Each spring, Canadians are required to file taxes, which, for those who are living on low income, can mean an extra payday through a mix of tax credits, benefits and overpaid income tax.
However, many people aren’t filing and getting what they’re owed. Carleton University research estimates that tax filing alone could have reduced poverty for 200,000 people in 2015. Instead, $1.7 billion went unclaimed amongst the 10‒12% of Canadians who didn’t file taxes.
Support for tax filing
In 2020, for example, the Volunteer Centre of St. Lawrence-Rideau assisted approximately 2,700 low-income residents to file taxes for free through the Community Volunteer Income Tax Program (CVITP). Their efforts resulted in approximately $1,850 being returned per person, an estimated total of $4.5 million in tax refunds overall, plus millions more in transfer payments.
Community Volunteer Income Tax Program (CVITP) clinics
CVITP clinics not only save low-income earners the $30‒60 tax filing service charge, but they also help participants recoup overpaid employment income.
Moreover, users can receive annual or one-time benefits and high-impact monthly federal and provincial income benefits, including the following:
- The Canada Child Benefit – for families with children under 18 years old
- The Guaranteed Income Supplement for low-income seniors
- The Ontario Trillium Benefit, BC Climate Action Tax Credit or Alberta Child and Family Benefit – for low-to-moderate income households to offset some living costs, such as utilities and carbon taxes, or child care
- The Quebec Medical Expenses and Solidarity Tax Credits for low- to middle-income families in Quebec, used for medical expenses and housing, respectively
Approximately 741,460 individuals completed and filed tax returns with the help of CVITPs across Canada in 2019, amounting to approximately 24% of those eligible using tax clinics to file.
Why people aren’t filing taxes
In 2016, Prosper Canada reported that the biggest barriers to tax filing for low-income residents were as follows:
- Access to clinics or services (17%)
- Affordability of tax help (14%)
- Not knowing where to get help (14%)
- Not being aware that they need to file taxes if they have no taxable income (12%)
What communities can do to support tax filing
The Volunteer Centre of St. Lawrence-Rideau organizes around 25 volunteers each year to collaborate with community partners to bring tax filing services throughout the United Counties of Leeds and Grenville. They go to places such as local legion branches, nursing homes, community health centres and grocery stores.
In a rural region such as Leeds and Grenville, this network of volunteers is a major asset which creates more accessibility to CVITP clinics. Volunteers, in return, are connected with the community, which provides a sense of purpose, reduces isolation and improves mental health, and also makes them more aware of poverty in their own community.
Now, with COVID-19, tax filing takes on an even more important role in poverty reduction as an early intervention tool. Becoming eligible for extra income can lift newly vulnerable people out of poverty quickly and support those at-risk from falling below the poverty line.
Download the Case Study on how the Community Volunteer Income Tax Program is being run in Leeds and Grenville, plans for increasing the number of people accessing CVITP, and how they are expanding their financial empowerment supports to help clients develop positive behaviours with the income received back at tax time.