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Using Municipal Poverty Data to Better Target CVITP Service
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In a previous article, we argued that the CVITP is not serving enough of Canada’s poor. In that article, we looked only at the national picture. Under the most generous assumptions, we determined that the CVITP served at best only one in every five poor people in Canada.
In this article, we look briefly at 2020 provincial and territorial level data (the most recent year available) to establish CVITP coverage (again, using a very generous assumption). Our estimates reconfirm that CVITP service to the poor remains surprisingly low across Canada (with the lower populated regions doing a comparatively better job).
Given the CVITP’s very limited delivery capacity, we believe that the best way to serve more of the poor is with better targeting. But to do this effectively, host organizations need poverty data at the local level. By this we mean both reaching out to specific groups to encourage them to use the service and greater selectivity in whom the service is provided to.
A new Statistics Canada website where poverty data for most Canadian municipalities can be found offers the CRA and host organizations the information needed to devise strategies to improve access to CVITP services for those who need it the most. But we argue it is unclear whether either group has the will to make this happen.
How to Reduce the Number of Chronic Non-filers by Using the CVITP Better
In the first article in this three-part series, we argued that while the number of current non-filers may not be as large as some popular estimates, the number is still very large and represents a serious drag on achieving the federal government’s poverty reduction objectives. In the second article, we focused on recent non-filers, those who forget to file, file late, or skip one or two tax years. Most importantly, these clients have a current mailing address on file with the CRA, enabling the CRA to communicate with them. We looked at the non-filers benefits letter campaign and the forthcoming automatic filing pilot project to see how the CVITP could help to enhance the performance of these two initiatives.
In this third and final article, we look at the situation of chronic non-filers, those who have not filed for many years and make up the majority of estimated non-filers. The CRA’s chief problem is that it does not have current mailing addresses for these clients. Therefore, it has no way of communicating directly with them. Yet this is the group the CRA should be trying to make progress in reaching if it is to substantially increase its coverage of poverty reducing benefits.
This article focuses on ways we think the CRA could also make use of the CVITP to target chronic non-filers. To do so successfully, it will have to meet two pre-conditions. First, it will have to become less reluctant to taking direct action in providing strategic direction and strong managerial support to the CVITP. Second, it will have to change its vision for the CVITP from a free tax return preparation service to one that also includes helping low-income residents maintain their access to important poverty reducing benefits.
Assuming the CRA can meet these two conditions (and we acknowledge this is a big assumption), the article looks at ways it can better invest in its two partners to reach and effectively serve chronic non-filers. With respect to community-based organizations that host CVITP clinics, we make suggestions to the CRA for changes to its funding formula, for providing data to improve client service and reporting on impact, and for assisting with coordination efforts. We also have suggestions for the CRA regarding its other CVITP partner, volunteers; these cover their recruitment, training, supervision and support, and recognition and retention.
Finally, we close the article looking at how the CRA can better track its progress in contributing to the reduction of poverty through the CVITP by using more appropriate indicators than those it currently reports against.
Why You Should Tell Clients the Benefit Estimates in Their Returns
We have been advised on more than one occasion by Canada Revenue Agency (CRA) staff not to share with our CVITP clients the estimates of their benefits, provided in the return prepared by Ufile, because they are not always accurate.
On the contrary, we see two reasons why it is important to provide the estimates.
First, we have found it to be a useful check on any mistakes that we might have made. As the client will know if the amounts differ substantially from what they have been receiving in the past, they will tell us if they think there’s something that doesn’t sound right.
Second, the client’s main motivation for filing a return is not to pay income tax as most of our clients don’t pay any income tax. It is to maintain their benefits. They want to know what they are going to be getting if their return is filed. We always indicate that these are estimates only and that the CRA will provide the client with notices indicating the final amounts once their return has been processed. Our clients usually understand this distinction.
After reviewing the results of our calculations with the client and obtaining permission to file their return, we print out the pages listing the estimated benefits and provide this to the client with the rest of their return. The tax summary lists things like the Canada Workers Benefit and the refund which are also subject to adjustment by the CRA during processing. So even if we took the CRA agents’ advice and did not provide the estimate of some benefits, others would still show up on their return.
