October 23, 2022
The CRA collects a lot of information from client returns
Client returns contain a lot of information. The Canada Revenue Agency (CRA) could strip the returns of personal information, aggregate the data and provide it to host organizations for at least three distinct purposes:
- Technical data on the return filing process (e.g., number of returns filed, number of error free returns, nature of errors in returns) could be used to monitor current performance and improve on the provision of CVITP service delivery in the future.
- Demographic and economic data could be used to learn more about the population currently served and improve targeting efforts in the future.
- Data on the benefits and credits generated for clients could be used to demonstrate to stakeholders the impact of the current CVITP service on their clients’ financial situations.
The focus of the current article is on the provision of demographic and economic data as well as benefit and credit data for the client population served by the host organization. The provision of technical data on the host organization’s return filing process will be treated in a forthcoming article.
The CRA does not share any of this information with its host organizations
At present, the CRA does not provide individual host organizations with information in any of these three areas. Why not? The use of the CVITP Organization Identification Number or COIN in all 2021 and future year tax returns allows the CRA to identify all of this data at the level of the host organization.
Annually, the CRA strips the personal information from all returns and provides the demographic and economic data to Statistics Canada for publication. Infrequently, the CRA has also aggregated the data on benefits and credits at the national and provincial levels and shared the figures publicly. Given the advent of the COIN, it is technically feasible for the CRA to do all this for each host organization as well. If it wanted to.
This is a missed opportunity for the CRA
We believe it is in the CRA’s own interest to do this. Here’s why.
First, rolling up all the benefits and credits generated by filing for clients is a unique and highly informative way for the CVITP clinic administrator to demonstrate to their organization’s management just how important the CVITP service is for the host organization’s clients. This could raise the profile of the CVITP service within multi-service host organizations, encouraging management to treat it more generously with its time and the organization’s budget. Equally important, for host organizations dependent on donor and community support, these amounts tell an important story about the impact of the CVITP service in helping to reduce poverty within the community. This data is a crucial piece that host organizations would like to use in garnering additional donor support for their CVITP clinics.
Yet, while many host organizations would like to have the data, few do. This is for many of the reasons we will discuss below. Since its inception, the CVITP has been dependent on the good will and resources of its host organizations; the CRA has provided no financial support. It was only in 2021 that the CRA launched a pilot grant program for host organizations but with what we judge to be burdensome arrangements for accessing meagre grant funds. This may be one reason why the CVITP has not experienced more significant growth. 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.
Thus, 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. Doing this would probably be one of the most important contributions the CRA could make to help its host organizations.
Given the CRA’s inaction, host organizations face challenges collecting and analyzing data
Sadly, we do not see the CRA making an attempt to do any of this soon. As we point out in another article, we believe the CRA’s current attitude, marked by ambivalence, leads it to be excessively cautious in undertaking improvements to the CVITP.
Some host organizations are already collecting and analyzing client data from their CVITP clinics to yield aggregate figures on benefits and credits generated as well as demographic and economic data. Most are not. The rest of this article explores five challenges host organizations face in doing this.
A. Lack of interest/understanding within the host organization
Many host organizations offer tax clinics because low-income residents in their catchment area demand the service. Recognizing that this is a reasonable demand, the host organizations try to meet it as best they can with their limited resources. Within the host organization, however, there may be a substantial lack of understanding as to the potential impact offering CVITP services can have in reducing the severity of their clients’ poverty.
This lack of understanding can also lead to a lack of interest within the host organization for expending the effort to collect, anonymize and analyze client data. Opportunities are lost for gaining insights into the benefit amounts being generated for clients, and for determining whether or not the demographic profile of the clients matches the host organization’s target population.
(This is where the CRA’s ability to collect, anonymize and aggregate client data at the level of the host organization, using the COIN, would prove especially useful. By providing analyses of this data to the host organization, the CRA could enhance the organization’s understanding of the impact of this service on its client base and help it to improve its targeting efforts in future years. At the same time, the CRA would be generating the evidence necessary to convince other organizations committed to reducing poverty of the merits of offering the CVITP service.)
B. Client consent
Client consent is governed at the federal level by the Personal Information Protection and Electronic Data Act (PIPEDA). (There may also be provincial legislation covering this issue.)
When a client gives their personal information, it is understood by all that it is for the purpose of preparing their income tax and benefit return. The following PIPEDA Fair Information Principles are particularly relevant here:
- Principle 2 (Identifying Purposes): The purposes for which the personal information is being collected must be identified by the organization before or at the time of collection.
- Principle 3 (Consent): The knowledge and consent of the individual are required for the collection, use, or disclosure of personal information, except where inappropriate.
