Category Archives: CVITP

A focus on recent developments in CVITP

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.

Missing in Action: No Future CRA Reporting on CVITP Results

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The Canada Revenue Agency (CRA) recently released its Departmental Plan for the forthcoming fiscal year.  Since 2012, the CRA has reported to Parliament on the results obtained by the CVITP.  With the introduction of results-based performance reporting across all federal departments and agencies in 2017, the CRA has included the CVITP results within its performance indicators.

However, the new Departmental Plan has dropped any formal reporting on the CVITP; this means no data will be included on CVITP performance targets or results achieved.  Therefore, no information will be systematically made available to Parliamentarians, the public or even the CVITP host organizations and their volunteers.

In this article, we give four reasons why this is a problem:

  1. any evidence on the linkage between the CVITP and the federal government’s Poverty Reduction Strategy will be lost;
  2. Parliament will be unable to exercise any oversight over the CVITP budget increases it approved;
  3. it calls into doubt the Minister of National Revenue’s commitment to a priority identified only three months earlier by the Prime Minister; and
  4. CVITP host organizations and their volunteers who do the bulk of the CVITP work for the CRA using their own resources will now be kept in the dark as to the results of their efforts.

This is a strange way to mark the 50th anniversary of the CVITP.

Coming soon…

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With the regular tax season drawing to a close, we are planning to return to producing articles on a range of CVITP related topics that we hope will be of interest to you.  For example, in the coming weeks, look for the following articles:

  • Tax Season Post Mortem: initial impressions from the CVITP frontlines
  • CRA Minister’s Mandate Letters and the CVITP
  • CRA Ombudsman’s Report and Recommendations for Improving the CVITP
  • Case Study: lessons from filing for refugee claimants
  • CRA’s newly minted COIN (CVITP Organization Identification Number)
  • Missing in Action: CVITP and the CRA’s Departmental Plan for the 2021-22 fiscal year
  • A CRA Data Wish List for Improving the CVITP

Furthermore, we have many other article ideas planned, including:

  • Case Study: lessons from filing for workers in the gig economy
  • Implications of the Federal Government’s Budget 2021 for CVITP Clients
  • CRA’s Partnership With Host Organizations: shortcomings & opportunities
  • CRA’s Partnership With Volunteers: shortcomings & opportunities
  • Alternative Income Ceilings for CVITP Tax Clinics
  • CVITP Volunteers as Freelancers?
  • Lost in Translation: CRA Communications With CVITP Clients

If you have an article idea you would like to suggest, we’d love to hear from you.  And if you have an article you would like us to publish on a topic you think would be of interest to our readers, please do let us know.

So make sure to visit this site regularly in the coming weeks for informative analysis and ideas on the CVITP and its link to poverty reduction.

16 Lessons From Dealing With COVID

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As we reported here, in the 2020 tax season the CVITP served only 55% of the clients it had served in the previous year.  The Canada Revenue Agency (CRA) attributes the dramatic decline to the public health restrictions introduced in 2020 to deal with COVID.

In preparing for the forthcoming tax season, the CVITP tax clinics will be subject to similar COVID related public health restrictions.  Furthermore, as of now, the CRA has given no indication that it will change the traditional filing deadline of April 30th to ensure the continuity beyond June 2021 of the many benefits which are conditional upon filing an up-to-date return.  Significant changes in practices and procedures are needed to avoid an outcome similar to last year’s.

What can be learned from the experience last year which can be applied to this year’s tax season and to future years when the public health restrictions are no longer an issue?

This article identifies 16 lessons.  We also invite our readers to share additional lessons drawing on their own experiences.

Notice of Assessment: Canada Revenue Agency’s New Grant Program

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The Canada Revenue Agency (CRA) recently announced that it will, for the first time, be providing financial support to host organizations that run CVITP clinics.  As the CRA has previously denied that it could provide such support, this is an important change.  And in principle, it is one that we support.

However, the current pilot project, which offers $3.3 million a year over the next three years, is poorly designed, with no targeting (not in line with the purpose of the program), insufficient financing (unlikely to provide the intended incentive effects), and an administrative process that is burdensome (not exploiting the flexibilities available with the use of grant funding).

Recognizing that this three-year pilot project has yet to begin its first year of implementation, we make some suggested changes that we believe will significantly improve its impact.  We propose that the CRA:

  • Target its grant funding to ensure host organizations are providing support to those who need it the most;
  • Make the client income level a criterion, using the poverty line as the threshold;
  • Set a minimum percentage for a host organization’s client returns that must meet or fall below the poverty line to qualify for any grant funding;
  • Offer a larger financial incentive for returns filed by clients who had previously not filed for a number of years;
  • Establish and publicize the minimum percentage and the size of the financial incentive at the outset of the grant funding period;
  • Significantly increase the funding level per eligible return to provide for something approaching a real incentive;
  • Use the annual registration process for the approval of host organizations to collect all of the information required to assess the host organization’s eligibility for grant funding; and
  • Use the annual registration process for the approval of host organizations to notify eligible host organizations of the funding formula it will use to determine the amount of grant funding they could receive at the end of the eligible activity period.

We conclude this four-part series of short articles offering some thoughts on the challenges the CRA will face in assessing the impact of this pilot project.  Given the difficulty in surmounting these challenges, there is a risk that any growth in the numbers will be claimed as demonstrating the success of the pilot and used to justify maintaining this project with poor targeting, insufficient financial resources and cumbersome administrative arrangements.

2021 Tax Season – A Letter to the Minister

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The Minister of National Revenue, the Honorable Diane Lebouthillier, is responsible for the Canada Revenue Agency (CRA).  We recently wrote to her to express our concern about the forthcoming tax season.  Without significant changes from the procedures and practices adopted in 2020 for the 2019 tax year, we worry that the CVITP experience this year will not be materially different from that of last year when CVITP operations were severely disrupted by COVID and many fewer clients were served than in recent years.

CVITP clinics will be operating under the same COVID related public health restrictions as in 2020.  Furthermore, as of now the CRA has given no indication that it will change the traditional filing deadline of April 30th to ensure the continuity beyond June 2021 of the many benefits which are conditional upon filing an up-to-date return.

In light of this, we make a number of suggestions.  Read our letter to the Minister here.

The Evolution of the CVITP – 2020 Update

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We find two sources of 2020 data from Canada Revenue Agency (CRA) publications that allow us to update CVITP trends on the numbers of individuals assisted, returns filed, volunteers employed and host organizations offering free tax clinics.

In this article, we show and briefly discuss: (1) the dramatic decline in individuals assisted; (2) the continuing modest upward trend in the average number of returns filed per client; (3) a modest decline in the number of volunteers registered, which may mask a collapse in the number of volunteers who were actually employed in providing services in virtual clinics; (4) a modest increase in the number of host organizations registered which may similarly mask a collapse in the number of host organizations which actually offered services through virtual clinics; and (5) a continued decline in the average number of volunteers employed per host organization.  This last trend may be an early sign of future capacity constraints within the CVITP.

How do I file a client’s returns for prior years?

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Volunteers are usually asked to file a client’s income tax and benefit return for the most recent tax year.  However, there are also instances where volunteers may be asked to file prior years’ returns for a client who has skipped one or more tax year filings.  In this article, we describe, in a series of steps, what we’ve learned from helping clients to file for prior years.