For us to say to our clients that the CRA has advised us not to provide them with this information because it might not be accurate would be totally unacceptable to many of them. It also presumes they cannot be trusted to understand the distinction between an estimate and the final amount as determined by the CRA.
We also find it strange as the reverse is not true: we are never advised to avoid sharing with our clients any amount they might owe in taxes because the calculation might not be accurate. When the CRA starts preparing automatic returns in its pilot next year, we hope that it does not follow its own advice. This is because we believe the response rate will be lower – or at the very least the CRA will get a lot more queries from recipients – if they have not received estimates of their benefits at the same time.
How to Reduce the Number of Recent Non-filers by Using the CVITP Better
In our first article in this series, we argued that while the number of current non-filers may not be as large as some popular estimates, the number is still very large and represents a serious drag on achieving the federal government’s poverty reduction objectives. In this second and the next article, we show how the Canada Revenue Agency (CRA) could make better use of the CVITP to reduce the number of non-filers more effectively than its current efforts.
This second article deals with recent non-filers, those who forget to file, file late, or skip one or two tax years. Most importantly, the CRA can still communicate with these clients as it has their current mailing addresses.
We focus on two initiatives. The non-filers benefit letter campaign has been operating since 2016. (We have previously reviewed this initiative here.) We suggest providing letter recipients with the name, address and phone number of the closest CVITP host organization where they can get their returns done for free, and informing these organizations of the names and addresses of letter recipients who have been referred to them. This may improve the rate at which letter recipients, most of whom are recent non-filers, respond.
The automatic filing of income tax and benefit returns will be experimented with starting next year. (We recently reviewed this new initiative here.) Some traditional CVITP clients may receive a pre-populated return from the CRA to review and send back, confirming the information contained in the return is complete and accurate. Should they have any questions about their return or the process, some clients receiving such a return may not own a phone with which to call the CRA. Others may not trust the CRA to provide clear answers to their questions. Yet again others may not understand what is being asked of them. To increase the success of this initiative, we recommend involving CVITP host organizations and their volunteers to help answer questions these clients may have. While these clients are unlikely to be non-filers, if this initiative is successful, it will reduce the number of traditional CVITP clients thereby freeing up CVITP capacity to take on new clients, some of whom may not have filed a return in many years.
Neither of these initiatives is likely to substantially reduce the number of what we call chronic non-filers who make up the majority of non-filers. The CRA’s chief problem is that it does not have current mailing addresses for these clients. Therefore, it has no way of communicating directly with them. Yet this is the group the CRA should be trying to make inroads with if it is to substantially increase its coverage of poverty reducing benefits. We believe the CRA could also make use of the CVITP to reduce the number of chronic non-filers. This will be the subject of the third and final article in this series.
How Many People Failed to File a 2021 Return?
This is the first article in a three-part series. This article argues that, while the number of current non-filers may not be as large as some popular estimates, the number is still very large and represents a serious drag on the federal government’s poverty reduction objectives.
Robson and Schwartz estimate 10-12% of Canadian residents eligible to file a return failed to do so in 2015. While this estimate continues to circulate in the media today, other estimates suggest the non-filer rate has fallen significantly since then. Using one of the more intuitive methods employed by Robson and Schwarz, we estimate that the non-filer rate had dropped to around 4.8% by 2021. However, this still means that approximately 1.5 million Canadian residents eligible to file a return failed to do so in 2021. As most of these were low-income residents, many missed claiming federal and provincial or territorial income-tested benefits designed to reduce poverty. Getting these residents to file a return will be key to meeting the federal government’s objectives laid out in its 2018 Poverty Reduction Strategy.
The next two articles will propose elements of a strategy whereby the CRA could make more effective use of the CVITP to reduce the number of non-filers, making an important contribution to poverty reduction.
Great CRA Innovations: Represent A Client
This article describes “Represent A Client”, a new Canada Revenue Agency (CRA) innovation that we tried for the first time this year. It gives the CVITP volunteer registered for EFILE and a representative identifier (Rep ID) access – on a read-only basis – to the client’s entire CRA Account (whether or not the client has set up their own access to it). If the CVITP volunteer has the client’s permission, this function can be used for many things including:
- Getting T slip information to prepare income tax and benefit returns prior to 2017;
- Seeing the Express Notice of Assessment on the same day the return is efiled;
- Confirming that the CRA has received a return submitted by paper; and
- Troubleshooting a wide range of questions raised by the client.
