CRA Strike:  Essential Tax Services Need a Rethink

Evelyn Jacks

Stressful, time-consuming and important.  Filing a tax return by the May 1 deadline is all of these things.  Yet it’s necessary to receive income-tested social benefits.  A recent analysis by the Canadian Centre for Policy Alternatives discovered a dismal take-up of two of them:  the new Canada Dental Benefit and Canada Housing Benefits.  It begs the question:  is the striking CRA serving the needs for essential tax services well enough?  Perhaps it’s time to consider a new solution to ensure delivery of important income-tested social benefits.

Senior economist at the Canadian Centre for Policy Alternatives, David Macdonald, found that only 44% of eligible people  received the Canada Housing Benefit and just over half received the Canada Dental Benefit in what he calls “pretty atrociously low take-up rates” in an interview with the Canadian Press.

He attributes this to the application process, which requires the filing of a tax return to test and verify income, as well as requirements by the CRA to keep receipts and a lack of information available on the program.  CRA says it sent out close to 3 million emails.

Herein lies the problem:  there is an assumption that email and computer services in general are accessible and adequate for those lower income families that may qualify.  Further, personal services are as good as non-existent, given the expectation that people have the time to wait for CRA reps for hours and hours at a time.

If filing a tax return – a complicated financial document to begin with -  is the ticket to important social benefits, well informed personal services available on a timely basis are required.  A potential new solution:  a collaboration with the Canadian tax preparation industry.   These small businesses could provide the essential tax services required and the government, could provide a subsidization for the preparation of returns for low earners.   In addition, a tax deduction for the fees paid could help those middle income earners who need help with their returns.     

Such a public-private sector collaboration could enable a higher uptake of important social benefits by a national network of professionals who already collect and remit GST and payroll taxes to government standards. 

What’s your take on the issue?  It’s the subject of our May poll – please weigh in to give your opinion next week: Do you think that the government should subsidize tax return fees  to people can get their benefits for free

This week however, is your last chance to weigh in on the appropriateness of rising interest costs on tax debt, especially since the tax filing deadline doesn’t appear to be extended due to the strike.  Please give us your opinion here.