February 8, 2021
2. Financial Resources
The CRA is offering $3.3 million per year over the next three years. To put this in its proper context, we use figures from the last normal tax season prior to COVID. Our assumption is that post-COVID, tax seasons should revert to their traditional trends.
The CRA indicates that the maximum amount of grant funding available to a host organization will be a function of the number of returns filed, among other things. For the 2019 tax season (processing returns for the 2018 tax year), CVITP clinics across the country assisted 741,400 individuals to file 835,216 returns. If the $3.3 million had been available that year, CVITP host organizations could have been provided with $3.99 per return filed.
Most organizations providing this service are likely to submit less than 500 returns. At $3.99 a return, this means that most organizations would generate a maximum of $1,995 for running such clinics.
However, with the exception of the lowest (10-200) and highest (over 4,000) ranges for returns filed, the amount of CRA grant funding on offer is no more than $2 per return. (It is a maximum of $2.50 for host organizations that file at most 200 or just over 4,000 returns.) Most host organizations, which submit between 200-500 returns, would be granted a maximum of $1,000.
In the second part of our series on Supporting Host Organizations Better, we point out that the Quebec government has, for a number of years, provided financial support to host organizations, paying $1 per return filed. The CRA’s proposed support is basically double what the Quebec government is currently offering host organizations in Quebec for every return they submit. The CRA may wish to ask the Quebec government whether it believes that by doubling the amount it offers per return, this would lead to a significant increase in returns filed. We very much doubt that it would.
The News Release announcing this new grant program makes it clear that the CRA’s financial support is expected to represent an important incentive for more organizations to sign up to host clinics, and for existing host organizations to expand their operations to serve more clients.
The current arrangement, as outlined on the grant website, has successful applicants receiving their grants well after they have incurred the expenses for running the tax clinics. The very late payment will only serve to further reduce any modest incentive effect the grant might have.
The small amount being offered would clearly not cover host organizations’ costs. Indeed, the amount is so small that it is unlikely to figure in any decision making by a non-profit organization about whether or not to open a free tax clinic, expand an existing one or take any new initiatives (like encouraging previous non-filers to file).
In summary, the CRA should significantly increase the funding level per eligible return to provide for something approaching a real incentive.
Read about the administrative arrangements here.