February 26, 2025
Summary: On February 24, the CRA posted on its CVITP website that it is extending its pilot grant project for a fifth year. Grants of $5 will generally be paid for 2020 to 2024 tax year returns filed between June 1, 2024, and May 31, 2025.
The good news is that the CRA has managed to find some money to continue supporting the CVITP for another season. But this masks some less welcome news.
First, it means the CRA has not managed to secure permanent funding. Instead, it has found temporary funding for the fifth year of what was originally meant to be a three-year pilot. Given the ongoing uncertainty about funding, the CVITP will continue to struggle to keep up with the demand for its service.
Second, the funding formula for the fifth year is not as generous as for the fourth year. This means that most host organizations will receive less money from the CRA for their efforts in the fifth year even if they significantly increase the number of returns they file over what they did in the fourth year.
The late confirmation of this temporary financing (at the start of the 2025 tax season and halfway through eligible grant period) means that few if any other community-based organizations will have been convinced to become hosts of new CVITP clinics in the 2025 tax filing season and that existing host organizations are unlikely to have made plans to expand their CVITP operations in the 2025 season.
Unlike in previous years, the fifth-year extension was introduced without any announcement by the CRA or the Minister of National Revenue who oversees the CRA. Previous years’ announcements included the budget envelope available for the year.
As in previous years, the CRA makes no reliable information available on the performance of this pilot project to date. Given the little information that the CRA has made available in the past, it appears that the pilot project was extended for a fifth year despite failing to meet most of its performance targets in the first four years of operation.
On February 24, the Canada Revenue Agency (CRA) posted on its CVITP website that it is extending its pilot grant project for a fifth year. Grants of $5 will generally be paid for 2020 to 2024 tax year returns filed between June 1, 2024, and May 31, 2025.[i]
What does it mean for the CVITP?
The good news is that the CRA has managed to find some money to continue supporting the CVITP for another season.
But this masks two less welcome pieces of news.
First, it means the CRA has not managed to secure permanent funding. Instead, it has found temporary funding for the fifth year of what was originally meant to be a three-year pilot. This is what I predicted was most likely to happen in the recent article entitled “Federal Government’s Fall Economic Update: Gambling With The CVITP’s Future”. As indicated in that article, the CRA was probably unable to secure permanent funding last fall because of the uncertainty surrounding the timing for the introduction of truly automatic tax filing. The federal government was unwilling to commit to permanent funding given its expectation that the demand for CVITP services would decline once automatic tax filing was in place. However, I strongly believe automatic tax filing, as most people imagine it, remains many years away. In the meantime, the CVITP will struggle to keep up with demand without more secure funding from the CRA.
Second, the funding formula for the fifth year is not as generous as for the fourth year. No longer is there a basic amount of $1,500 paid to host organizations which file more than 50 returns. Similarly, the supplemental payment of $250 to host organizations serving rural and remote communities as well as indigenous communities has also been dropped.
For those clinics which filed more than 50 returns in the fourth year, the loss of the basic amount of $1,500 can only be made up in the fifth year by filing 300 returns more than in the previous year. In 2024, host organizations filed on average 279 returns. However, the relatively few large clinics across Canada which filed thousands of returns skewed this average. It means that that at least 50% of tax clinics filed fewer than 279 returns. Most of these clinics will struggle to more than double the number of returns they file in the fifth year. As a result, they will receive less money from the CRA for the efforts in the fifth year even if they significantly increase the number of returns they file over what they did in the fourth year.
Other noteworthy points
Leading up to the 2025 tax filing season, the uncertainty surrounding the grant program means that few if any other community-based organizations will have been convinced to become hosts of new CVITP clinics. The late confirmation of this temporary financing – at the start of the 2025 tax season and halfway through eligible grant period – also means that existing host organizations are unlikely to have made plans to expand their operations in the 2025 tax season. (The repeated changes to the funding formula will only add to the general confusion.) This proves once again that the CRA lacks the ability to use grants as an incentive to improve CVITP performance.
Unlike in previous years, this fifth-year extension was introduced without any announcement by the CRA or the Minister of National Revenue who oversees the CRA. Previous years’ announcements included the grant budget available for the year.
As in previous years, the CRA makes no reliable information available on the performance of this pilot project to date. Given the little information that it has made available in the past, it appears that the pilot project was extended for a fifth year despite failing to meet most of its performance targets in the first four years of operation.
[i] Although this is the basis of the funding formula, the CRA reserves the right to pay less than this amount.