(OTTAWA) Canadians who don’t file their taxes are sometimes stunned to find out how much money the government owes them after years of missed benefits, says head of a nonprofit that works to build literacy finance for low-income people.
Prosper Canada CEO Elizabeth Mulholland says her organization works with other community partners to deliver financial services and financial literacy programs, including tax filing programs that help Canadians who otherwise would not file a return.
However, some people who use such services sometimes find that they are owed tens of thousands of dollars in benefits they have not received, she says.
This new money can open the door to a conversation about money and financial planning, she believes. She even saw a case where a family was able to put down a down payment on a condominium after receiving the money they were owed.
“Often the first question is, ‘Well, what am I going to do with all this money?’ “, explains M.me Mulholland.
The federal government is increasingly relying on the Canada Revenue Agency (CRA) to deliver income-tested benefits to individuals, including the recent one-time supplement to the Canada Housing Benefit and the temporary doubling of the goods and services tax.
However, some vulnerable Canadians miss these payments because they do not file their returns.
The Taxpayers’ Ombudsman, François Boileau, raised this issue in his latest annual report, released this week. At a news conference on Tuesday, Boileau said he planned to provide the CRA with recommendations on how to fix the problem.
“We are still trying to fully understand the problem and come up with concrete solutions, which is why there are no recommendations this year. But you can bet there will be some at another time,” he said.
Jennifer Robson, Associate Professor of Management at Carleton University, has looked at the problem of non-filers in the tax system and its implications for the receipt of income-tested benefits.
In an article published in 2020, Mme Robson and his co-author Saul Schwartz found that about 10% to 12% of Canadians do not file their taxes.
In total, the researchers estimated the lost benefits for non-filers of working age to be around 1.7 billion in 2015.
Mostly men, young and single
Why don’t people file their taxes? It’s a bit of an academic mystery, observes Mme Robson.
“We don’t yet have a good, full understanding of why some people don’t file,” she explains. Why wouldn’t people file a return if that means they’re leaving money on the table? »
According to his article, non-filers are more likely to be male, young and single. And, while there were non-filers in all income groups, they were mostly concentrated in the lower income brackets.
“It’s a real problem in terms of people missing out on some of these benefits,” says Ms.me Robson.
It also has implications for program integrity, she adds, since many programs use tax returns to assess eligibility.
Based on her experience working with low-income individuals who have not filed their taxes, Ms.me Mulholland observes that there are a whole host of reasons for this, including language barriers, cognitive issues and sometimes even just a lack of awareness.
In 2015, new Prime Minister Justin Trudeau’s mandate letter to the Minister of National Revenue called on the CRA to proactively reach out to Canadians who are entitled to tax benefits but are not receiving them.
It further indicated that the CRA should offer to do the work to complete the tax returns of some Canadians, especially those with low incomes.
A CRA spokesperson said in an email that each year the agency helps more than 600,000 low-income people file their taxes by supporting free tax clinics. The agency is also working with Statistics Canada to better understand the use of benefits.
Mme Robson says there’s no “silver bullet” to solving the problem of people not filing, but that the CRA could already start by pre-filling the tax returns of Canadians whose information is already there. at the agency.
“Think, for example, of people who receive social assistance. That’s a lot of people. The CRA knows what their income was,” says Ms.me Robson.
Mme Mulholland would like to see more coordination between federal and provincial departments and agencies, as well as community groups, to reach Canadians who may be missing out on benefits because they don’t file their taxes.
“As long as the money doesn’t drag on in Ottawa, we fail, and that failure has very harsh consequences for low-income people who are the intended recipients of that money,” she says.