The client’s participation in a CVITP clinic generally means they understand that the data will be used to prepare their return. However, they must also be made aware of and consent to the use of their personal information if the host organization is to use their data to achieve the two other purposes mentioned above: to demonstrate the benefits of offering this free service to the community, and to learn how to better serve clients in the future.
Although the name, Social Insurance Number and birthdate of the client are essential for the preparation of the return, these are not necessary for the other two purposes to which the data will be put. PIPEDA’s Fair Information Principles are also relevant here:
- Principle 4 (Limiting Collection): The collection of personal information must be limited to that which is needed for the purposes identified by the organization. Information must be collected by fair and lawful means.
Thus, to fulfill the two purposes identified above, client data needs to be anonymized when collected from the client returns. To obtain client consent to the use of their data, it is important they understand that their data will be de-personalized when collected for these two latter purposes. This can be both time consuming for host organizations and, even then, meet with resistance from some clients who may be suspicious about a host organization’s intent.
C. Client privacy
When registering with the CVITP, every volunteer is required to commit to deleting a client’s return within 48 hours of filing. Given that CVITP clinic administrators (usually staff at the host organization responsible for managing the tax clinics) are also expected to register with the CRA as volunteers, we assume they are equally required to make the same commitment.
Again, PIPEDA’s Fair Information Principles are relevant here:
- Principle 5 (Limiting Use, Disclosure and Retention): Unless the individual consents otherwise or it is required by law, personal information can only be used or disclosed for the purposes for which it was collected. Personal information must only be kept as long as required to serve those purposes.
Thus, the CRA’s 48-hour rule relates to the filing of the return. It does not take account of the two other purposes to which the client’s data might be put – demonstrating the benefits of offering this free service and learning how to better serve clients in the future – once stripped of any personal identifying characteristics.
Since it is the host organization which collects or authorizes its volunteers to collect client information, there is an onus on host organizations to respect the commitment to protect and delete client data, whether in the hands of its volunteers or its staff. Again, PIPEDA’s Fair Information Principles are relevant:
- Principle 1 (Accountability): An organization is responsible for personal information under its control. It must appoint someone to be accountable for its compliance with these fair information principles.
The 48-hour rule makes it a challenge for most host organizations to collect and de-personalize client data within this timeframe. The CRA could make the 48-hour rule more flexible to allow host organizations sufficient time to do this. The CRA could also provide host organizations with a secure cloud-based method of retaining client returns long enough for them to complete the process of collecting and stripping their clients’ personal information from the data.
D. Costs associated with data collection
Many host organizations have no budget to support their tax clinics. Thus, staff time to organize these clinics is very limited. For these organizations, dedicating further staff time to the collection of the data from the returns is out of the question.
We have heard of tax preparation software which makes the job of collecting, anonymizing and aggregating client data relatively easy. However, this is not the case for the software currently used by the CVITP.
Given the added constraint that the 48-hour rule currently imposes on the retention of data (as discussed above), host organizations may be tempted to download the responsibility for the collection and anonymization of the data onto their volunteer tax preparers. However, for most host organizations we believe that this is likely a non-starter for two reasons. First, additional training time would be needed for volunteers to learn the host organization’s protocols for collecting and anonymizing the data. Second, many host organizations may feel that their volunteers’ time might be better be spent filing additional client returns.
E. Expertise with data analysis
Even if a host organization manages to overcome the hurdles in collecting and anonymizing their client data, they may lack the internal expertise to produce aggregated benefit and credit figures or demographic and economic data. It is our experience that many tax clinic coordinators know little about the income tax and benefit returns. Thus, they may not be familiar with all of the benefits that are conditional upon filing of a return. As a result, they may not be able to instruct their volunteers on the relevant benefits to aggregate so as to yield a comprehensive figure for the benefits generated from filing returns.
If the host organization is lucky, they may be able to turn to volunteers who have the time and the skills to do this. However, lacking the internal expertise may limit the host organization’s ability to even formulate the questions it wants answered.
Conclusion
Addressing each of these challenges can be demanding for some host organizations. Addressing all of these challenges can appear insurmountable to many host organizations. Still, some host organizations manage to do it. (Few make their results public. But we know it is possible because we have seen some of these results.)
Our experience is that it is mostly host organizations with the advancement of their clients’ financial empowerment who are 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.
We hope that more host organizations will consider taking up these challenges and aim to produce the data they need to show the CVITP’s impact to their stakeholders and to help design better tax clinics in the future.
However, we firmly believe that the CRA is best placed to provide the relevant benefit figures as well as demographic and economic data each host organization needs to do this. The use of the COIN now makes this technically feasible. Furthermore, we believe it is in the best interests of both parties for the CRA to make this information available to its host organizations. By doing so, the CRA will help the CVITP to better contribute to meeting the objectives of the federal government’s Poverty Reduction Strategy (PRS).
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 get data on non-filers.