Category Archives: CRA

Disappointing Distraction: The CRA’s Non-filers Benefits Letter Campaign

Leave a Reply

Two years ago, we posted an article on the issue of non-filers.  We are now updating this with a series of three articles.

The first article in this series looks at the Canada Revenue Agency’s (CRA) non-filer benefit letter campaign which has been running for six years.  This campaign entails the CRA sending letters to people who have not filed a return in the most recent tax season.  These letters outline the benefits of filing a return.  Then the CRA tracks whether or not the letter recipients file a return in the next tax season.

We argue that the performance of this campaign has been, at best, insufficient at dealing with the size of the non-filer problem.  Less charitably, we argue that it represents a minimalist effort on the part of the CRA.  Worse still, we believe the success of this effort, such as it is, is based on the faulty assumption that these letters actually motivate recipients.  Research commissioned by the CRA and others shows that a lack of knowledge about the benefits of filing is not identified as one of the main barriers to filing a return.  The CRA makes very little data available on this initiative but we strongly suspect that, even in the absence of this letter campaign, a similar number of non-filers from one tax season would likely file in the next.

This article lays the groundwork for a discussion in the next two articles of more effective approaches to addressing the issue.  As we hope will become readily apparent to the reader, the CVITP has an important, but as of yet vastly underexploited, role to play in helping to tackle this issue.

The Evolution of the CVITP – 2022 Update

Leave a Reply

Canada Revenue Agency’s (CRA) recently released Departmental Results Report for fiscal year 21/22 allows us to complete the 2022 update for the evolution of the CVITP.  We have divided this subject into three short articles.  The first focuses on the results from delivering CVITP service to clients.  It includes all the data with accompanying commentary on individuals assisted, returns filed and value generated.  The second focuses on the CVITP infrastructure needed to provide this service.  It also provides all the data with accompanying commentary on host organizations and volunteers.  The third is a new feature which provides some simple measures of CVITP productivity.

Short on time?  Here are the key developments:

NO INCREASE IN CVITP SERVICE IN 2022

  • While the CRA calls the number for individuals assisted in the 2022 tax season an approximation, it is roughly the same as in the 2021 tax season; in other words, there has been no increase in service.  The 2021 tax season saw a partial rebound in numbers after the sharp decline in 2020 but it was still well below the numbers reached in 2016 and far from the peak in 2019. 
  • The trend for returns filed largely mirrors that of individuals assisted.
  • While the CVITP was making progress in filing more of its clients’ prior year returns up until and including the 2020 tax season, its performance in this area declined in 2022.
  • For the first time, the CRA has reported in its Departmental Result Report on value of the refund and benefits generated through the CVITP.  This is a very welcome development, and we hope that the CRA continues this practice in the future.  As the main rationale for offering a CVITP clinic is not to help individuals pay income tax but to help them maintain access to many poverty-reducing benefits, this figure provides tangible evidence of the real value generated for CVITP clients.

NUMBER OF HOST ORGANIZATIONS REBOUNDS BUT NUMBER OF VOLUNTEERS CONTINUES TO DECLINE

  • The number of host organizations offering CVITP service has largely rebounded in the 2022 tax season following the precipitous decline due to COVID health restrictions.
  • The trend in volunteers has been in decline since it peaked in the 2019 tax season.  The small rebound in the CRA count for 2022 is, we believe, misleading.  This is due to an unusual interpretation which the CRA makes in whom it classifies as a volunteer.  In partially correcting for this with an adjusted estimate, we show that the small rebound in 2022 is illusory and that the number of volunteers continues to decline.

PRODUCTIVITY REBOUNDS FOR VOLUNTEERS BUT NOT FOR HOST ORGANIZATIONS

  • Averages of individuals assisted and returns filed per volunteer fully rebound to the peaks achieved in the 2017 tax season.
  • Averages of individuals assisted and returns filed per host organization are only 70% and 71% respectively of the peaks achieved in the 2017 tax season.

For further analysis, charts with trends, tables with data and their sources, see:

How to Get Experienced Volunteers Back Next Year

Leave a Reply

Once a CVITP volunteer has been recruited, trained and gained some experience, the CVITP stands to gain if the volunteer comes back again next year.  Given that the Canada Revenue Agency (CRA) does not publish information about its volunteers, we do not know if the root of the problem behind its stagnating volunteer numbers is principally one of poor recruitment of new volunteers or of poor retention of existing volunteers.

Just as with the recruitment of new volunteers, the CRA currently relies primarily on its host organizations’ efforts to retain their existing volunteers for the next tax season.  Yet the evidence suggests this indirect approach, mediated via its host organizations, is not working.  In this article, we propose ways for the CRA to get directly involved in efforts to retain its existing CVITP volunteers.

