January 29, 2021
The Honourable Diane Lebouthillier, P.C., M.P.
Minister of National Revenue
7th Floor
555 Mackenzie Avenue
Ottawa ON K1A 0L5
Dear Minister Lebouthillier,
We are two volunteer tax preparers within the Canada Revenue Agency’s Community Volunteer Income Tax Program (CVITP). We are writing to you to express our concern that, without significant changes from the procedures and practices adopted in 2020 for the 2019 tax year, the CVITP experience this year will not be materially different from that of last year.
As you know, the CVITP operations for the 2019 tax year (i.e., the tax season in 2020) were severely disrupted by the COVID related public health restrictions. The Canada Revenue Agency (CRA) reported in December 2020 that as of mid-May, the CVITP had managed to serve only 55% of the individuals and families of low and modest income that had been served the previous year.
Many of those individuals and families who were unable to access the CVITP services may have had to pay a commercial service provider. (One very large commercial provider charges low-income individuals at least $115 for this service.) Many were not able to file by early September and had the benefits conditional upon filing a return discontinued starting October 1st. Some of these people subsequently received a demand for repayment from the CRA for some of the benefits they had been advanced for the July 2020 to June 2021 period.
The Government of Canada recognized the CVITP as an important initiative in support of the poverty reduction objectives outlined in its 2018 Poverty Reduction Strategy. When the CVITP is handicapped, this has a direct impact on the ability of the government to further its own objectives.
For at least two reasons, we anticipate the forthcoming tax season will also be challenging for the CVITP. First, CVITP clinics will be operating under the same COVID related public health restrictions as in 2020. Host organizations may be better prepared than last season to offer free tax preparation services. But the models they must rightly employ, to conform with public health restrictions, are much more labour intensive for both staff and volunteers than the traditional CVITP tax clinic model. As in previous years, these host organizations will have to draw entirely on their own resources to set up and run these clinics. (Those host organizations whose funding applications are successful in the CRA’s new grant program will only receive their grants in the fall and the small amounts received will not significantly reduce the costs they bear in offering these free tax clinics.) Given these constraints, we do not see how CVITP host organizations will be able to reach anywhere near the number of clients they served in the years before COVID struck.
Second, unlike in 2020 where the CRA gave a lot of latitude for filing without penalty after the traditional April 30th deadline, as of now the CRA has given no indication that it will change the traditional filing deadline of April 30th to ensure the continuity beyond June 2021 of the many benefits, like the Canada Child Benefit, which are conditional upon filing an up-to-date return.
While the CRA may not be able to solve the first problem, it is entirely within its power to address the second problem. We hope that the CRA is planning now for the possibility that many low-income individuals and families will be unable to file through the CVITP tax clinics or commercial services by the April 30th deadline. This could involve putting in place procedures for extending benefits and credits such as the GST credit in July, much as was done last year, for those individuals whose return has not been filed in time to meet the July 1st deadline. This could also involve discussions with the provinces and territories on making a similar arrangement for those benefits and credits the CRA administers on their behalf.
This extension could be given for an additional period of time, say three months, beyond the traditional deadline, in order to allow for low-income individuals to file before they get cut off from the benefits and credits normally conditional upon filing. While the CRA may not wish to publicize this extension in advance, it could make this known to those who have not managed to file by the usual deadline when issuing them with an extension to their benefits and credits.
This last year, we came across cases of CVITP clients who filed very late and who had, in the interim, received a letter from the CRA demanding repayment of advances in benefits and credits they had received after June 2020. When we inquired from CRA agents as to what these CVITP clients should do, we were told that our clients could ignore the demand for repayments. As you can imagine, this was very confusing for our CVITP clients, some of whom already have bad experiences in dealing with the CRA. For individuals who have not filed by the traditional deadline or the end of the extension, the CRA will need to work out a better, clearer approach this year to communicating the implications of not filing.
We hope that the CRA will play its part to ensure that low-income individuals and families, who are already severely impacted by COVID, are not made even worse off because of difficulties filing tax returns under the COVID related public health restrictions.
As the Minister of National Revenue, we trust you will ensure that the CRA administers its Benefits Program in a way that proactively promotes the government’s poverty reduction objectives.
Yours sincerely,
Jonathan Rothschild Bill Singleton