PBO reports CRA’s automated tax filing could generate over $1 billion in benefits

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A sign outside the Canada Revenue Agency is seen Monday May 10, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld



“Unlocking Over $1 Billion in Unclaimed Benefits: The Case for Automatic Tax Filing in Canada”

Introduction:
Imagine a scenario where Canadians could potentially receive over $1 billion in unclaimed benefits every year through an automatic tax filing system. This may sound like a dream, but according to a report from the Parliamentary Budget Officer (PBO), it could become a reality. Let’s delve into the details of how this system could benefit not only individuals but also low-income and vulnerable households in Canada.

The Potential Benefits of an Automated Tax Filing System:

The PBO report highlights the significant impact an automated tax filing system could have on Canadians, especially those who have never filed a return or have gaps in their filing histories. A study by Carleton University professors revealed that between 10-to-12 per cent of Canadians fail to file their returns annually, missing out on benefits they are entitled to.

If implemented now, the automated system could potentially see eligible taxpaying households receiving more than $1.6 billion in benefits in the current fiscal year, with projections reaching $1.9 billion in five years. These benefits include essential programs like the Canada Child Benefit, Canada Workers Benefit, GST/HST tax credits, and even the Canada Carbon Rebate for households outside of British Columbia and Quebec.

Challenges and Considerations:

While the idea of an automated tax filing system is promising, challenges such as administrative costs and eligibility criteria need to be addressed. The CRA estimates that running such a system would cost $57 million in the 2024-25 fiscal year, with projections rising to $65 million by 2028-29. Additionally, concerns around the ability of the CRA to complete tax returns for low-income households highlight the need for clear criteria and guidelines.

Expanding Access through Technology:

In addition to the automated tax filing system, the CRA is planning to expand its SimpleFile by phone service to provide a digital and paper version for individuals with gaps in their filing history. This service aims to reach out to eligible Canadians, making it easier for them to submit their tax returns with assistance from CRA agents over the phone. However, the uptake of this service has been relatively low, with only seven per cent of invitees using it in 2023.

Conclusion:

The potential benefits of an automatic tax filing system in Canada are undeniable. Not only could it unlock over $1 billion in unclaimed benefits for Canadians, but it could also provide much-needed support to low-income and vulnerable households. As discussions and implementations continue, it is crucial to address challenges, improve access, and ensure that all Canadians have the opportunity to benefit from this innovative approach to tax filing. The path towards a more inclusive and efficient tax system lies in embracing automation and technology to empower individuals and maximize the impact of government support.”



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