Category Archives: CRA

CRA’s Automatic Tax Filing: Shortcomings of the “SimpleFile” Pilot

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In a series of three articles, we look at three initiatives other than the CVITP that the Canada Revenue Agency (CRA) seems to be focusing its efforts on to reach low and modest-income Canadian residents.  We show why these initiatives presently show less promise than the CVITP in tackling the fundamental problem of helping a greater percentage of Canada’s impoverished residents access the benefits to which they are entitled.

In the first article of this series, we looked at the CRA’s non-filers benefits letter initiative.  We argued that the results are insignificant, even questionable and bear no comparison with those obtained by the CVITP when it comes to assisting those living in poverty.

In the second article, we looked at SimpleFile by Phone, the CRA’s automated phone service for filing returns which has operated since 2018 under a different name, File My Return.  We concluded that the results are insignificant, especially when compared with those produced by the CVITP.  It is also far less cost efficient in producing results than the CVITP.  Furthermore, we showed why the service does not live up to its stated promise of helping Canadians who have not filed in the past to access their benefits.

In this third article, we look at the CRA’s long awaited pilot for automatic tax filing, SimpleFile, which was launched in July 2024.  Learn here why we think that, unlike its billing, filing a return under this new method is not automatic, the process is not “simple” to complete, this new method will not reach non-filers as originally intended, and the launch of the pilot is not well timed so is likely to perform poorly.

Rebranding “File My Return” as “Simplefile by Phone” Fails to Get Better Results

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In a series of three articles, we look at three initiatives other than the CVITP that the CRA seems to be focusing its efforts on to reach low and modest-income Canadian residents.  We show why these initiatives presently show less promise than the CVITP in tackling the fundamental problem of helping a greater percentage of Canada’s impoverished residents access the benefits to which they are entitled.

In the first article of this series, we looked at the CRA’s non-filers benefits letter initiative.  We argued that the results are insignificant, even questionable and bear no comparison with those obtained by the CVITP when it comes to assisting those living in poverty.

In this second article, we look at SimpleFile by Phone, the CRA’s automated phone service for filing returns which has operated since 2018 under a different name, File My Return.

Learn here why the results are insignificant, especially when compared with those produced by the CVITP.  It is also far less cost efficient in producing results than the CVITP.  Furthermore, we show why the service does not live up to its stated promise of helping Canadians who have not filed in the past to access their benefits. It is important to recognize the limitations of SimpleFile by Phone because, as will be seen in the third article, this is also part of the CRA’s pilot aimed at launching automatic tax filing.

Why We Doubt The CRA’s Results From Its Non-filers Initiative

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In our most recent article on the CVITP’s coverage of the impoverished in Canada, we concluded that the CVITP remains a very effective program for helping those on low and modest incomes to file their income tax and benefit returns, thereby getting the benefits to which they are entitled.  We also noted that the Canada Revenue Agency (CRA) should redouble its efforts to expand the CVITP as most Canadian residents living in poverty still do not benefit from this free service.

Yet we noted that post-pandemic, the CRA appears to have scaled back its ambitions for the CVITP.  The CRA no longer sets any targets for reaching more clients. Presently, it is unclear what its goals for and commitments are to this program.

Instead, the CRA seems to be focusing its efforts on reaching Canadian residents on low and modest incomes through three other initiatives: non-filers benefits letter initiative, SimpleFile by Phone (formerly File My Return) and the piloting of automatic tax filing.

In a series of three articles, we show why these three initiatives presently show less promise than the CVITP in tackling the fundamental problem of helping a greater percentage of Canada’s impoverished residents access the benefits to which they are entitled.

In this first article, we look at what the CRA calls its “non-filers benefits letter initiative” which it has operated for the last seven years to encourage non-filers to submit a return. 

Learn here why the results are insignificant, even questionable and bear no comparison with those obtained by the CVITP when it comes to assisting those living in poverty.

The CVITP’s 2023 Coverage of the Impoverished in Canada

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In the 2022 tax season, the CVITP served only 28% of those living in poverty in 2021.  The poverty rate in Canada rose from 7.4% in 2021 to 9.9% in 2022.  What percentage of the 3,037,000 adults living in poverty in 2022 were served by the CVITP in the 2023 tax season?  Read this article to find out more.  Also learn about why we think the Canada Revenue Agency should be doing a lot more to expand the CVITP yet does not seem willing to do so.

The Evolution of the CVITP – 2023 Update

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Each year, we present and analyze the Canada Revenue Agency’s data to show how the CVITP is evolving.  Using the CRA’s 2023 data, we review the most recent trends in the numbers of people assisted and returns filed as well as in the value generated (results from CVITP service delivery), in the numbers of volunteers and host organizations recruited and retained (CVITP infrastructure supporting service delivery), and in measures of productivity for CVITP service delivery.  We also identify two positive and two negative factors which could affect CVITP productivity in the future.  Read the summary of our findings as well as the full articles (with data tables and graphs) on service delivery, infrastructure and productivity.

*Watch for a new feature that we will be publishing in the coming months on the Evolution of the CVITP!

What Has The CRA’s Pilot Grant Project Accomplished Between 2021 And 2023?

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Did you know that the grant funding the Canada Revenue Agency offered to host organizations is a pilot project, not a permanent feature of the CVITP?  This project was planned for three years, running from 2021 to 2023 but has been extended for a fourth year to the end of 2024.  In this article, we review how this pilot project was implemented in the three-year period and what it was supposed to as well as what it really did accomplish.  We also speculate on what the fourth year is likely to yield in the way of results.  We conclude with what we think should happen once the fourth year is completed.

Insights From Visiting 14 Urban Organizations in 5 Provinces

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Over the last three years, we’ve visited CVITP host organizations in six cities spanning five provinces.  At the risk of overgeneralizing, we see broadly two types of host organizations.  They have different objectives which lead to very different practices and sustainability in providing CVITP services.  One of the two organizations is more common and serves most of the CVITP’s clients across Canada.  Yet it is the weaker of the two types of host organizations.  If the Canada Revenue Agency (CRA) wants to expand the CVITP, the current situation presents it with some big operational challenges.

In this article, we outline the main features distinguishing the two types of organizations, show why these differences severely limit the CVITP’s potential for expansion, and suggest some ways in which the CRA could constructively meet this challenge.  Find out which of the two types of organizations yours is most alike, see if there are any defining characteristics we’ve missed, and let us know if you agree with our reasoning that this presents a problem for the CRA as well as with our proposed solution for building on these differences to the CVITP’s advantage.

What is the CRA’s new Volunteer Identification Number for?

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Early in May, you probably received an email from the Canada Revenue Agency (CRA) announcing that as an approved volunteer with the CVITP, you have been assigned a Volunteer Identification Number or VIN.  No information was provided on its purpose other than to say it would allow the CRA to better serve volunteers.

Read here to learn about at least three ways we think it might be used.

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.

Why You Should Tell Clients the Benefit Estimates in Their Returns

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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

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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: Represent A Client

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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

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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

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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.