The federal government’s Budget 2023 has announced plans to help more low-income Canadians who are not currently filing their returns to get the benefits to which they are entitled.  In this article, we explain why both of the proposed initiatives are unlikely to succeed.  What follows is a summary of the article.

One of the initiatives aims to increase the number of eligible Canadians using the File My Return (FMR) service to two million by 2025. This service, introduced in 2018, allows eligible Canadians to file their income tax and benefit returns over the phone by answering a series of short questions using an automated function.

However, the use of this service has been consistently low, with less than 10% of eligible users taking advantage of this service annually over the past five years.  Complicated instructions that require a high level of reading skills in one of the official languages and understanding of tax-related concepts, confusion over various automated options, and distrust in the government are some of the reasons which have contributed to the low take-up rates. Furthermore, usage depends on the Canada Revenue Agency (CRA) having the correct mailing address for the recipient, which it lacks for many current non-filers.

The other initiative proposes to pilot a new automatic filing service next year.  However, the attention given to automatic filing is misplaced.  Although the returns of some low-income residents could be automatically prepared by populating various parts, the CRA will still need to contact non-filers to obtain their approval of their returns.  The CRA’s track record in contacting low-income non-filers and getting them to respond is extremely poor and there is no reason to believe the response to this new initiative will be any different.

In the next few years, if the CRA wants to reach more low-income people who are not filing their returns, it should focus on strengthening the CVITP.  The CVITP is the main initiative the CRA relies on to help meet the objectives of the federal government’s 2018 Poverty Reduction Strategy.  With over 50 years of direct person-to-person contact and the trust this engenders, the CVITP remains the CRA’s best option for increasing vulnerable people’s access to the benefits they are entitled to.