spend those revenues requires express legal authority or prior Treasury Board approval.

Departments that establish or amend charges by order or regulation must observe the requirements of The Government of Canada Regulatory Policy.

In circumstances where a department has several types of legal authorities available for establishing or amending charges (i.e. enabling or subordinate legislation, the Financial Administration Act, ministerial contracting authority), it should seek legal advice to ensure proper application.

This policy is to be read and applied in conjunction with other policies, notably those listed in the References section.

Specific Requirements

Ministers are responsible for the decision to establish or amend external charges within their areas of responsibility consistent with the legal authorities available to them and in accordance with the conditions and requirements of this policy.

Ministers (or Deputy Heads of agencies where appropriate) are responsible for ultimately ruling on disputes relating to their external charging activities (see Dispute Management below).

Deputy Heads must identify an Assistant Deputy Minister-equivalent or higher to oversee the implementation of the policy and to serve as the point-of-contact for the Treasury Board Secretariat. They must also develop and maintain information systems and management practices necessary (including documentation and analysis) to support external charging.

In order to demonstrate sound management of and accountability for external charging, departments shall:

1. Consult with stakeholders on all aspects of proposals to establish, amend and manage external charges, including specifically:

a) analysis in support of proposed external charging;

b) costing;

c) establishing the charge;

d) service delivery methods and standards; and

e) dispute management.

2. Monitor the implementation of the policy within the department.

3. Report information related to external charging.

These requirements are discussed in detail below.

1. Stakeholder Consultations

Once an initial proposal is developed to establish or amend a charge, departments should identify affected and interested stakeholders, and should develop a consultation strategy and plan.

The purpose of the consultation process is two fold:

  • to disclose to stakeholders information relevant to the establishment, amendment and management of an external charge; and
  • to allow stakeholders an opportunity to provide their input and to receive timely and considered feedback from the department.

The scope and level of effort devoted to the consultation process should be proportionate to the significance of the proposed charge and to such other factors as the range and diversity of stakeholders and the nature and level of their interest. The consultation mechanisms used will depend on the nature of the activity in question, the environment in which it operates and the characteristics of stakeholders. The policy acknowledges that there may be circumstances where stakeholders are not readily accessible for consultation.

Departments should also contact other federal departments whose stakeholders may be affected by the proposed charge in order to seek opportunities for greater efficiency and consistency and to take into account the impact on other public policy objectives.

Consultations with stakeholders must cover the following:

  • the rationale for introducing or amending charges, and how this relates to the overall objectives and priorities of the department;
  • the nature of the activities for which there will be charges, the associated costs and other information relating to service delivery, if relevant to the charge;
  • service delivery standards, stakeholder and departmental responsibilities for their achievement, and feasible departmental options that could be implemented in the event that service standards are not met;
  • how the level of the proposed charge (or schedule of charges) was determined, including an understanding of the environment in which the charging will occur, as well as the effects of the charging itself;
  • the manner by which departments will consult on a continuing basis, including the provision of information, the opportunities for stakeholder feedback, and reporting on the achievement of service standards;
  • how departments will communicate, following appropriate consultation, any revision to fee schedules or other aspects of managing the charges; and
  • the departmental process available to stakeholders for raising issues or disputes related to external charging.

Exceptional situations may arise which preclude prior consultation (e.g. Budget secrecy). In such cases, post-announcement consultations should be planned and the design of the announced program should be sufficiently flexible to allow for changes which may emerge as a result.

a) Analysis for External Charging

When proposing to introduce or amend external charges, regardless of the authority under which they are established, departments are expected to be aware of, and to understand the environment within which the charges apply, including the incidence and effects of the charges. Such analysis will form one element of stakeholder consultations and support the decision-making process.

Regardless of the authority under which charges are established, departments should undertake an environmental scan of the relevant factors. These factors should include:

  • the rationale underlying the charges and how the charges relate to the mandate and objectives of the activity or program in question, or to other government programs or policies;
  • the practices of other jurisdictions (such as major trading partners) for comparable activities under comparable circumstances;
  • stakeholders and their interests (including, as appropriate, those in the general public with a broad interest in the program’s results, but who do not pay charges);
  • an analysis, based on available information, of the expected effects and incidence (including fairness and equity considerations) of the charges as they may pertain to social, economic, health, safety benefits or costs; and
  • the organizational and administrative requirements and resources associated with establishing and administering the charges.

