Advocates hopeful new auto-tax filing system could help low income families break even
A new pilot program from the federal government is set to come into effect in 2024
Donna McBride of Calgary files her adult son's taxes for him every year. He has a disability, and can't do it himself. But she's optimistic that a new program will make the task easier by doing it automatically.
"This is such an empowering system change that allows Brodie to have one less thing to ask someone to help him with," said McBride.
The new program was announced in March as part of the federal budget.
According to the Government of Canada website, the Canada Revenue Agency (CRA) will launch an "automatic filing service" pilot program next year. It says it will "help vulnerable Canadians who do not currently file their taxes receive the benefits to which they are entitled."
"I'm just really happy that this is about to happen for Brodie and for me and for so many other people like us," said McBride.
The promise for such a program began with a one-line mention in the 2020 speech from the throne.
By law, and in most cases, only people who owe taxes are required to file a return each year. Many people — notably those on government assistance — don't expect to owe the federal government anything, so they seldom file.
Under the proposed changes, the CRA itself would draw up the paperwork for such simple returns each year — using data they already have on hand about individuals' income.
Rebekah Smylie is already doing this kind of work. She is the manager of financial empowerment at West Neighbourhood House, a non-profit in Toronto. She works with low-income Canadians to help file their taxes, but says there are so many people who need help that it's hard to assist everybody.
Smylie says Canadians face many barriers when it comes to filing their taxes. Even just getting to a clinic is tough, whether it's because of disabilities or cost. And, she says, the forms can be complicated.
I'm cautiously optimistic. It could be really significant.- Jennifer Robson, associate professor at Carleton University
"There's still a demographic that don't know that even if they don't have a high earning [job] or even if they don't have any earning, there could be benefits that they would be entitled to. And so many people don't file because they're afraid, or because they just don't know," Smylie told The Current host Matt Galloway.
Smylie said many people don't know where they could be getting back money. She said that last year her clinic worked with about 2,500 people, and helped them get back $5.9 million overall.
"It's significant. It's very significant," said Smylie.
"Any additional funds that could come in as a result of filing your taxes are significant because we're not talking about money that can be used for vacations or fun stuff. This is money that people rely on to be able to survive."
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10-12 per cent of Canadians don't file taxes: study
Jennifer Robson, an associate professor at Carleton University in Ottawa, says the number of Canadians who don't file their taxes across Canada is even higher than that.
Robson did a study on tax filing in 2020, looking at results from the 2015 tax year. She says based on that data, about 10 to 12 per cent of working age Canadians don't file their taxes. She says young people are least likely to file, while most seniors can be counted on to do it.
And she's hopeful the new program could bump those numbers.
"I'm cautiously optimistic. It could be really significant," said Robson.
She says it should be set up so the tax agency is doing more of the work for Canadians. She says that in the United States, there is a free online service that allows people to file themselves online.
And she says that in some countries, the tax agency does all of the work, then sends you the information later.
In 2020, she found that there was around $2 billion in credits and benefits that went unclaimed in Canada during tax season. And she says that number has likely gone up.
Program set for 2024
Robson would like to see an outline of what this will look like, and after it's done, it should be reviewed and adjusted going forward.
"Let's begin where we can with the most vulnerable and then think about how do we gradually start bringing more and more people into a system where the administrative burden isn't falling on them," she said.
Smylie says it could be transformational for people, but it will be important that government puts the proper funds towards implementing it. She also hopes there is consultation with groups like hers, who are doing this work, and the low-income Canadians it purports to want to help the most.
"We need to see a lot of education around, what do these changes mean? We need to see clear communication coming from the government. We need to make sure that this really is what it can be, that it reaches its potential," said Smylie.
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With files from CBC Politics. Audio produced by Ines Colabrese.