Volunteers need to be recognized for their efforts.  This is a fundamental aspect of any organization’s work on retaining its volunteer.  However, at present the CRA does remarkably little to recognize its CVITP volunteers’ contributions.

This article offers ideas for the CRA to better acknowledge their volunteers’ contributions both to the volunteers themselves and to the wider community.  It also includes some other measures the CRA could take to help retain experienced volunteers.

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.

Stagnating Volunteer Numbers: Will CRA Succeed In Recruiting Better?

Leave a Reply

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

Leave a Reply

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.

Collecting and Analyzing Data to Improve Service and Demonstrate Impact

Leave a Reply

When personal information is stripped from client returns and the remaining information is aggregated, a host organization can make at least two uses of the ensuing data.  It can use the demographic and economic data to learn more about the population currently served and to improve targeting efforts in the design of future tax clinics.  The host organization can also use data on the benefits and credits generated for clients to demonstrate to its various stakeholders the impact of the current CVITP service on their clients’ financial situations.

Annually, the Canada Revenue Agency (CRA) strips the personal information from returns and provides the demographic and economic data to Statistics Canada for publication.  Infrequently, the CRA has also aggregated the data from returns on benefits and credits at the national and provincial levels and shared the figures publicly.  Given the advent of the CVITP Organization Identification Number or COIN in 2021, it is now technically feasible for the CRA to do all this for each individual host organization as well.

There are two reasons why we believe it is in the CRA’s own interest to do this.  First, by providing data to individual host organizations on the benefits and credits generated by their CVITP clinics for their clients, the CRA would be helping them to make the case to donors.  Increased donor funding would alleviate a serious resource constraint for many host organizations.  In turn, this could reduce some of the pressure on the CRA to provide funding while, at the same time, increase client access to CVITP services.

Second, by obtaining demographic and economic data on the clients served by its CVITP service, the host organization can learn more about the population currently benefiting from its CVITP service.  Where there is a mismatch between this data and the population the host organization wishes to serve, this information can be used to help better target CVITP services in the next tax season.  In turn, this could increase access to CVITP services by clients who need these the most.

In both instances, the provision of data to host organizations could help the CRA to better contribute to meeting the objectives of the federal government’s Poverty Reduction Strategy (PRS).

Quite apart from doing this to fulfill its obligation to support the government’s PRS, we believe the CRA has an obligation, as a good partner, to provide its host organizations with their data.  Currently, most host organizations offer CVITP clinics with little or no support from the CRA.  Providing this data would be one of the most important contributions the CRA could make to help its host organizations.

Although the CRA does not presently do this, some host organizations are collecting and analyzing client data from their CVITP clinics.   However, most are not.  This article explores five challenges host organizations face in doing this:

  • A lack of interest or understanding within the host organization about the importance of this data
  • Addressing client consent considerations
  • Handling client privacy issues
  • Finding staff or volunteer time to collect the data
  • Finding the expertise to analyze the data

Our experience is that host organizations mandated to promote their clients’ financial empowerment are the most successful at present in addressing these challenges.  As they already receive donor funding in support of this mandate, they are well positioned to tackle these challenges.

On the other hand, most host organizations providing CVITP services do not have clients’ financial empowerment as part of their core mandate.  Thus, they probably do not receive donor funding specifically to support their CVITP services.

One final reflection: our article addresses the use of anonymized data found in client returns.  To improve on the delivery of their CVITP services, host organizations also need to find ways to get data on non-filers within their potential client base.

Implementation of CRA’s Pilot Grant Program in Year 1 of 3 – A Slow Start to Missing the Mark

Leave a Reply

In 2021, the Canada Revenue Agency (CRA) introduced a new pilot grant program that provides financial support to some CVITP host organizations.  When it was introduced, we had a lot to say about it here.

The pilot program has completed the first of its three years.  As is unfortunately typical of the CRA in its reporting on the CVITP, there is a dearth of information on the first year of this pilot.  However, there is one important piece of information cited in the CRA’s Departmental Plan for the 2022-23 fiscal year: “In the first year alone, the CRA sent just under one million dollars to qualifying organizations across Canada to support their efforts to ensure that vulnerable people have the ability to file tax returns and access the benefits and credits designed to support them.”

Remember: the budget for this three-year pilot grant program is $10 million; this amounts to an average of $3.3 million being available each year to support host organizations.  Disbursing less than $1 million in the first of the three years raises serious question about the ability of the pilot grant program to meet its stated objectives: defraying organizations’ costs of hosting CVITP clinics and encouraging more organizations to host CVITP clinics.