Departments should also conduct a risk assessment of the relevant factors, with particular emphasis on those that may materially affect the successful establishment and management of the charge. The scope and level of effort devoted to such analysis should be commensurate with the level of risk determined by the department.

The environmental scan and risk assessment should be updated if the initial results lead to more in-depth analysis, or, if through the consultation process, additional information becomes available or more in-depth analysis is warranted in order to respond to the concerns of stakeholders.

After the implementation of new or amended charges, departments should periodically monitor the key factors identified in the environmental scan to the extent practical and reasonable and update their analysis as required. This is particularly important for sensitive or controversial factors and when the original analysis was inconclusive.

Where a department is the sole provider, it must be sensitive to the concerns of the users of these services about the effect of charges on their competitiveness or the financial performance of their operations. The environmental scan must address these concerns to the extent practical and reasonable, recognizing that such analysis: i) is complex and difficult to conduct because it is sensitive to the level of detail of the analysis, the methodologies used and the availability of reliable financial or other data from the users; and ii) often leads to inconclusive results.

When in-depth analysis that relies on sophisticated methodologies or consulting expertise is warranted, departments should seek the concurrence of stakeholders with the approach and methodologies to be used and their agreement to provide verifiable data at the appropriate level of detail.

Finally, analysis in support of external charging must give due consideration to the primacy of the program’s mandate and statutory basis.

b) Costing

Prior to establishing or amending an external charge, departments must estimate the full cost to government of the activity. A thorough assessment of costs will provide for open and informative consultations with stakeholders as well as contribute to sound management practices and informed decision-making.

The costing calculation must comply with the practices outlined in the Treasury Board Guide to the Costing of Outputs in the Government of Canada incorporating all direct and indirect costs as well as any relevant costs incurred by other departments in support of the activity.

Full cost estimates are required regardless of the approval authority or the basis on which external charges are applied.

Standard use of the Treasury Board Guide to the Costing of Outputs in the Government of Canada in conducting costing assessments will support other federal measures and policies advocating government-wide consistency in the treatment of costs and facilitate the comparison of cost information across activities.

c) Establishing Charges

Departments are responsible for establishing the amount to be charged. Establishing the amount to be charged must be done on one of the following bases, depending upon the type of activity in question:

  • Cost-based external charges apply to the provision by the department of products and services (including regulatory services), or use of a government facility (such as a campground). Cost-based external charges also apply to the granting of rights or privileges and the provision of access to or use of government resources for non-commercial use. In such cases, charges must not exceed the full cost (or a reasonable approximation thereof) of providing the product, service, access, use, right or privilege.
  • Market-based external charges may apply to the granting of rights or privileges or provision of access to or use of government resources for commercial use. Charges in these cases should be based on the market value (or a reasonable approximation thereof) of the right, privilege, access or use. When proposing charges on this basis, departments must consult with legal advisors.

Regardless of the basis of the charge there are valid conditions, described below, under which the level charged may be set lower than the full cost or market value. In all cases, when a department wishes to set a charge below full cost or market value, it must fully justify the reduction in accordance with one of the following conditions:

  • a market-based charge, or recovery of the full cost, would reduce consumption by such an extent that the achievement of important program or other public policy objectives would be compromised;
  • recovery of the activity’s full cost would have a significant, detrimental impact on the financial position of groups or classes of recipients, and a fee reduction would be consistent with broader policy objectives;
  • demand may be insufficient to allow full cost recovery, and the costs cannot be reduced to make full cost recovery feasible.

Departments considering the use of fee formulae in establishing the level to be charged must consult with legal advisors and refer to the appropriate fee-making authority (e.g. provision 19.2 of the Financial Administration Act), concerning legal expectations. Also, departments that utilize fee formulae must continue to ensure that their responsibilities under this policy (e.g. consultation) are being met.