The article also explains how the authorized CVITP volunteer can access the client’s CRA account using “Represent A Client”.
One Way to Get Useful Data on Your CVITP Clinic: Ask the CRA for it
We have previously made the case for host organizations to collect and analyse data from their CVITP clinics to demonstrate the impact of their work to stakeholders and to improve their clinics in future years. There are two ways to get this data: the Canada Revenue Agency (CRA) could provide it or host organizations could collect it themselves. In this article, we look at the first of these methods, showing how the CRA could and why it should provide the data.
But even if the CRA could and should provide the data to participating organizations, the CRA may not do this on its own initiative. Host organizations are going to have to ask the CRA for the data. To make it easier for them to do this, we provide a template of a letter which can be used or modified and sent to the CRA. To get commitment from senior managers within the host organization who may be less familiar with the subject, we also provide a background note that a CVITP clinic coordinator can use internally to brief them.
If a host organization thinks it is a good idea, now is the time to send in this letter. It will give the CRA ample time to plan for any changes in practice before the 2024 tax season.
However, we are not naïve in believing that the CRA would do this just because a handful of host organizations ask for it. As it represents an important change in institutional practice, it will likely require a sustained letter writing campaign over the longer term by many host organizations to convince the CRA to make the technical, demographic, economic and benefit-related data available to each of its participating organizations for the CVITP service they are providing and the populations they are serving.
In the short term, what does a host organization do to get the data it needs to improve its CVITP service and to demonstrate the impact of this service? This will be the subject of a forthcoming article.
Great CRA Innovations: Annual Data on CVITP Results
The CRA recently published a new feature on its CVITP website called “Free tax clinic statistics”. This feature includes annual data on individuals assisted, returns filed, volunteers and host organizations as well as the value of the entitlements generated by filing returns. It provides this data at the national level as well as by province and territory, something that was rarely seen before. This is a very welcome development!
While the website only gives data for 2021 and 2022, we hope the CRA will update this feature in future years without losing the historical data. Considering this new feature, we list four concerns below, in order of priority, from least to most important:
- A change in the timeframe for data collection, shifting from May 16 of the previous year to May 15 of the current year, over to January 1 to December 31 of the same year. The data for 2021 (January 1 to December 31) are remarkably similar to the data reported for what was previously 2022 (May 16, 2021, to May 15, 2022). The data for 2022 (January 1 to December 31) leads to only one change in our previous assessment of six trends revealed in CVITP data: the numbers of individuals assisted and returns completed rose by 13% and 15% respectively in 2022 whereas the old data suggested stagnating performance.
- Reporting on the value of the refund, benefit and credit entitlements generated each year for CVITP clients. The total is for the federal and provincial/territorial refund, credit, and benefits administered through the CRA. A further breakdown of what is included would provide for greater transparency and understanding. We give several reasons why we think the amount reported is a very conservative underestimation.
- While the subnational figures are of passing interest, host organizations are keen to get the information on the value of the refunds, credits and benefit entitlements for the clients they have served in their own CVITP clinics. This demonstrates the relevance of their work to senior management within their host organizations and to their local communities. It also helps to buttress their requests to donors for funding support. The introduction of the CVITP Organization Identification Number or COIN in 2021 (for 2020 and subsequent year returns) now makes this possible.
- While the CRA data are useful, the results do not really get at the main purpose of the CVITP. (We show why here.) The CRA should track and report against more relevant results, which will help it to focus limited CVITP resources, especially its volunteers, on providing CVITP services to those who need these the most.
This article provides the numbers and more detail on the concerns listed above.
Assessing Year #2 of the CRA’s Three Year Pilot Project
This article looks at the implementation in the second year (2022) of the Canada Revenue Agency’s (CRA) three-year pilot grant project in support of CVITP host organizations. (We reviewed the first year of implementation in 2021 here.)
