Promised measure would remove bureaucratic roadblock for many Canadians qualified for benefits
The federal government has promised to introduce a free, automatic tax filing system for simple returns, potentially removing a crucial roadblock for many Canadians eligible to collect government benefits.
The proposed scheme, expressed in one line buried within the 6,783-word Throne Speech, would put the onus of preparing simple tax returns on the Canada Revenue Agency (CRA) using data they have on hand regarding individuals’ income, reported CBC News. The CRA receives much of the information necessary electronically from employers and other government agencies.
The new system of automatic filing could aid hundreds of thousands of Canadians with low or fixed incomes in accessing benefits that are paid exclusively to those who file tax returns.
Citing figures from Carleton University, CBC News said that an average of 12% of working-age adults in Canada don’t send in a return every year. That leads many prospective recipients to miss out on federal programs such as the Canada child benefit (CCB), the Canada workers benefit and the carbon tax rebate. The Calgary Homeless Foundation, meanwhile, said fewer than 3% of homeless Canadians collect the GST/HST credit.
According to CBC News, many tax policy experts have long argued that the CRA has the personal information necessary to automatically fill out tax returns on behalf of many infrequent filers. Lindsay Tedds, a professor of fiscal and economic policy at the University of Calgary, maintains that making benefit eligibility contingent on tax filing is bad policy as it results in many eligible recipients falling through the cracks.
“I find it really disturbing that someone with a very simple tax return is going to a provider to pay $60 to have them fill out something that the CRA already can do,” Tedds said, referring to tax software providers that she said have actively lobbied to discourage tax agencies from providing free returns and impacting their profits.
The CRA already has a system in place called “File My Return,” through which low- and fixed-income Canadians are enjoined to file their tax returns through a simple and free telephone service. But Tedds contended that the program, which has CRA agents reaching out to people by phone or mail and encouraging them to file to collect benefits, has limited usefulness because of how much people, particularly Indigenous people, distrust the government.
“The CRA is not known as being a loving, caring, nurturing organization to deal with,” she said. “There are those in CRA and the Department of Finance who just don't fundamentally understand that the tax system is actually a barrier to achieving other objectives.”
