The federal government promised a “new automated (tax) filing service” in 2024 to help low- and fixed-income Canadians get benefits — but it ended up recycling a program for a year before seeing little uptake.
Thousands of low-income Canadians miss out on government benefits each year because they don't file tax returns. The Parliamentary Budget Officer (PBO) estimates that the automated filing system would cost the government $1.6 billion to $1.8 billion in payments to people who do not currently receive those benefits.
In most cases, only taxpayers are required by law to file a return each year with the Canada Revenue Agency (CRA). Many people—especially those on government assistance—don't expect to owe anything to the federal government, so they rarely file.
The CRA announced earlier this year that it was expanding its SimpleFile program rather than piloting a new program. Through the SimpleFile program, the CRA sends invitations to low-income Canadians to call the tax agency and answer a short questionnaire to complete their tax return.
When the CRA announced that expansion, it said it would include paper and digital options “beginning in summer 2024.”
Last month, CBC News asked the CRA how many Canadians used the “new” digital and paper SimpleFile options in 2024. The agency said it hasn't finalized the numbers but pointed CBC News to a previous pilot from 2023 that offered digital and paper. Options under the SimpleFile program.
The agency said that by 2023, it had invited 118,000 people to use the SimpleFile program. Of those, 35,000 filed their returns and the vast majority – 32,150 – filed through traditional methods rather than using the free SimpleFile service.
Only 260 people used the digital option and 350 people used the paper option – less than two percent of the invitees who filed.
“The Canada Revenue Agency measures success regardless of the filing method used,” a CRA spokesperson said in an email.
Elizabeth Mulholland is the CEO of Prosper Canada, which works to give low-income Canadians access to programs and policies that help improve their economic situation. She said she is not surprised by the low uptake for the 2023 program.
“We know that many low-income people are afraid to open correspondence from the CRA,” she said. “Their view is that it's generally bad news, so they try to avoid it.”
She said many low-income people assume any good news claiming to come from the CRA must be a scam.
Jennifer Robson, associate professor of political management at Carleton University, suggested one solution to low uptake is to make free electronic tax filing an option for everyone on the CRA website. As has the US Internal Revenue Service.
Many other countries, including the United Kingdom, Germany and New Zealand, have some form of automatic filing system for low and fixed income earners. Under the UK model, those in ordinary tax situations have their returns filed automatically but can correct any inaccuracies later.
Mulholland said that even with the expansion of the SimpleFile program, Canada is nowhere near having the same kind of automated systems seen in other countries.
“I think it's good to have (the SimpleFile program) in the toolkit,” she said. “I don't want to disparage the program, but I think it's not doing enough to help the people we're really focused on, which are people with low incomes and simple tax returns who could really benefit from an automated service.”
46% of invitees sought help from the private sector: PBO
The PBO found that 46 percent of those invited to file through the SimpleFile phone system in 2023 turned to the private sector to file their returns – meaning they paid an accountant even though they qualified for free government services.
Robson said leaving low-income people to pay to file their returns when a free government service is available undermines the program's purpose.
“If you're standing back and thinking about this from the perspective of individual taxpayers, especially those on low and moderate incomes, it's definitely defeating the purpose,” she said.
The government said in its fall economic statement last month that it was developing legislation to establish an automated filing system. Both Mulholland and Robson said they believe the CRA will eventually get there, but it may still take some time.
“I'm not saying it's a simple file to solve, but I'm saying I think progress on it is very slow and very modest,” Robson said.
