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Understanding the Tax Return – What You and Your CVITP Clients Need to Know
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What is an income tax and benefit return? For many Canadian residents, it is a frighteningly complicated puzzle. This is why each year, consistently 60% of Canadian residents ask someone more knowledgeable to prepare their return for them[i]. And for many first-time filers, the return is a veritable mystery. Many just know they’ve been told this is something they need to do.
But between low-income and middle or high-income Canadian residents, the motivations for preparing and filing a return are very different.
For many middle and high-income Canadian residents, it is just about income taxes. It is something that they may not like but realize they must do. In doing so, they hope to get no nasty surprises, especially a tax bill. Instead, they may dream of getting a hefty refund. They may or may not realize that it is a legal obligation to file a return if they have taxable income. They probably know that if they don’t file their return and they owe taxes, they will get charged interest on the amount owing. There is no time limit on the tax amount owed – the CRA will maintain records and, in addition to the interest, charge a late filing penalty when the errant taxpayer finally files.
Middle and high-income residents are generally unaware there are any benefits to filing a tax return – other than possibly reducing their tax bill – because they are not eligible to receive most of them; their incomes are too high for that. Most of their actions are based on the fear of owing the government more money and the desire to recover any overpaid income tax. It’s why almost everyone calls it a tax return[ii].
For many low-income Canadian residents, preparing and filing a return is not about paying income tax. This is because many have incomes too low to be paying any income tax. But they know they need to file it each year to get or maintain access to many poverty reducing benefits. If they have no taxable income, they under no legal obligation to file a return. They will not be charged a late filing penalty by the CRA. But they can only claim refunds on income tax overpayments and benefits for the last ten years; after that, the CRA retains the money.
CVITP volunteers are in a privileged position. By helping clients to prepare their returns, they gain insights into how the income tax and benefit system works (and often doesn’t work).
Many volunteers simply like doing returns because it helps people and, unlike many of their clients, they are comfortable with numbers. I admit I get a certain satisfaction out of completing a return and getting it filed.
But the CVITP volunteer’s role is not just to prepare and file the return. It is also to explain the results of their work to the client and answer their questions before seeking the client’s permission to file the return.
Every volunteer should understand the principles, if not all the details, that lie behind the return preparation and filing process so they can better answer questions the client may have.
In the first article in this two-part series, I explain the purpose of the income tax and benefit return, in a relatively simple, straightforward manner. I hope this will help CVITP volunteers to understand the context for the many details of the return that often confuse people.
In the second article, I explain the essentials of what the CVITP volunteer’s client needs to know to understand their return. While it relies heavily on the big picture laid out in the first article, none of what is in the first article is essential for the client to know.
[i] The CRA updates data weekly which shows that 60% of Canadians consistently use EFILE to file their returns. EFILE is the system wherein an expert files a return on behalf of a client.
[ii] Unlike the CRA which more accurately calls it an income tax and benefit return.
I want to hear from you
This website is designed for people like you who are interested in the strong development of the CVITP as an important tool to help reduce poverty across Canada. It provides critical analysis of the CVITP and its in reducing poverty. As far as I can tell there are no other websites in Canada devoted to this purpose.
That said, I admit it’s a pretty niche subject. There are few people who visit the site and fewer still who engage with its content. This may be because it is difficult to find (internet search engines give it low priority), my writing style puts off some readers, or the content is not what most readers want to learn about.
Here, I want to address the last issue: its relevance to your interests. I would like to hear from you about the issues you think I should be covering. (At the bottom of this article, you will find a list of the main issues I try to cover.)
Perhaps I’ve missed an issue entirely that you think is relevant. Then again, perhaps I have written on the issue before, but you think I’ve missed an important angle to it. Either way, please tell me what it is and why you think it is relevant.
Use the Comments section below if you want to share your ideas publicly on the website. Use the Contact Us form if you want to share your ideas privately with me.
I will react to your suggestions, acknowledging each one and writing about those where I can find good information to share.
Thank you for taking the time to read this and to respond!
