The Canada Revenue Agency is considering ways to expand its system of automated tax filing so more Canadians get the benefits they’re entitled to, MPs heard Tuesday.
In last September’s throne speech, the federal government promised to “introduce free, automatic tax filing for simple returns to ensure citizens receive the benefits they need.”
Doing so would mean that fewer Canadians miss out on hundreds of dollars in government benefits, such as the Canada Child Benefit (CCB).
On average, 12 per cent of working-age adults in Canada don’t file an annual return, according to recent figures compiled by Carleton University researchers Jennifer Robson and Saul Schwartz. That number jumps to nearly 16 per cent in Ontario.
The Canada Revenue Agency (CRA) is considering how to expand automated filing so more Canadians get their benefits, agency commissioner Bob Hamilton told the House of Commons’ Public Accounts committee.
On Tuesday, the committee held a hearing on the auditor general of Canada’s February report on the CCB.
While the agency has done a good job of promoting benefits, it’s an “ongoing challenge” to encourage more Canadians to file their returns, Hamilton said.
Currently, the CRA automatically files an application on a parent’s behalf for child and family benefits when the birth of a newborn is registered with a province or territory, said Frank Vermaeten, the CRA’s assistant commissioner.
Parents must then provide consent for the transfer of the birth-registration information to the CRA. This automated-application option is available in all provinces and the Northwest Territories, and will soon be available in the Yukon and Nunavut.
Fifty-seven per cent of more than 600,000 CCB applications in 2019-20 were submitted through this automated method, according to agency figures.
Hamilton said the time has come for the CRA to offer automated tax filing to Canadians, and that his agency has the capacity to enter information on file into tax forms for them.
But a hurdle to further automation is not getting eligibility information for groups like recent immigrants, Vermaeten said. People whose marriage status or child-custody situation has changed must update their information manually in order to be eligible for benefits.
“If we don’t have the information, it’s a challenge,” he said in French.
The CRA is consulting with Immigration, Refugee and Citizenship Canada about sharing information to help automate tax applications, Vermaeten added.
More automation could speed up CCB payments, suggests the auditor general’s report. It found that the CRA’s system can process automated benefits applications in seconds, whereas its primary tax agents can enter data from a paper application in five minutes.
Currently, the CRA offers the Community Volunteer Income Tax Program, whereby community organizations host free tax clinics where volunteers file tax returns for vulnerable Canadians, such as the elderly. This program, which turned 50 last month, has moved online due to COVID-19.
The agency also offers File My Return, a phone-based system for eligible low- or fixed-income Canadians with simple tax situations that doesn’t require paper forms or calculations.
“We will be exploring with stakeholders how best to interact with Canadian tax filers to further automate our processes,” CRA spokesperson Pamela Tourigny said in an email.
Some online tax software offers auto-fill options. The agency has updated File My Return and offered simplified return forms for First Nations communities this year, she added.
At least 36 countries, including Germany, Japan, and the United Kingdom, permit return-free filing for some taxpayers, according to the Urban-Brookings Tax Policy Center.