Category Archives: CVITP

A focus on recent developments in CVITP

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

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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.

How to Reduce the Number of Recent Non-filers by Using the CVITP Better

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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.

Great CRA Innovations: Annual Data on CVITP Results

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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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.

CRA Scales Back Its Ambition For The CVITP

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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:

  1. 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.
  2. 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.
  3. 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

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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

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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.

Trends in Poverty Reduction With Implications for the CVITP

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Our website is focused on the link between the CVITP and poverty reduction.  The federal government’s first ever Poverty Reduction Strategy, introduced in 2018, set a target for reducing the poverty rate by 2020 by 20% from its 2015 level.  In March 2022, the Official Poverty Dashboard of Indicators maintained by Statistics Canada indicated that the poverty rate, which was 14.5% in 2014, had declined to 6.4% in 2020.  This is well in excess of a 20% reduction!

However, Statistics Canada recently released a paper which revised the poverty rate for 2020 to 8.1%.  This revision took into account the 2021 Census of Population figures.  While not as impressive as 6.4%, it still exceeds the target the government set for reducing poverty by 2020.

But this accomplishment is likely to be short-lived for two reasons.

First, 2020 saw the introduction of a large number of benefits to help people who had suffered loss of income due to COVID related lockdowns.  While not the intended objective, these benefits lowered income inequality as well as the proportion of the population living on low incomes.  While many of these supports were maintained in 2021, these income supports were largely withdrawn in 2022 as the economy opened back up.

Second, 2022 has also seen rising price inflation.  Price inflation disproportionately impacts those on low incomes, reducing their purchasing power, as people in this group live on fixed incomes or low wages which do not rise as fast as inflation.

Whether or not these two factors have led to an increase in the poverty rate will only be known in March 2024 when Statistics Canada releases its poverty data for 2022.  The implications for the CVITP will be evident more immediately as an increasing number of residents fall into poverty, becoming eligible to receive federal and provincial or territorial government benefits which are income tested.  Since the filing of a current income tax and benefit return is a condition for receiving many of these benefits, the federal government will be keen to facilitate filing.

But will the CVITP be ready to provide this service in the 2023 season to an expanding clientele?  The most recent figures for the CVITP show, at the very least, that the CRA will struggle to do this. Consequently, many low-income people who are eligible for this service in 2023 will likely have to turn to commercial return preparers to file in a timely manner.  Others will file late, risking interruptions in the flow of their benefits.

For more details, see our full article on this topic here.

Stagnating Volunteer Numbers: Will CRA Succeed In Recruiting Better?

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The federal government has frequently indicated it wants the CVITP to grow.  In recent years, the CVITP budget has quadrupled to expedite this growth.  As volunteers lie at the heart of the CVITP’s service delivery, the Canada Revenue Agency (CRA) needs to ramp up recruitment.  How’s that going?

In the first article of this three-part series, we explore the current trends for volunteering in Canada and in the CVITP.  We present evidence suggesting that the CVITP faces an existential threat with stagnant or declining volunteer numbers.

In the second article of this series, we review what the CRA has recently said about its plans for volunteer recruitment.  It appears to rely primarily on the volunteer recruitment efforts of its host organizations to grow its volunteer base.  Yet the evidence suggests this indirect approach, mediated via its host organizations, is not working.

Gambling further on using just this approach poses a great risk to the future success of the CVITP.  The third and final article proposes that the CRA also get directly involved in more actively recruiting volunteers.  The article offers ideas in three areas:  developing appropriate promotional materials, launching an annual recruitment campaign, and using diverse media.  These are used to illustrate what this more direct approach might look like.   The article also suggests how the CRA could manage this direct approach. 

These suggestions are informed by Volunteer Canada’s Canadian Code for Volunteer Involvement (CCVI) and, in particular, its checklists for putting the Code into action (including the checklist on recruitment on page 9).  While it has not adopted the Code, we believe the CRA should heed its advice as the Code represents the industry standard for Canadian organizations, whether non profit or government, in working with volunteers.

Once the CRA has recruited new volunteers, what can it do to keep them?  Watch for our forthcoming article on CVITP volunteer retention.

Messaging Confusion: The CRA Has More Than Just A Marketing Challenge

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The CRA markets the CVITP clinics as a place for low-income residents to get their taxes prepared.  Yet this is increasingly at odds with the experience of most of the CVITP’s clients.  They do not come to CVITP clinics to get a year-end reconciliation of the income tax they owe as their incomes are too low to pay tax.  They come because they know, from prior experience, that they can only continue to get important federal and provincial/territorial benefits if they file a return.

In this article, we explore why it matters that the CRA misrepresents the CVITP clinics in its marketing.  We recommend an alternate way of marketing the CVITP which better aligns with the reality lived by its current and potential clients.

Changing the way the CRA markets the CVITP makes it sound like it’s an isolated problem with an easy fix.  But we believe the mismatch between the CRA’s current marketing messages and the reality on the ground is indicative of a larger challenge: the CRA needs to update its vision of the CVITP.

It is no longer just a free tax preparation service.  It has also become – and arguably more importantly – a community-based service which helps low-income residents maintain their access to important poverty reducing benefits.  The evolution of the income tax and benefit system and the return preparation process it employs have driven this change.

A realistic appreciation of the two functions currently carried out by the CVITP suggests the CRA needs to embrace a different approach to its administration of the CVITP.  This new approach should emphasize the dual function throughout four stages (i.e., recruitment, training, supervision and support, recognition and retention) in the administration of the CVITP’s service delivery.  We give two examples in our article to illustrate the kind of changes this might entail.  Future articles will offer many more examples.

