The federal government is advancing its push to expand automatic tax filings for Canadians.
In the 2024 fall economic statement released Monday, the feds further outlined how the Canada Revenue Agency (CRA) is making the process a broader “reality.”
The government said that its current pilot programs have seen “initial success” but it is “time for Canada to accelerate modernization of how Canadians file their taxes and make needlessly complicated and costly tax filing services a thing of the past.”
It added that “many countries have already pursued full-scale automatic tax filing and the federal government is launching the second phase of its work to move Canada towards broad-based automatic tax filing.”
The government says it intends to develop legislation to allow the CRA to automatically file a tax return on behalf of some lower-income Canadians using available information.
Those eligible would receive a pre-filled tax return based on CRA data and be invited to change and modify the information or opt out of automatic filing.
“If eligible Canadians do not opt out, the tax return would be filed on their behalf by the CRA, thereby helping more Canadians receive their benefits. Every effort will be taken to ensure that people have the opportunity to modify or opt out as they choose,” notes the economic update.
This measure could be implemented as soon as the 2025 tax year.
Since 2023, the CRA has invited eligible Canadians to participate in the SimpleFile by Phone program. The automatic tax filing system aims to help lower-income Canadians who do not file taxes or have filing history gaps.
The feds say they’re also considering how to expand the automatic tax filing process to middle-class Canadians with “simple tax solutions.”
“This could include, for example, non-filers or those with a gap in their filing history and who do not claim most deductions and credits,” states the recent economic update.
“It could also include a modest-income family who does not have the funds for a paid tax filing service.”
Additionally, the government said it is looking into options to improve the availability of free online tax software for Canadians. It also proposes amending the Canada Revenue Agency Act to ensure advancing simplification and automation of individual tax filing, which is part of the national revenue minister’s responsibilities.
The CRA has established an advisory group to find a “path forward” for automatic tax filing. The feds also say they will consult Canadians on its implementation to ensure that they receive the benefits they’re entitled to.
Automatic tax filing pilot has been a success
The feds note that the SimpleFile program has been a success so far.
In early 2024, the CRA increased the number of initial invites for the program from 700,000 to over 1.5 million.
As of Nov. 3, 2024, 93 per cent of invitees filed a tax return receiving $3 billion in benefits and credit payments.
In July 2024, the CRA invited more than 500,000 lower-income and non-taxable individuals to try SimpleFile.
Since the pilot is ongoing, the 2024 results aren’t available. However, the agency recently provided us with the results of its small-scale pilot that took place in the summer of 2023.
At that time, it invited over 118,000 lower-income and non-taxable individuals to use the automatic tax filing system, which is available over the phone, digitally, or on paper.
For that specific pilot, “over 35,000 individuals filed a tax return using a variety of filing methods and were entitled to $92 million in benefit and credit payments,” CRA spokesperson Benoit Sabourin explained over email in early December.
According to the agency, those Canadians received the following in unclaimed benefits and credits:
- More than $32 million in Canada Child Benefits
- Over $400,000 in Advanced Canada Workers’ Benefit
- Approximately $217,000 in Dental Benefits
- Over $58 million in the Goods and Services Tax Credit, Canada Carbon Rebate and other provincial and territorial benefits issued by the CRA
A June report from the Parliamentary Budget Officer (PBO) said that implementing an automatic tax filing system could give those who don’t file their taxes $1.7 billion in unclaimed benefits from 2024 to 2025 to $1.9 billion from 2028 to 2029, totalling about $9 billion over five years.
With files from Isabelle Docto
