Volunteer tax clinics: Benefits for tenants and housing providers
It’s tax season again and whether you’re claiming costs related to working from home or figuring out tax owed on income from Canada Recovery Benefits, filing individual tax returns will likely look a little different this year.
With changes to RGI taking effect and eligibility for tax credits and benefits on the line, it’s especially important that community housing residents file their taxes annually. Read on to learn about community volunteer tax clinics and how they can benefit both tenants and housing providers.
What is a community volunteer tax clinic?
Canada Revenue Agency’s (CRA) Community Volunteer Income Tax Program (CVITP) allows community organizations to host tax clinics where highly qualified volunteers file tax returns for eligible individuals free of charge. These clinics are currently being offered virtually by video conference or phone.
How can volunteer tax clinics help tenants?
We spoke with Bill Singleton and Jonathan Rothschild, CVITP volunteers and creators of the website Connecting CVITP and Poverty Reduction to find out how volunteer tax clinics benefit their communities.
Many people turn to businesses that provide tax preparation services that charge a flat rate or a percentage of the return, or require the client to take out a payday loan until the institution receives their tax return. While these types of services allow the client to receive the money quickly, the monetary cost can be substantial, particularly for individuals and families operating on a limited budget. The CVITP allows those who are owed a return to keep every cent.
Claiming credits and benefits
The CRA started the program in 1971 as a way to assist low-income earners in filing their taxes. “In the last 10 years”, Jonathan tells us “what has changed significantly is that not only the federal government but the provincial and territorial governments are increasingly using… the Income Tax and Benefit Return to assess the eligibility for, and ensure continuity of many provincial, territorial, and federal benefits and credits that are specifically income-tested. Meaning the lower your income, the more likely you are able to access and benefit from that particular benefit or credit”.
Jonathan explains: “technically if you don’t have taxable income, you’re not legally obliged to file an income tax and benefit return and yet some of the clients that [we] deal with… don’t owe any tax, but it’s very important for them to file so they can access these benefits and credits”. This is so important, he continues that “the Government of Canada’s first-ever Poverty Reduction Strategy… identifies that one of the initiatives specifically to help the government deliver on the targets it has set for itself to reduce poverty by 2020 and 2030 is the CVITP. Jonathan tells us this is because the federal government recognizes that there are so many benefits and credits that help low-income Canadians reduce their poverty that are conditional upon filing their return.
“In addition to benefits that are actually dependent on the income level” Bill elaborates, “such as the Ontario Trillium Benefit, which is both the sales tax credit and the Ontario Energy Property Tax credit, which the vast majority of tenants of organizations that are members of ONPHA will be eligible for, two of the biggest single benefits in dollar terms, the Canada Child Benefit and the Guaranteed Income Supplement for those receiving old age security, the actual filing of the return [is what] allows those benefits to continue”. The amount of those benefits doesn’t necessarily change if their income fluctuates, “but they would be cut off if they don’t file”. Bill explains that both he and Jonathan have seen clients whose benefits were cut off when they didn’t file their tax return on time. In some cases, “those benefits were restored as soon as the return was filed… but they had two months [or more without the benefit] and that money is very important for low-income families”.
“Similar to what you’ve seen with RGI, Jonathan continues, “there is an increasing tendency of governments to make use of the information coming from notices of assessment to assess eligibility for other programs [including] the Canada Learning Bond… an additional grant that is provided to low-income people to help establish a RESP for their children”.
You can find lists of Ontario and federal benefits most likely to be relevant to clients of community tax clinics on Bill and Jonathan’s website.
What are the benefits for housing providers?
The benefits of the CVITP are a little less tangible, but still important for housing providers. When tenants are filing their taxes regularly and receiving their benefits, their income and therefore, their ability to pay rent is much more stable. As Bill puts it “it’s an income-smoothing device” and “that level of stability for tenants makes life slightly simpler for the providers”.
Relevant info for tenants
You can direct tenants to the CRA website to help them find a volunteer tax clinic in your area.
It’s important to make tenants aware that the new RGI rules, which will be fully-implemented by July 1, 2021, require household members whose income is included in the Adjusted Family Net Income to file their income tax for the household to remain eligible for RGI, subject to extenuating circumstances.
Bill and Jonathan also recommend that community housing landlords who have property tax exemptions inform their tenants of this during tax season. They have seen cases of tenants attempting to claim the Ontario Energy and Property Tax Credit undergo stressful reassessments as a result of being unaware of their housing provider’s property tax exempt status.
Visit the website Connecting CVITP and Poverty Reduction for more information on how community tax clinics can help improve financial well-being in your community. Bill and Jonathan are also interested in hearing from individuals and organizations with knowledge and experience in the arena of CVITPs and assisting low-income earners with taxes. You can contact them via their website.
ONPHA is partnering on a pilot program with the Wealthsimple Foundation to help supplement the tax services provided by the CVITP and increase financial literacy in non-profit housing communities. If you’re an ONPHA member and would like to learn more about the program, contact us at email@example.com.
Do you have questions about supporting your tenants or best practices you’d like to share? Contact us at firstname.lastname@example.org. We’re always happy to hear from you, and to help!
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