Automatic tax filing could send roughly $2K to some, but cost millions: PBO

Canada is moving towards implementing automatic tax filing for low-income individuals, a move projected to deliver an average of approximately $2,000 to qualifying Canadians. The initiative, announced by Prime Minister Mark Carney, is designed to ensure that those most in need receive government benefits more efficiently.

According to a report by the Parliamentary Budget Officer (PBO), the program is expected to cost $429 million over the next five years, encompassing both administrative expenses and the benefit payments themselves. The Canada Revenue Agency (CRA) will prepare pre-filled tax filings for eligible individuals, primarily those with simpler tax situations and a history of filing.

The intention behind automatic tax filing is to streamline access to crucial benefits, including the new Canada Groceries and Essentials Benefit, the Canada Child Benefit, and the Canada Disability Benefit. Many low-income earners might miss out on these payments if they do not file their taxes, making this automatic process a vital step for financial support. The PBO report also notes that administrative costs for the first year are estimated at $22 million, projected to rise to $87 million over five years. The number of automatically filed returns is expected to grow significantly, from an estimated 3,000 in the first year to 50,000 by 2027.