Departments may establish differential external charges, varying relative to the level of service to be provided (e.g. a higher fee could be charged for quicker delivery).

d) Service Delivery

Whether engaged in external charging or not, departments are expected to manage programs and deliver services in an efficient and responsive manner and to be open to innovative ways of delivering services. This includes periodically reviewing the service delivery performance of their programs.

Departments must also be receptive and respond to stakeholders’ suggestions on how to improve the efficiency or responsiveness of their services. Suggestions received must be carefully assessed to determine whether they are reasonable, feasible and consistent with public policy objectives.

When consulting with stakeholders on proposed or amended charges, departments must clearly describe the service to be delivered and explain why the service is being delivered in the manner in which it is. They must consult on the service standards to be achieved, respective responsibilities and accountabilities for their achievement and an exploration of feasible departmental options that could be adopted in the event they are not met. Feasible options could range from the consideration of alternative service delivery mechanisms to business re-engineering, fee reductions and rebates, etc.

Departments must establish and communicate appropriate service standards (qualitative or quantitative) in the context of the inherent nature of the activity and the interests of their stakeholders. Appropriate standards could include those performance commitments related to client-focused aspects of service delivery (such as a commitment to promptly notify clients of receipt of material, to inform clients on the progress made as an application moves through processing stages, or to expected processing times).

Departments could consider adopting relevant standards developed by other organizations, such as the International Standards Organization.

Stakeholders should be informed about those areas of service delivery where changes to underlying assumptions or conditions could impact the department’s ability to meet prescribed standards.

Service standard development and performance assessment are important elements of initial and ongoing stakeholder consultations. Realistic service expectations are fundamental to the establishment of workable service standards. Ultimately, departments need to examine service delivery issues within the context of available resources and with consideration to the primacy of legislated or regulated mandates and priorities.

Departments must, at a minimum, report annually to stakeholders on their overall performance with respect to service standards. Where service standards could not be met, departments must provide an explanation and implement corrective action as appropriate.

e) Dispute Management

Once fees are in place, a departmental process must be available to stakeholders for raising disputes or issues related to external charging.

Departments must ensure that the process:

  • is clearly communicated to stakeholders during consultations;
  • follows an escalating track within the hierarchical structure of the department, which includes the departmental overseer for the implementation of external charging and culminates with the Minister (or Deputy Head of agency where appropriate);
  • describes the procedures to be followed in the event of a dispute, including the means of managing a dispute that reaches a state of impasse (e.g. independent advisory panel providing recommendations to the Minister or Deputy Head of agency);
  • is well-publicized;
  • is easily accessible;
  • is structured to ensure timely responses; and
  • observes the same principles of openness and transparency that guide the conduct of consultations in general.

2. Monitoring

Monitoring based on the principles of risk management is a joint effort of TBS and departments, and promotes accountability and sound management.

Treasury Board Secretariat will monitor:

  • implementation of the policy through the review of proposals that require Treasury Board approval; and
  • government-wide implementation of this policy, and will work in partnership with departments to maintain ongoing awareness of issues associated with the policy.

TBS will monitor implementation through the use of such tools as:

  • regular meetings with departments;
  • due diligence assessment tools;
  • educational sessions;
  • the review of departmental information on revenues, associated expenditures and other information relevant to the establishment or amendment of charges; and
  • the review of internal audits, program evaluations and other relevant reports.

TBS may require, on a government-wide basis or with specific regard to issues within a single department, periodic reviews or studies to assess specific elements of external charging.

A review of this policy will be initiated by Treasury Board Secretariat within five years of its coming into force.

Departments will:

  • monitor their individual charges on a department-wide basis, in order to assess implementation of the policy.
  • determine which tools are best suited to monitor implementation of the policy, and are encouraged to use similar monitoring tools across their external charging activities. This approach will foster consistency and assist in aggregating information at the corporate level.
  • conduct periodic reviews of their external charging activities in order to determine how well the policy is being implemented by the department, and act on the findings as appropriate. The results of such reviews shall be made available to TBS.

Departments will provide, upon request of TBS, pertinent information on external charging (including the findings of any departmental review) in support of TBS monitoring of the policy.

