January 8, 2021

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What’s in the latest report about the CVITP and non-filers?

The Canada Revenue Agency’s (CRA) Departmental Results Report for fiscal year 2019-2020 was released just a few weeks ago.  Here is what it tells us about the CVITP and how it is doing in reaching non-filers to encourage them to file. 

The number of individuals helped by the CVITP was 407,408 as of May 15, 2020. The report also indicates that 9.5% of previous non-filers that the CRA attempted to contact in order to encourage to file actually ended up by filing a return.  There is no further quantitative information on either program.

Let’s see how this adds to our understanding of the CVITP and the CRA’s work on non-filers based on our previous analyses…

The Evolution of the CVITP – Update

In our series of articles on The Evolution of the CVITP, we examined closely four areas where the CRA has provided data at various times in past reports on the CVITP: individuals assisted, returns filed, volunteers and community organizations that host CVITP clinics.  We determined there are many problems underlying the CRA’s data (as well as the absences of information) and concluded that “the CRA’s reporting on the CVITP has been weak to date and gives Parliament too little information”.

Let’s see what the information in this most recent report does to this picture.  Below we provide a simplified overview of the data with the most recent number:

In the previous three years, we were able to piece together information on all four areas.  For this most recent year, the CRA has provided data in only one area, on the number of people assisted.   We still know nothing about the income profile of the clients served by the CVITP.  Although the CRA’s figure of 407,408 individuals assisted by May 15, 2020 appears to represent a dramatic decline relative to previous years, we are unsure if this figure is even comparable with prior reports as these did not identify the dates by which the data had been collected.

Given that CRA can easily find within its database the number of returns filed, volunteers employed and host organizations running CVITP clinics, it is surprising that the CRA failed to provide any of this.  Although we had previously concluded that the CRA’s reporting was weak, this year’s reporting is especially noteworthy for its lack of clarity.

Getting Good Results – Update

In our series of articles on Getting Good Results, we showed how the CRA determines its performance for the CVITP using indicators and targets.  We outlined some serious misgivings we have with those indicators and targets, and offered what we believe to be a more robust alternative for managing CVITP performance.

Let’s see what the results in the most recent report show in terms of CRA performance.  Below we show the CRA’s current indicators and targets for the CVITP with the most recent number:

On the face of it, this is a massive failure.  The CRA’s report says:

“Unfortunately, the COVID-19 pandemic and physical distancing recommendations severely compromised the ability to run in-person clinics. Although temporary measures like virtual clinics were introduced, the lack of in-person clinics resulted in a significant decrease in the number of individuals helped this season.”

This information does not help the reader of the Departmental Result Report.  It is a description of what happened throughout all of Canadian society in 2020, and provides no details specific to the CVITP that might help to explain such a dramatic decline in the number of individuals assisted.

We know that in the forthcoming tax season in the spring of 2021, the CVITP will be operating under the same COVID related public health restrictions. Therefore, it is very disappointing that this report does not offer any insights into ways the CRA intends to shore up the CVITP in the coming season to avert another abysmal failure.  (Normally such future planning would be included in the CRA’s Departmental Plan for fiscal year 2021-22 but this will only be published around April or May, too late to inform the forthcoming tax season.)

The main rationale for the CVITP is to enable individuals and families with low and modest incomes to file their returns so they can access and maintain their eligibility to the many federal, provincial and territorial benefits and credits that are conditional on filing a return.  Therefore, it is surprising that the CRA report also does not include any specific discussion of the ramifications of this terrible CVITP performance.

This reflects a serious inattention to the underlying purpose of the CVITP and the crucial role that it plays in helping to reduce poverty in Canada.  It is not just about serving more people.  It is about ensuring that those people get and maintain their eligibility for benefits and credits that help to keep them from falling further into poverty.  And when they lose those benefits and credits because they cannot find a CVITP clinic, this has a real impact on their poverty.

The Issue of Non-filers – Update

In our article on the issue of non-filers, we reviewed the work the CRA has done to encourage previous non-filers to file.  Although the CRA never explains how these previous non-filers have managed to file, it is likely that many of them are using the existing free return preparation services offered by CVITP host organizations.  For this reason and, because of the challenges the CRA faces in communicating with non-filers and the many advantages host organizations have in connecting with non-filers, we believe there are actual and potential synergies between the CRA’s non-filer initiative and the CVITP.

Let’s look at how this past year’s performance compares with previous years’ efforts:

There are two main problems with this.  First, we have no idea what this 9.5% represents.  To illustrate, it is possible that the CRA could have contacted as few as 200 previous non-filers; it would take only 19 of those they had contacted to file for the CRA to have generated 9.5% (just 0.5% or 1 person shy of the CRA’s performance target of 10% for this indicator).  Second, it gives no sense as to the magnitude of the problem of low-income non-filers and just how well the CRA is doing in addressing this problem.

To sum up…

1. The CRA gives too little data to understand how the CVITP evolved in the 2019 Tax Year.

2. The only information it gives, on the number of people assisted, tells us nothing about the income profile of the clients served.

3. The number of people assisted suggests the CVITP was an abysmal failure this year, reaching only 55% of the number of clients it had reached the previous year and 51% of its target.  The only reason the CRA gives for this failure is the COVID-related public health restrictions.

4. Although the next tax season will be subject to the same COVID-related public health restrictions, the CRA does not suggest any measures it is planning on taking to avert another massive failure.

5. There is no discussion of the impact of this last year’s failure on the delivery of benefits and credits that are conditional upon filing a return.

6. This suggests the CRA continues to be blind to the connection between its core responsibility with respect to the administration of the Benefits Program and the federal government’s Poverty Reduction Strategy.

7. The CRA’s reporting on its non-filer initiative is also flawed, leaving one with no sense as to the size of the effort the CRA has made in trying to communicate with non-filers, nor how well the CRA is actually doing in tackling this problem.

For these reasons, we conclude that this reporting is totally inadequate for assessing the CRA’s performance in delivering on its core responsibility to provide key benefits to individuals and families, including to those with low and modest incomes, helping them to reduce their income-based poverty (as outlined in the Annex to the 2018 Poverty Reduction Strategy).

Why this is a BIG problem

What worries us is that the information provided in other areas of the CRA’s report, ones we are less familiar with, is likely to be no better.  Yet, as we stated at the outset of this article, this is the only report that parliamentarians and the Canadian public can use to answer the question: is the CRA achieving the results required to fulfill its mandate?

The above suggests that the Parliament is flying blind, voting budget allocations for the CRA (as for other government departments and agencies?) as it takes on faith that the CRA is doing a good job.  If this is the case, Parliament is failing in one of its key responsibilities toward Canadian citizens: holding the government to account by ensuring that budgets are being used to achieve meaningful results.