The first part of this article looks at the second year of funding. Increases to the grant amounts on offer were announced late in the calendar year, after all the second-year implementation of this pilot project was finished. These increases were probably a response to the very low grant payments for the first year of operation. But while the CRA’s stated objectives for the program suggest the funding is intended to serve as incentive for host organizations to ramp up their services, the timing of the announcement was strange as it would have no effect on the results obtained in the second year. According to the CRA, 1,067 host organizations had applied for grant funding in the second year and the CRA anticipated disbursing $2.4 million (up from just over $900,000 in the first year).
The second part of the article looks at the results obtained in the second year and compares these with results from the first year. In doing this, use is made of the objectives and performance targets the CRA identified for this pilot grant program:
- While the first objective is to cover some of the participating (host) organizations’ administrative costs, no performance measure is given. That said, it is strange for an element of the project design to be a stated objective of the pilot project.
- Whereas the number of participating organizations was expected to grow by 5% per year, between 2021 and 2022 the number grew by 692%. However, as we observed when the grant program was launched over two years ago, the CRA will have difficulty disaggregating the rebound in the numbers due to the pilot project from a return to normal after the deleterious effects of COVID in 2020 and, to a lesser extent, in 2021 as well as the natural growth in the numbers that the program has previously known.
- Although increased retention of participating organizations is a stated objective and a performance measure is given, the CRA publishes no data which allow this to be assessed.
- Expansion in the reach of participating organizations is listed as another objective. But no performance measure is given so this cannot be assessed.
- Expansion to vulnerable population segments is also listed as another objective. But, again, no performance measure is given so this cannot be assessed.
- Even though it is not a stated objective, the CRA identifies an increase in the number of volunteers associated with grant recipient organizations as a performance measure. As the CRA does not distinguish in its published data between host organizations which are grant recipients and those which are not, this cannot be assessed.
- The CRA also identifies an increase in the number of returns filed by grant recipient organizations as a performance measure. However, this too cannot be assessed because the CRA does not distinguish in its published data between host organizations which are grant recipients and those which are not. Surprisingly, the growth in returns filed is not a stated objective. Yet a simple measure of success could be whether more individuals get served and, by extension, more returns get filed.
When the project was first launched, we wrote that the pilot grants needed to be targeted differently for the CVITP to better contribute to the poverty reduction objectives set out in the federal government’s 2018 Poverty Reduction Strategy.
In the intervening years, the federal government has further increased its use of the income tax and benefit return (for example, with the one-time top up to the Canada Housing Benefit, the Canada Dental Benefit and the grocery rebate) to achieve its income security and poverty reduction goals. This has only reinforced our conviction that, upon completion of the pilot, the CRA needs to rethink the design of this program (and not just make the funding permanent and more generous) if it wants the CVITP to improve its contribution to reducing poverty in Canada.
With Poverty Rising, How Well is the CVITP Reaching the Poor?
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Why Every Volunteer Should Learn How to Use “Autofill My Return”
First introduced by the Canada Revenue Agency (CRA) in 2017, Autofill My Return (AFR) is a great innovation. We use it all the time.
But when we speak with other volunteers about AFR, we are struck by the large number, many of them quite experienced, who continue not to use it. (The CVITP end-of-season survey results for 2022 corroborates this picture of low usage: only 35% of survey respondents confirmed that they made use of AFR.)
When we ask why they don’t use it, two of the most common complaints we hear are that it is too complicated and that it takes too much time to use.
This article outlines nine reasons why we think every volunteer should learn how to use AFR. Let us know if there’s a reason we’ve missed. We also want to hear from clinic coordinators as to why they think their organizations can offer satisfactory CVITP services without insisting that their volunteers use AFR.
Automatic Filing is No Magic Fix for Getting Benefits to More Low-income People
The federal government’s Budget 2023 has announced plans to help more low-income Canadians who are not currently filing their returns to get the benefits to which they are entitled. In this article, we explain why both of the proposed initiatives are unlikely to succeed. What follows is a summary of the article.
One of the initiatives aims to increase the number of eligible Canadians using the File My Return (FMR) service to two million by 2025. This service, introduced in 2018, allows eligible Canadians to file their income tax and benefit returns over the phone by answering a series of short questions using an automated function.