In the following article, we show that it has budgeted too much for this pilot or, on the basis of the current budget, it is simply too stingy with the current payments to meet its goals.  We predict that the pilot program will complete its three years well under budget.  There are two design elements we stated when the pilot program was first launched which are likely to contribute to this outcome: administrative arrangements that are burdensome, deterring some host organizations from applying for the grant, combined with grant amount limits that are too low to serve as an incentive for host organizations.

We note that the indicators the CRA has said it will use to determine the success of the pilot are likely to yield misleading conclusions.  This is because the implementation of the pilot program coincides with the period immediately following COVID, when the numbers for the CVITP had plummeted and thus could be expected to rebound anyways.

We also believe that the indicators the CRA is using are the wrong ones as none of them gets at the real purpose of the CVITP.  As noted in one of our articles assessing the pilot program when it was first launched, at its core the CVITP is about the income levels of the clients it serves.  Therefore, the pilot program should aim to increase the number of returns filed by a host organization for clients whose incomes fall at or below the poverty line, not simply the number of returns filed nor, for that matter, host organizations and volunteers enlisted in the CVITP.  Until the CRA draws a closer link between its CVITP and the objectives contained in the federal government’s Poverty Reduction Strategy, it will continue to miss the mark with opportunities like its pilot grant program.

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

Leave a Reply
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

Leave a Reply

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.

CRA Data and Analysis Suggestions for a More Effective CVITP Strategy

Leave a Reply

As mentioned in a previous article, one priority in her Supplementary Mandate Letter from the Prime Minister (dated January 2021) instructs the Minister of National Revenue to “enhance and expand the Community Volunteer Income Tax Program”.  One thing the Canada Revenue Agency (CRA) can do to help achieve this is through placing greater emphasis on another priority mentioned in the same letter, instructing Minister Lebouthillier to “improve the collection and analysis of disaggregated data related to supports and services offered by the CRA.”

Data needs to be collected and analyzed for at least two reasons.  First, to confirm whether or not the CVITP is meeting its intended objective.  And second, where the CVITP is falling short of its intended objective, to help devise strategies to ensure the program can better meet its intended objective.

We think the Canada Revenue Agency (CRA) currently has two related problems with respect to CVITP data.  First, it collects the wrong data and publishes too little of what it does collect.  Second, this means the CRA focuses on doing the wrong things.

In this two-part series of articles, we look at data and its use in formulating strategy.

In the first article, entitled “First, the CRA Needs to Collect and Analyze the CORRECT Data”, we examine the data that is collected and analyzed on clients and their returns.  We begin with the uncontroversial observation that data needs to be collected and analysed to confirm whether or not the CVITP is meeting its intended objective.  We then refer to a previous article in which we argued that the CRA presently collects and reports CVITP results data which are not aligned with the purpose and in which we offered alternative performance indicators which we believe do a better job of this.  We also look at the data the CRA currently collects on CVITP host organizations and volunteers – what we call the delivery infrastructure – and make some modest suggestions for additional data to be collected through the annual registration process just prior to the tax season.

In the second article, entitled “Then, the CRA Needs to Build a Strategy With a Focus on Improving EFFICIENCY”, we look at how all this data can be used to devise strategies to ensure the CVITP can better meet its intended objective.  The combination of analyses of data on CVITP results and delivery infrastructure can help to inform the choice of actions to be taken.  The strategic priority we focus on is increasing the number of CVITP clients.  We argue that the CRA should place greater emphasis on increasing efficiencies within the existing delivery infrastructure over increasing the size of the delivery infrastructure.  A few examples are offered to illustrate how data on results and delivery infrastructure could be used to do this.

CRA’s Newly Minted COIN: A Welcome Innovation

Leave a Reply

This year, the Canada Revenue Agency (CRA) introduced an innovation into the CVITP.  Every host organization will be issued with a unique CVITP Organization Identification Number or COIN for the duration of its participation in the CVITP (i.e. it will remain the same from year to year).  In this article, we explain briefly why the CRA introduced the COIN and how it works.  We also identify a function for the COIN which the CRA has not yet stated but which we believe will be really important for helping to make strategic decisions about the future shape of the CVITP.

Post Tax Season Review: Initial Impressions from the CVITP Frontlines

Leave a Reply

With the close of the tax filing season, we did an informal survey of some of our fellow CVITP volunteers, to get their first impressions of how the tax season went.  This included both new as well as returning volunteers.  This article contains a summary of their impressions as well as a few of our own.  We welcome hearing more about some of the lessons you have drawn from your own experience of the tax filing season.

Missing in Action: No Future CRA Reporting on CVITP Results

Leave a Reply

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.