The main issues I cover on this website:
Regular features
- Evolution of the CVITP, based on the CRA’s release of its annual CVITP statistics (usually in the spring)
- Tax year information which may be useful to volunteers and host organizations (usually around the beginning of the tax season)
- Access to CVITP services at the national level by people living in poverty, based on Statistics Canada’s release of its Canadian Income Survey (usually in the spring)
- Inequalities of access to CVITP services at the provincial level, based on Statistics Canada’s release of disaggregated poverty data (usually in the spring)
- Review of the National Advisory Council on Poverty annual report (usually published in the fall) for relevance to the CVITP
- Review of federal budgets (previously tabled in Parliament in the spring but now in the fall) for relevance to the CVITP
- Review of CRA annual departmental plans (published in the spring) and departmental results reports (published in the fall) for relevance to the CVITP
Specific issues
Specific audiences
- Volunteers: Recent examples include how the CRA deals with money owed by clients, why getting informed client consent to file is so important, and what the CVITP should do about any problems with UFile.
- Host organizations: Recent examples include whether the CRA should change its income criteria for client eligibility, a detailed examination of the failure of the CRA’s five-year pilot grant project, and the limits to getting useful CRA data on an organization’s CVITP clinics.
- CRA: Recent examples include the looming volunteer shortage that could undermine the CVITP in the next 5 years, why I doubt the results from the CRA’s non-filer initiative, and ways to reduce the number of chronic non-filers by making better use of the CVITP.
Forthcoming articles
- Empowering clients with a better understanding of their income tax and benefit return
- How host organizations can collect and analyze their own data
- Why municipalities need to step up to support the CVITP
- The evolution of the CVITP in the provinces
- The past, present and future of the CVITP
Budget 2025: What You Need To Know
Tabled in Parliament in November, Budget 2025 promises sweeping changes, but how much of it truly reaches Canada’s most vulnerable residents? This article takes a closer look at the measures that matter for low‑income households, from a modest supplemental payment tied to the Canada Disability Benefit to the government’s plans for automatic benefit delivery. It highlights what’s new, what’s missing, and why some of these changes may not work as smoothly as intended.
Budget 2025 did not announce any new funding to replace the Canada Revenue Agency’s pilot grant project which terminated providing support to the CVITP in October 2025. With automatic filing on the horizon and volunteer shortages looming, this article raises important questions about whether low‑income Canadians will actually see more support—or risk falling through the cracks. Dive in to explore the full implications.
Looming Volunteer Shortage Could Undermine CVITP in Next 5 Years
In the first of two articles, I look at the demand for and supply of CVITP services to illustrate a growing problem with volunteer recruitment. Looking at the recent past, I conclude there has likely been a large unmet demand for CVITP services. However, the recruitment of volunteers, who are the linchpin in the provision of CVITP services, has been sluggish. Looking ahead, I speculate that the demand for CVITP services is unlikely to decline and may even grow as automatic tax filing gets introduced for low-income individuals and households.
If I am correct, this implies that CVITP volunteer recruitment will need to be ramped up. In the second article, I review recent trends in volunteering within Canada which suggest that it will be increasingly more difficult to recruit volunteers. As volunteer recruitment is a responsibility shared between the Canada Revenue Agency (CRA) and host organizations, I look at how both are doing. I conclude that the CRA has no plans to ramp up volunteer recruitment and that most host organizations are in the same position.
Thus, CVITP volunteer recruitment is the slow-moving crisis that could undermine the CRA’s ability to continue providing quality in-person services to low-income households in the coming years.
Why Canada’s Poverty Rates Suddenly Look Worse
Canada’s official poverty rates just shifted — not because incomes suddenly fell, but because Statistics Canada updated the way it measures poverty. The new 2023‑base Market Basket Measure now includes modern essentials like cellphone and internet services, raising the thresholds that define who is considered to be in poverty. As a result, poverty rates for 2020–2023 are slightly higher than previously reported, though the trend remains the same: poverty has been rising since 2020.
