The Canada Revenue Agency will pilot a new automatic filing service next year to help vulnerable Canadians who do not file taxes still receive the federal benefits to which they are entitled.
Tuesday’s federal budget indicates that the Canada Revenue Agency will also present a plan in 2024 to further expand this automatic tax filing service, following consultations with stakeholders and community organizations.
The shift to automatic filing, first promised in the 2020 Speech from the Throne, is among many budget measures the Liberals say are aimed at helping Canadians with the cost of living.
Jennifer Robson, associate professor of political management at Carleton University, welcomes the move with “cautious optimism.” Mme Robson, who has done research on people who don’t file taxes, believes this approach could eventually change things.
Experts and activists have called for such an automatic filing service, pointing out that many vulnerable Canadians are denied the benefits to which they are entitled because they do not file taxes.
Canadians are generally not required to file a return each year if they do not owe money to the tax authorities. But the federal government is increasingly relying on the Canada Revenue Agency (CRA) to provide income-tested benefits to individuals.
Examples include the Canada Child Benefit, as well as the recent one-time supplement to the Canada Housing Benefit and the temporary doubling of the GST tax credit.
Already in other countries
A 2020 report, co-authored by Professor Robson, estimated that 10-12% of Canadians do not file taxes, especially in lower income brackets. The report also estimated that the value of benefits not received by these working-age Canadians was $1.7 billion in 2015.
Automatic production is already a reality in many other countries, including the UK and New Zealand.
Mme Robson believes that in Canada, this would likely involve the CRA first filing a tax return itself with information it already has. The agency would then give the person the option to update the statement or submit additional information, such as eligible medical expenses.
A move towards automatic filing would certainly pose a threat to the tax preparation industry, which relies on taxpayers who must file a return. Butme Robson says there will always be taxpayers with more complex tax situations who need professional advice.
The federal budget also indicates that the Canada Revenue Agency will expand access to a service introduced in 2018 that allows certain Canadians with low or fixed incomes to file their returns automatically and free of charge by telephone, after answering a series of short questions.
The budget indicates that two million Canadians will be eligible for this service, called “File my return”, by 2025, almost three times more than today.