December 1, 2025
Summary: For low‑income Canadians, the budget introduces only one direct new support. Individuals who apply for and receive the Canada Disability Benefit (CDB) will be eligible for a one‑time $150 supplemental payment to offset the costs of obtaining a Disability Tax Credit certificate. This payment will be retroactive to the launch of the benefit, with disbursements expected before the end of the 2026‑27 fiscal year. In addition, the government confirmed its intention to amend the Income Tax Act so that the CDB will not be treated as taxable income, ensuring recipients retain the full value of the support.
Budget 2025 also announces the introduction of “automatic federal benefits” beginning with the 2026 tax year, allowing the Canada Revenue Agency (CRA) to prepare pre‑filled returns for certain low‑income households and automatically file them if individuals do not submit their own return within 90 days of the deadline. While this is intended to ensure access to benefits such as the GST Credit, Canada Child Benefit, and Canada Workers Benefit, pre‑filled returns will not capture expense information needed for other federal credits and many provincial benefits. Many recipients may struggle to understand these returns, and CRA call centres are already overburdened, meaning community tax clinics will likely continue to play a crucial role in helping low‑income residents navigate the process.
Finally, the CRA’s pilot grant program for CVITP host organizations ended in 2025, and Budget 2025 did not extend or replace it. This omission, coinciding with the rollout of automatic filing, suggests the CRA expects reduced demand for CVITP services. However, this assumption is flawed, as chronic non‑filers and those with more complex situations will still need assistance. With volunteer shortages looming, the lack of sustained CRA support for the CVITP could limit its capacity, and in the short term, automatic filing may even reduce benefit uptake if the CVITP cannot expand to meet demand.
This article looks at the federal government’s Budget 2025 from two perspectives.
Measures to help low-income residents
From my reading of Budget 2025, there’s only one measure that will have a direct impact on some low-income residents. The government is introducing a one-time supplemental payment of $150 to help those who apply for and receive the Canada Disability Benefit (CDB) to help offset the costs of getting the Disability Tax Credit. This one-time payment would be retroactive to the launch of the CDB. The first supplement payments will come before the end of the 2026-27 fiscal year (which ends March 31, 2027).
Budget 2025 also confirms the government’s intention to bring forward changes to the Income Tax Act to exempt CDB from being treated as income. This is intended to help ensure that CDB recipients keep the full value of this benefit.
Measures that impact the CVITP
There are two measures, or rather one measure and the absence of another, that will have a direct impact on the CVITP.
Budget 2025 indicates that the federal government will introduce “automatic federal benefits” for low-income households, starting with the 2026 tax year i.e. in the 2027 tax season. This is the way it will work: “individuals will be able to review and confirm a pre-filled income tax return, and the Canada Revenue Agency (CRA) will automatically file these individuals’ taxes to ensure they receive government benefits they qualify for—including benefits that these Canadians may not be aware they are entitled to.” (Just to clarify: the CRA only will only file the return if the individual has not filed their return 90 days after the filing deadline.) This is intended to ensure that low-income households do not miss out on getting their GST Credit, the Canada Child Benefit and the Canada Workers Benefit. Up until recently, the federal government had been calling this automatic tax filing.
Sounds great, right? This will help low-income people with very simple tax and benefit situations who do not owe tax and do not file themselves. But just how many people fall into this category is an open question.
I have written a fair bit about this. The most relevant article is here. Here are my objections in brief. The pre-filled return, when filed, will trigger the federal benefits as these are based on income information the CRA has. But as the CRA does not have the taxpayer’s expense related information, the pre-filled return will not include any of the information required to trigger some federal credits and many provincial benefits. If this turns out to be anything like the CRA’s experimentation with SimpleFile, many recipients of these pre-filled returns will not understand them and need assistance. Calling the CRA is not the best option as the CRA already has difficulty managing call volumes.[i] Even if they manage to get through to an agent, many people struggle to successfully answer the client verification questions. Many low-income residents are likely to turn to other sources for advice. Some will seek help from community tax clinics to understand their pre-filled returns or to file their return and get estimates of the benefits they should be receiving.
It is notable that Budget 2025 does not include any grant funding for the CVITP. The CRA’s pilot grant project for host organizations terminated in 2025 with grants disbursed in October. If the CRA intended to make this pilot project a permanent feature of its support for the CVITP, grant funding would have been included in Budget 2025. But it was not. So, this ends the CRA’s experiment in providing financial support to the CVITP. This omission comes as automatic filing is being introduced. The timing is not coincidental: the CRA is assuming that automatic filing will reduce the demand for the CVITP’s services. However, as I make clear above, this cannot be assumed.
It should also be noted that people who have not filed for two or more previous years will not qualify to receive pre‑filled returns. They will still need assistance in preparing and filing their returns. The CRA will also not prepare pre-filled returns for prior years, so chronic non-filers will also need help in preparing and filing these returns. Many are likely to turn to the CVITP for assistance.
However, looming volunteer shortages in the coming years could severely limit the number of people who get assistance from the CVITP. At least in the short term, automatic filing could lead to a decline in benefit disbursements if the CRA does not take more active measures to sustain the CVITP and help it grow to meet increasing demand for its service.
[i] Budget 2025 states that the CRA will absorb, on average, $1 billion in budget reductions every year for the next four years. This may have a further, negative impact on client service.