However, the use of this service has been consistently low, with less than 10% of eligible users taking advantage of this service annually over the past five years. Complicated instructions that require a high level of reading skills in one of the official languages and understanding of tax-related concepts, confusion over various automated options, and distrust in the government are some of the reasons which have contributed to the low take-up rates. Furthermore, usage depends on the Canada Revenue Agency (CRA) having the correct mailing address for the recipient, which it lacks for many current non-filers.
The other initiative proposes to pilot a new automatic filing service next year. However, the attention given to automatic filing is misplaced. Although the returns of some low-income residents could be automatically prepared by populating various parts, the CRA will still need to contact non-filers to obtain their approval of their returns. The CRA’s track record in contacting low-income non-filers and getting them to respond is extremely poor and there is no reason to believe the response to this new initiative will be any different.
In the next few years, if the CRA wants to reach more low-income people who are not filing their returns, it should focus on strengthening the CVITP. The CVITP is the main initiative the CRA relies on to help meet the objectives of the federal government’s 2018 Poverty Reduction Strategy. With over 50 years of direct person-to-person contact and the trust this engenders, the CVITP remains the CRA’s best option for increasing vulnerable people’s access to the benefits they are entitled to.
CRA Scales Back Its Ambition For The CVITP
In this series of five short articles, we show how the CRA has publicly scaled back its growth ambitions for the CVITP. We cover four distinct periods in the evolution of the CVITP over the last 10 years:
- During the 2013-2017 period, the CVITP saw steady growth but this does not appear to be because of any explicit strategy.
- In the 2018-2019 period, aided by the quadrupling of the budget to support its administration of this program, the CRA established its first performance targets for the CVITP. These targets would cover the 2018 to 2021 tax seasons. The CRA planned to achieve these targets without providing the community-based organizations and their volunteers who delivered this service any financial support.
- The 2020-2021 period saw a collapse in CVITP services followed by a modest rebound. This was due to the introduction of COVID-related public health restrictions which restricted in-person clinics, the main delivery model which had been used up to that point in time.
- Given that the CVITP’s performance was well short of the targets established by the CRA, the Agency eliminated any further targeting or performance reporting to Parliament on the CVITP for the 2022-2024 period. It also introduced a pilot grant program to provide modest support to community-based organizations hosting the CVITP during the 2021, 2022 and 2023 tax seasons. The intent of the program is to provide a financial incentive for existing host organizations to take on more clients and new community-based programs to host CVITP services. However, this period also coincides with the return to normalcy in public life. Thus, we should expect the CVITP to recover some of the ground it lost in 2020 even in the absence of financial incentives.
Given the history of CRA’s changing ambitions for the CVITP, we draw three conclusions:
- The CRA’s track record in performance targeting with the CVITP illustrates how meaningless it is for federal departments and agencies to set, monitor and report on their own results. When performance falls short of targets, these can be changed or dropped entirely to avoid the inconvenience of having to explain awkward results. The elimination of any further performance indicator for the CVITP suggests the CRA no longer considers that the CVITP is part of its key responsibilities.
- CRA data for the 2022 tax season, the most recent available, show the CVITP’s numbers of returns completed and of individuals assisted represent about three quarters of the results achieved in the 2019 tax season. Worse still, the number of returns completed is only a 13% increase over the number produced for the 2013 tax season (the earliest figure reported by the CRA). And the number of individuals assisted is only about 80% of the number for the 2016 tax season (the earliest figure reported by the CRA). Yet, over the same period, the Canadian population has grown and the federal government has increasingly resorted to using the return filing process as its principal tool for allocating a growing number of income-tested benefits. It is unclear how, despite a quadrupling of its CVITP budget, the CRA has managed to produce such poor results.
- The fact that the CRA has quietly abandoned its growth ambitions for the CVITP calls into question the federal government’s statement in its 2018 Poverty Reduction Strategy (PRS) that the CVITP is a key program for helping to deliver on the PRS objectives. If the PRS is genuinely a strategy and not just a communications tool, the federal government needs to follow up and ensure that the relevant departments and agencies it depends on to achieve the PRS objectives are implementing their initiatives effectively. Someone senior inside the federal government needs to be calling the CRA to account for its poor implementation of the CVITP.