This change matters. Programs like the CVITP play a critical role in helping low‑income Canadians access benefits that count toward disposable income. For some households, CVITP support is the difference between being classified as poor or simply low‑income. Understanding how poverty is measured — and what’s left out — is key to making sense of Canada’s latest numbers.
Read this article to learn more about this change.
Council Has Too Much Faith in Automatic Filing, Undervalues CVITP
The National Advisory Council on Poverty’s latest report highlights automatic tax filing as a solution for getting low-income Canadians their benefits. But use of the services offered through the Canada Revenue Agency (CRA) SimpleFile pilot project has been minimal. Most people relied on traditional service providers, especially the CVITP, to file correctly. The CRA’s evolving plans for automatic tax filing risk producing similar results. Many will still turn to the CVITP which assists nearly a million people annually. Even though the CVITP has serious resource limitations, the CRA is silent on providing further funding.
In all this, the Council has yet to acknowledge the long-standing CVITP, let alone its resource limitations. This article explores what this omission means for the Council’s credibility and the CRA’s policy.
Will Automatic Tax Filing Live Up To Its Promise?
Loyal readers know I have been tracking the federal government’s work on automatic tax filing for low-income Canadians ever since it was first announced in the 2020 Speech from the Throne. After six years of delay, some social policy advocates predict that the announcement by the Prime Minister a few weeks ago will be a game-changer for delivering benefits and reducing poverty.
My own experience as a volunteer with the Canada Revenue Agency’s Community Volunteer Income Tax Program (CVITP), however, leaves me sceptical. I believe the CRA’s current vision of automatic tax filing is unlikely to deliver the improvements promised – especially for those who have not been filing returns and missing out on benefits. Here is why.
1The first article in this three-part series, “SimpleFile in 2024 and 2025”, examines the pilot the CRA launched in 2024 and continued to promote in 2025. This was the CRA’s initial response in the government’s push for automatic tax filing.
As the evidence shows, SimpleFile has been an abysmal failure – despite the CRA’s claims to the contrary. The evidence speaks for itself – read the article and judge for yourself using the CRA’s own numbers.
2The second article, “Further Experimentation in 2026”, reviews the CRA’s evolving plans, which use the SimpleFile invitation – if not its filing methods – as a pathway toward automatic tax filing. It’s an interesting development, but one fraught with challenges that may limit adoption of this new form of automatic filing.
Moreover, individuals who have not filed a return in the last two or more years – and are therefore missing benefits – will be excluded. The CRA is also unlikely to prepare pre-filled returns for past years, even when those years could mean substantial missed benefits. Individuals will need outside help to prepare and file those returns.
3The third article, “Be Careful What You Wish For in 2027”, looks at the Prime Minister’s recent announcement of a large-scale rollout and considers what may unfold between 2027 and 2029. The CRA plans to rely heavily on technology to deliver automatic tax filing. This initiative will likely shift low-income Canadians who already file returns and get benefits from one filing method to another. By preparing returns itself, the CRA could, in theory at least, bypass intermediaries such as the CVITP.
Yet many individuals already find CRA documentation and correspondence confusing. Many recipients of pre-filled returns will likely turn to trusted sources for help in understanding their pre-filled return and for advice before consenting to the CRA’s filing.
The CVITP is well positioned to provide this support free of charge. With some 3,500 host organizations and 18,000 volunteers embedded in communities across Canada, it is a trusted network. This article argues that by adapting the CVITP to help meet these challenges, the CRA could significantly boost adoption of automatic tax filing.
Across the three articles, I argue that by design, the CRA’s automatic tax filing initiative is unlikely to help low-income Canadians who have not been filing returns or receiving benefits. Yet this was the originally rationale for introducing automatic tax filing. Given its community roots and more than 50 years of earned trust, the CVITP remains the best option for fulfilling that promise.
CRA Lowballs Its Target For The CVITP In 2025
In my latest review of the CVITP’s performance, I found that in the 2024 tax season, at best 27% of Canadians living in poverty in 2023 received free CVITP assistance. That leaves a staggering 73% without help.