3. Reporting

The disclosure of external charge information is essential to sustaining accountability to Parliament and the Canadian public. Reported information must be accessible, timely, regular, and available at differing levels of detail so as to meet the various needs of the general public, parliamentarians and paying stakeholders. Meeting this range of information requirements will require a combination of reporting vehicles including the Public Accounts of Canada, Reports on Plans and Priorities and Departmental Performance Reports as well as less formal mechanisms such as departmental websites, newsletters and documents distributed at consultation sessions.

To this end, revenues from external charges will be reported on departmental and a government-wide basis by major category within the Public Accounts of Canada and supplemented, where appropriate, with more detailed information by department and type.

Departments will disclose, in existing annual reports, including Reports on Plans and Priorities and Departmental Performance Reports, information related to charges planned, established or amended under this policy. Such information will be reported in accordance with a format and process to be prescribed by TBS.

  • The format will contain provisions for the reporting of external charge information revenue according to categories such as: i) fees derived from rights and privileges; ii) fees derived in support of regulatory activity; and iii) fees for other products, services and use of facilities;
  • Provisions will include requirements for the annual reporting, in Reports on Plans and Priorities, of planned fee activities. This information will include the type and fee setting authority of the planned fee, the reason for the planned fee introduction or amendment, the planned effective date, the planned consultation and review processes, and the planned dispute management process that will address issues arising from the planned fee activity.
  • Provisions will include requirements for the annual reporting, in Departmental Performance Reports, of fee activities, fee types, fee setting authorities, revenue, cost, consultation and analysis information, service standards, performance results and dispute management information relating to how the dispute process is publicized, the number of disputes received, their nature and status or outcome. Additional reporting elements may also be included as needs dictate.

Departments will disclose on departmental internet websites and through newsletters or other accessible means when appropriate, all information reported above, as well as further information such as details on fee descriptions, fee levels, service, and the authorities under which fees are established or amended.

Such information will be disclosed in accordance with a format and process to be prescribed by TBS. The provisions will contain the minimal requirements for the disclosure of information on web sites or through other distribution channels as well as the requirement to update such information annually. Departments will be encouraged to exceed established disclosure requirements wherever possible.


Enquiries related to the policy or to dispute management related to external charging should be directed to the departmental official designated as responsible for overseeing the implementation of external charging. When necessary, further questions or points of clarification can be directed to the appropriate Treasury Board Secretariat program analyst or the TBS financial management policy centre.

Annex A: References

Relevant Legislation:

Access to Information Act

Federal Real Property and Federal Immovables Act and Federal Real Property Regulations

Financial Administration Act

Government Contracts Regulations

Interest and Administrative Charges Regulations

Official Languages Act

Receipt and Deposit of Public Money Regulations, 1997

Repayment of Receipts Regulations, 1997

Policies and Publications:

Accepting Credit Cards as Means of Payment for Goods and Services Provided by the Government - TB Circular 1987-18

Common Services Policy

Evaluation Policy

Financing of Conferences and Seminars [Information Notice]

Communications Policy of the Government of Canada

Government of Canada Regulatory Policy

Internal Audit Policy

Materiel Management Policy

Policy on Active Monitoring

Policy on Alternative Service Delivery

Policy on the Application of the Goods and Services Tax and the Harmonized Sales Tax in the Departments and Agencies of the Government of Canada - For FIS compliant Departments and Agencies

Policy on the Collection and Remittance of Provincial Sales Taxes (Application of Reciprocal Taxation Agreements and Comprehensive Integrated Tax Coordination Agreements)

Policy on Interdepartmental Charging and Transfers Between Appropriations

Policy on Receivable Management

Policy on Recording Receipts of Money

Policy on Special Revenue Spending Authorities

Policy on Specified Purpose Accounts

Treasury Board Contracting Policy

Guides and Other Publications*:

Guide on Financial Arrangements and Funding Options

Guide to the Costing of Outputs in the Government of Canada

Guide to the Regulatory Process

Integrated Risk Management Framework

Regulatory Impact Analysis Statement Writer’s Guide

Service Standards: A Guide to the Initiative

* The most current version of this material can be found on either the websites of the Treasury Board Secretariat of Canada ( or the Privy Council Office of Canada (