Improving Calls to the CVITP Helpline for Client Information: A Simple, Secure Proposal
There comes a time in every volunteer’s work where they need to get on the phone with the client and call the Canada Revenue Agency (CRA) CVITP Helpline. The Helpline is, in principle, a really good innovation which delivers expert advice efficiently. But more frequently than we would like, we have an experience which reminds us just how incredibly difficult it can be for some clients in communicating with the CRA. The barriers to client identification can be onerous, even for a client who is very well prepared going into the call.
Too often, the call’s success depends on the CRA agent who takes the call. The CRA agent first needs to ascertain that the client is indeed who they say they are. To do this, the CRA agent will ask for information on the client’s file which the client should know. Some CRA agents appear to detect from the way they answer that the client is likely to have problems with some of these questions. So, the CRA agent goes out of their way to permit the call to proceed. But this is not always the case.
Where the client fails to convince the CRA agent of their identity, the CRA agent will terminate the call. Often this results in the client being scared away from calling the CRA again. The client may also lose faith in the competence of the volunteer, thereby damaging the reputation of the host organization.
Our article outlines a proposal which builds on the security mechanisms the CRA currently uses for the CVITP. In addition to explaining a simple procedure which could be used to avoid the release of client information under fraudulent circumstances, we give a few considerations which should be taken into account when assessing our proposal.
Ultimately, we believe the CRA needs to place more trust in the rigorous security and confidentiality procedures it already has in place for the CVITP. Adopting our proposal, or something very much like it, would go some way toward reducing client stress and increasing the efficient use of CRA and CVITP volunteer resources.
Helping Non-filers Access the CVITP to Increase Benefits Coverage
In the first article in this series, we argued that the CRA’s existing non-filer benefits letter campaign was not effective. In the second article, we reviewed a recent Auditor General (AG) of Canada report on the efforts of Employment and Social Development Canada (ESDC) and the CRA to help those in hard-to-reach populations who are non-filers to access benefits. We concluded that the CRA does not know the size of the non-filer problem and, worse still, has done little to better inform itself.
The focus of our third article is on outlining some solutions to this problem.
The CRA believes that a lack of awareness about the benefits of filing is a key obstacle and has a number of outreach activities designed to address this problem. Ironically, research commissioned by the CRA itself contradicts this; it identifies the main obstacles to be ones that the CVITP has already been designed to address.
In the AG’s report referred to above, the AG noted that the CRA and ESDC both have extensive outreach activities employing thousands of volunteer organizations across the country to target these same populations, but that the CRA and ESDC needed to adopt an integrated approach for people requiring extra help. Closer collaboration by the CRA with ESDC could prove beneficial as ESDC’s competencies in working with community-based organizations could help the CRA to introduce better practices within the CVITP.
But even in the absence of strong collaboration, the CRA could still be doing more to help hard-to-reach populations to file their returns, in particular by making better use of the CVITP. At present, the CRA seems to be counting principally on its three-year pilot grant program to build CVITP capacity by recruiting and retaining host organizations. We remain sceptical that this program will genuinely increase the number of host organizations providing CVITP services.
The CRA cannot simply bet on strengthening CVITP capacity by increasing the number of host organizations and volunteers. It also needs to make more efficient use of its existing CVITP host organizations and volunteers, ensuring that this infrastructure provides services to those who need it the most. In particular, we have highlighted the importance of undertaking data analysis to inform the CRA’s strategic choices and have given specific examples to illustrate how this could be done.
In our review of the three-year pilot grant program when it was first introduced, we also illustrated how data analysis could be used specifically to inform choices about funding, including offering a larger financial incentive for returns filed by clients who had previously not filed for a number of years. After the 2023 tax season, the CRA will be reviewing the implementation of its three-year pilot grant program. Assuming it retains a modified grant program thereafter, it could include more generous grant payments for each return a host organization files for the 2020, 2021 and 2022 tax years with the highest payments for the oldest returns.
We close our third article in this series admitting that CRA money alone will not solve the problem of non-filers. However, ESDC could play a larger role. We will return to this in a future article, examining some of the ways in which ESDC could collaborate with the CRA in supporting the CVITP.