Where did they turn? Some filed on their own, some paid for costly commercial services, and others likely didn’t file at all — cutting themselves off from the very benefits designed to reduce poverty. Barriers like lack of awareness, limited access to clinics, and overwhelming demand for the service all play a role.
The Canada Revenue Agency (CRA) has long identified the CVITP as its contribution to Canada’s Poverty Reduction Strategy. Yet since 2022, it has set no real performance targets for assisting more people. Surprisingly, the CRA’s Departmental Plan for fiscal year 2025-2026 includes one: a promise to increase the number of people helped by 5%.
This article digs into why the CRA’s new target is less ambitious than it looks — and why Canadians concerned about poverty reduction shouldn’t be impressed.
Should The CRA Change Its Income Criteria For Eligible Clients?
Every host organization uses income ceilings or thresholds to identify the clients it wishes to serve. In doing this, many host organizations make use of the Canada Revenue Agency’s (CRA) suggested income ceilings. The implicit assumption is that by using these, the host organization will be targeting those most in need of this free service. But just how good are the CRA’s suggested income ceilings for this purpose?
In 2020, I wrote about this issue here. At that time, I concluded that “Everywhere in Canada, with the exception of the large urban centres, the income ceilings in the CVITP guidelines are above the official poverty line. As this is a free service being offered to low-income individuals, the income ceilings in the CVITP guidelines should be aligned more closely with the official poverty lines. In those regions where host organizations are easily able to meet the demand for free CVITP services, there is no concern. But in those regions where host organizations are unable to meet the demand and must ration CVITP services, host organizations may wish to consider being less generous with the income ceilings they use to define individuals’ and families’ eligibility for their CVITP services.”
Since then, the CRA has not revised its suggested income ceilings. But inflation has led to successive increases in the official poverty lines across Canada.
I showed that in 2024, at best only 27% of those living in poverty accessed CVITP services. I showed that in 2023, access by those living in poverty to free CVITP services ranged from a high of 34.3% in New Brunswick to a low of 14% in Ontario. So, there are unlikely to be any regions in Canada where host organizations are easily able to meet the need if not the demand for these services.
This means that all host organizations should be attentive to the income ceilings they use to identify clients who are living in poverty. But are the CRA’s current ceilings still the best income criteria to use for selecting those most in need of free CVITP services? This article explores this question and provides an answer.
How Does The CRA Deal With Money Owed by Clients?
Have you had a client tell you they didn’t receive the benefits you estimated they were entitled to when you prepared their income tax and benefit return? In some cases, they might be getting the benefits but just don’t realize it because they haven’t checked their bank account.
But for other clients, they owe money to various creditors. And in certain instances, the Canada Revenue Agency (CRA) acts somewhat like a collection agency, withholding the client’s refund and possibly some of their benefits, and redirecting these to the client’s creditor. The client may not realize they owe this money or, if they do know about the debt, they may not realize the CRA has the legal authority to do this.
In this article, I identify several different kinds of debts that a client might have where the CRA may get involved. These include income tax arrears, overpayments of federal and provincial or territorial benefits, ineligible COVID-related support, monies owed to other federal departments and provincial or territorial governments, and monies owed because of a court order that has not been respected.
In some of these cases, it is clear as to how the CRA proceeds. But in others, it is not because the CRA does not provide clear information on its rules for what it calls “recovery actions”, claiming that these will often depend on the client’s circumstances.
This debt will usually be referred to in the client’s CRA account which you can access using Represent A Client. This article provides you with information to help you explain to the client any discrepancy between your estimates of the client’s refund and benefits, and what the client gets from the CRA.
Examining the Failure of the CRA’s 5 Year Pilot Project
The Canada Revenue Agency’s (CRA) pilot project was announced at the beginning of 2021, after the disastrous performance of the CVITP in 2020. This was the first time the CRA offered financial support to community-based organizations hosting CVITP clinics. It has now run for four years and is completing its fifth year in the fall of 2025. This is a three-part series of articles, examining the project to date and what lies ahead.