The Evolution of the CVITP – 2021 Final Edition

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This is a follow up to our early edition on the evolution of the CVITP in 2021.  We consider the CRA’s annual Departmental Results Report the gold standard for CRA reporting because the report is submitted to Parliament.  Even then, data on all four elements – clients, returns, volunteers and host organizations – is hard to come by.  It is growing increasingly difficult for Parliament, the public and the host organizations and volunteers directly involved in making the CVITP a reality to know what’s happening.

In our article, we briefly discuss the numbers and their sources.  We show that the number of clients served rebounded by 43% from the spectacular low of the 2020 tax season.  (Remember: that was the season when host organizations had to stop offering in-person CVITP clinics due to the COVID health restrictions.)  Nevertheless, the number of clients served was still well below the peak achieved during the 2019 tax season.  As the CRA did not report consistently on the number of returns filed, we can only assume that it was greater than the number of clients served.  But we don’t know by how much.

Although the CRA did not report formally on the number of volunteers, we find a number in a statement by the Minister of National Revenue which suggests it declined substantially from the number reported for the 2020 tax season.  The number reported for host organizations represents a spectacular decline from the 2020 tax season.  We note that the numbers provided by the CRA for volunteers and host organizations in the 2020 tax season are misleading in that they likely included those registered with the CRA at the beginning of the season rather than those who were able to adapt to CVITP virtual clinics.  Furthermore, the 2021 figure for volunteers is simply too high to be credible.  In any event, the declines in the number of volunteers and of host organizations over the 2020 and 2021 tax seasons is deeply troubling.

Ambivalent Administrator: a Contradiction in the CRA’s Relationship with the CVITP

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Contradiction

Canadian residents with taxable income have a legal obligation to file a return.  But Canadian residents with no taxable income have no legal obligation to file a return.  What does the CRA do in the latter case, when a resident with no taxable income does not file a return and thus loses access to benefits that are contingent upon filing a return?

We believe the federal government has an expectation that the CRA will not be passive but will actively encourage residents to file.  This is because the federal government has identified so many of the benefits contingent upon filing a return as key to achieving the objectives identified in its Poverty Reduction Strategy.  And, as the federal government’s administrator of its system for filing returns, the CRA is the gatekeeper for gaining and retaining access to so many of these benefits.

The CRA’s current actions with respect to the CVITP suggest it has a highly ambivalent attitude toward the CVITP, its main program for assisting low-income residents to file their returns.  Why do we say this?

For two reasons.  First, we believe the CRA has adopted two approaches which, taken together, are contradictory.

On the one hand, the CRA has repeatedly stated the importance of maintain what it calls an arms-length relationship with CVITP host organizations (see 4 in diagram above) and their volunteers (see 5 in diagram).  For example, on page 41 of the 2020 report on the CVITP by the Taxpayers’ Ombudsman, the CRA states that it: “…strives to provide as much support as possible to the volunteers and partner organizations, while maintaining the arms-length relationship required to mitigate the liability risks that would be associated with any prescribed involvement in tax return preparation by the CRA.” 

Yet it is unclear what exactly the CRA means by an “arms-length relationship” in the CVITP context.  The CRA says it needs to maintain some distance from – or, to word it another way, not work too closely with – host organizations and their volunteers to mitigate any risks the CRA might run as a result of the returns these partners prepare for clients.

On the other hand, the CRA clearly states on its website that it is prepared to do the returns of those residents with a modest income and a simple tax situation who have used a free tax clinic before or are eligible to use one (see 1 in diagram). 

The CRA’s willingness to do the returns of low-income people and accept the risks this entails is puzzling.  It seems to contradict the CRA’s own argument about the need to mitigate for the liability risks associated with its involvement in the CVITP return preparation process by maintaining some distance from its partners.

Second, the main rationale for the CVITP is to help low-income people access benefits and credits to which they are entitled, not to pay income tax as most CVITP clients do not owe income tax.  Nevertheless, in the four years since the federal government’s publication of its Poverty Reduction Strategy (PRS), the CRA has never once publicly acknowledged the link the federal government has established between the CVITP and the PRS’s goals.

Events over the last three years should shake the CRA of its ambivalence.  Just as the CRA has seen its budget for the CVITP quadrupled with the aim of doubling its client numbers, it saw those numbers dip by a third from their peak.  If the CVITP is to be turned around, the CRA must get off the fence and take more initiative.

In the following article, we provide more details on all of this and options for the administration of the CVITP.

The Evolution of the CVITP – 2021 Early Edition

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CVITP figures for the number of people assisted this year and the number of volunteers registered show a second year of poor performance, well below its peak for the 2018 tax year (2019 tax season).  The poor performance last year was not surprising given the sudden imposition of public health restrictions due to COVID.

In the lead up to the 2021 tax season (2020 tax year), the Canada Revenue Agency (CRA) had ample time to plan for the operation of the CVITP under public health restrictions.  However, the CVITP’s performance this year was only marginally better than last year.  This is despite the CRA having been allocated in recent years a large administrative budget increase for the CVITP that was intended to double the number of people assisted.

What’s going on here?  We may never know the full story.  Earlier this year, the CRA indicated it will not be providing any information on the CVITP in its future reports to Parliament.  The timing of this decision may be purely coincidental.  But one can be forgiven for thinking that the CRA’s recent poor performance on managing the CVITP might have had something to do with it.

For further analysis with numbers and our sources, see our short article here.