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FAPS program builds financial literacy and inclusion

Financial Literacy Matters | By Lynne Woolcott

“I had not done my taxes in seven years, and was so intimidated and overwhelmed. My taxes were a gigantic mess of papers. I had no idea where to even begin.”

This statement is one the staff at St. Christopher House hears from many of its participants who come to the Financial Advocacy and Problem Solving (FAPS) Program. In fact, helping people with current year and back taxes is the most frequent initial request it gets from participants, 95% of which have incomes below Canada’s low-income cut-off.

St. Christopher House is a neighbourhood community centre in downtown Toronto. The Centre works with less advantaged individuals, families and groups in the community to enable them to gain greater control over their lives and within their community.

FAPS program addressing financial issues of low-income people

For 10 years, the FAPS Program has worked with low-income people to address their financial issues, including financial literacy and exclusion. In 2012, 2,050 people secured $3.9 million through the FAPS program by accessing entitlements (through the tax and government programs) and addressing debt issues.

Through individual coaching, workshops and tax clinics, FAPS program staff and volunteers work to untangle the complex financial problems of their program participants. The program provides support in:

         • Reducing and consolidating debt
         • Accessing credit, such as student loans, along with support to use appropriately
         • Filing income tax
         • Taking advantage of savings programs
         • Getting out of scams
         • Reading the small print on contracts for cell phones and other goods.

Building an appetite for financial literacy through tax filing

St. Christopher House finds that helping people with their taxes is often the stepping-stone upon which they begin to build participants’ confidence, capacity and greater curiosity about the difference financial literacy can make in their lives. The program provides information relevant to the day-to-day financial issues and decisions participants face when living on a limited budget. This information is extremely valuable as it outlines income programs, tax credits, banking services, budgeting, registered savings plans, etc. Participants also learn about the consequences (including the unintended ones) of social and economic policy on low-income people. The knowledge gained through the FAPS program enables participants to make informed decisions like for example, whether a Tax Free Savings Account is a better savings option for them than a Registered Retirement Savings Plan. Or they may learn how to start planning for retirement as a low-income person, or how disability or immigration status is interpreted by various government programs, and the implications for their own financial situation.

Tax filing is an important vehicle for building financial literacy and inclusion

Tax filing, as a vehicle for both financial literacy and inclusion has become more important to FAPS. Increasingly tax credits are seen and used by governments as a social policy mechanism as evidenced by the Child Tax Benefit, <

ABOUT THE AUTHOR

Lynne Woolcott is the Director of Community Response and Advocacy at St. Christopher House.

Tags: assets, benefits, budgeting, inclusion, poverty, retirement, tax

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Let Tax Season Work for You!

Financial Literacy Matters | By Teena Gill

Tax time is generally associated with anxiety, frustration, and expenses for many people; but it also means improvements on roads, public utilities, education, health care, and law enforcement. Revenue from tax helps redistribute wealth to lower income families, students, or people with disabilities. It provides social services such as Old Age Security benefits, Employment Insurance benefits, the Canada Child Tax Benefit, the Working Income Tax Benefit, and the Universal Child Care Benefit.

Filing a tax return is critical for low-income Canadians given that income tax and government benefits are inherently intertwined. Failure to complete an annual income tax return results in loss of access to essential government programs for families and individuals who would otherwise qualify. Filing an income tax return incorrectly can be just as detrimental, however there are often barriers preventing low-income people from seeking professional help. The average cost for a chartered accountant to complete a simple tax return in Edmonton is $85.00 per person.

Edmonton based charity, E4C’s Make Tax Time Pay Program (MTTP) is one organization who offers free financial services to low income families and individuals to complete their income tax return, apply for government benefits and subsidies, and gain additional information and education on related financial resources.

Without access to professional support, a family of four with a family net income of $34,000 may not be able to access the Canada Child Tax Benefit, Alberta Child Care Subsidy, Alberta Child and Adult Health Benefit, City of Edmonton Leisure Access Pass, and RESP grants and bonds they would be eligible for. Overall this family of four would supplement their earnings by 22% of their net income, as a result of filing their income tax return and applying for eligible government benefits and programs. This family could generate almost a quarter of their income throughout the year in benefit payments alone, while also saving hundreds of dollars on health care, child care, and recreation costs.

Families and individuals use the funds from their refund, plus the now accessible government support to provide food, shelter, clothing, health care and recreational activities for their families. Some federal government benefits, like the Canada Child Tax Benefit, Universal Child Care Benefit, and Goods and Services Tax Credit provide consistent income to families throughout the year. Other provincial and municipal benefits like the Alberta Child and Adult Health Benefit, Child Care Subsidy, and the Edmonton Leisure Access Pass ensure families will only pay a fraction for health, child care, and recreation expenses, if anything at all.

Taxes not only change the financial health, but also the holistic health of those who are struggling to make ends meet and provide for their families. An income tax refund may provide short-term satisfaction for low income families; however, it is the lasting impact of receiving monthly financial benefits that move families effectively out of poverty.

MTTP’s financial services are offered during the tax season each March and April, MTTP mobilizes over 300 volunteers and numerous community agencies and tax site location across the City of Edmonton. MTTP also collaborates with multi-level program partners, including the Federal, Provincial and Municipal governments to train volunteers, disseminate information, and streamline services. In addition, MTTP partners with Edmonton’s 211 (The Support Network) to arrange service user referrals from community members.

ABOUT THE AUTHOR

Teena Gill is the Program Manager for E4C’s Make Tax Time Pay Program, based out of Edmonton, Alberta. Teena is also an active member of the Alberta Asset Building Collaborative and the Financial Literacy Resource sub-committee.

Tags: benefits, inclusion, tax

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The CCFL Blog provides a platform for timely discussions and commentary on policy, practice, research and news relevant to the field of financial literacy for low income and vulnerable groups. Contributors include guest experts, community leaders and CCFL staff. The views expressed on this blog are those of the individual contributors, and do not necessarily represent the views of the CCFL.

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