1The first part, “The Evidence”, assesses the performance of the pilot project after four years (2021-2024) of implementation. I conclude that the project has failed to meet its most important objective (and the only one for which public information is available) and that the project is a failure which the fifth and final year will be unable to rectify.
This article also offers new financial information that is quite different from what the CRA has previously reported for 2021-2023. Together with the budget announced for 2024, it demonstrates that the pilot project has proved to be more expensive than originally planned.
2The second article, “Why Did This Happen?”, provides three reasons – the financing formula changed in an untimely way, the financing formula was not generous enough, and the assumption that financing was the main constraint to expansion was dubious – why the pilot project has been a costly failure.
Given these considerations were known to the CRA toward the end of 2023, the third year of the original pilot, this article speculates as to why the project was extended for a fourth year.
3The third article, “What Next?”, looks at 2025, the fifth year of the pilot project as it has been extended for a second time, and beyond. It gives different reasons for the second extension of the pilot project.
Finally, this article gives four arguments – failure of the project to achieve its most important objective, the project’s cost, the government’s current budget saving exercise and the priority it attaches to automatic tax filing – why the pilot project is unlikely to be extended yet again, for a sixth year.
What Happened During the 2025 Peak Return Filing Season?
For most CVITP host organizations and volunteers, the period between late February and mid-May is the heaviest time of year for helping clients to file their returns. A lot of unusual things happen, whether it be with the Canada Revenue Agency’s CVITP support, the UFile software volunteers are provided with, Service Canada’s support, or the work of other service providers. I usually don’t take the time to document these. However, during the 2025 season, I decided to record the most noteworthy oddities. This article contains my somewhat eclectic list of 16 things that happened. Some may be obvious to you, others may be puzzling. Let me know what you think.
Providing CVITP Service in 2024 to People in Poverty
In the 2023 return filing season, the CVITP served only 25% of those living in poverty in 2022. The poverty rate in Canada rose from 9.9% in 2022 to 10.2% in 2023. What percentage of the 3,168,000 adults living in poverty in 2023 was served by the CVITP in the 2024 tax season?
Read this article to find out more. Also learn why the Canada Revenue Agency should be doing a lot more to expand the CVITP yet seems instead to be focusing its efforts on two other largely ineffective programs.
The Evolution of the CVITP – 2024 Update
What is happening to the CVITP over time? The Canada Revenue Agency (CRA) has been publishing figures about the CVITP for some time. But it only began offering a consistent view of what is happening across the country in 2022 when it started publishing figures from the previous year on the CVITP pages. Even so, the CRA does not publish analyses of the data to show what has been happening over time.
I’ve been tracking the numbers since 2019. Each year, I update the CRA’s figures to show how the CVITP is evolving. With the recent release of the 2024 data, I have completed a review of the trends for the 2017-2024 period. This information is now available as a series of four short articles with supporting data tables and charts plotting the data. In these, I begin by looking at the results from delivering CVITP service. I present and analyze the numbers for people assisted, returns filed and value generated for clients. I then look at the infrastructure supporting CVITP service delivery. I present and analyze the numbers for the recruitment of volunteers and host organizations. Then I use two simple measures to examine volunteer and host organization productivity. Finally, I extrapolate from these trends to what will likely happen in the 2025 season. Read the summary of my findings as well as the full articles (with data and graphs).
Why Informed Client Consent Is Important But Some Volunteers Don’t Get It
Imagine receiving a Notice of Assessment that says you owe money when you were expecting a refund. Or again, receiving a notice for a benefit that contains an obvious error. A greater surprise might be to discover that your return has been filed without your knowledge. Unfortunately, these kinds of things happen all too often because a volunteer has failed to follow two important steps: review the results of the return with the client and then obtain their consent to file it.
In my visits to host organizations across Canada as well as in my own CVITP volunteer work with clients, I have been surprised by the large number of clients who are not being informed of what is contained in the completed return and whose consent is not sought before their return is filed.
This article explores how and why this malpractice is so widespread. It then spells out the reasons why the volunteer must get the client’s informed consent prior to filing their return.