Undervaluing the proven while investing in the untested

August 26, 2026

Summary

In addition to the CVITP, the CRA as four other programs intended to support low‑income tax filing, though only two—deemed filing and pre‑filled returns—represent true automatic tax‑filing initiatives. The non‑filer benefits letter program has been discontinued, and SimpleFile has shown persistently low uptake.

Pre-filled returns will be available to one million low-income individuals with simple tax situations beginning in 2027.  However, this service will require users to navigate their CRA accounts online, understand pre‑filled information, identify missing data, and trust CRA accuracy—barriers that may seriously limit adoption.

Deemed filing will be launched as a pilot in the fall of 2026.  It aims to file returns automatically for non‑filers with simple situations who owe no tax. However, the scale is modest—3,000 participants initially, rising to 50,000 annually—and key details remain unclear, including eligibility criteria and how beneficiaries will file their returns in future years.

Deemed filing and the CVITP are the only two programs which allow non-filers to file their returns and get the benefits to which they are entitled.

Unlike deemed filing, the CVITP is a proven, large‑scale, community‑rooted program with strong results. It has operated for 55 years, is valued by low‑income residents, and consistently generates billions of dollars in benefits.

However, there are three concerns about the CRA’s commitment to the CVITP: (1) consistently low growth targets, (2) reliance on temporary and insufficient funding for community organizations, and (3) reliance on a failed strategy for the use of these funds.

Automatic tax filing is proving far more complex than originally anticipated.  Implementing deemed filing has required legislative changes.  And yet its scale will be small.  Automatic tax filing more generally will require substantial tax‑system simplification—politically difficult as many groups’ interests may be threatened by such reforms.

In the meantime, automatic tax filing will remain limited to low‑income individuals with simple returns.  And pre-filled returns, which are being scaled up more significantly than deemed filing, are unlikely to be as effective as the CVITP in delivering on the government’s poverty reduction goal.

Nevertheless, the CVITP will remain in a “holding pattern” until sufficient evidence of this point becomes available, probably only by late 2028 at the earliest.  Budget 2028 will be a key indicator of the government’s long‑term strategy for the CVITP.

Introduction

Earlier this year, I wrote an update looking at access to CVITP services by people living in poverty.  As in previous years, it showed that, at best, only a quarter of people living in poverty use the CVITP to help them file their income tax and benefit return.

This was the catalyst for a three-part series.  In the first article, I looked at the other CRA services designed to help low-income people file their returns.  There are four other services.

The oldest, the non-filer benefits letter initiative was discontinued in 2024.  In my opinion, its modest results were always suspect.

Operating since 2018 under different name, SimpleFile was originally an automated phone service but expanded in 2025 to allow filing returns through one’s CRA account.  In 2026, 3 million people were invited to use this service but, as in past years, adoption has remained very low, with less than 5% taking up the invitation to use the service.  The CRA does not publish income thresholds for those it invites to use SimpleFile or report on the benefits generated through this service, leaving us with little information about the poverty levels of those invited and no evidence of SimpleFile’s impact.

The remaining two services – deemed filing and pre-filled returns – that together make up what the CRA calls automatic tax filing have yet to be implemented.

Deemed filing is designed for non-filers with simple tax situations who do not owe tax.  It will be piloted this fall with 3,000 individuals, expanding to 6,000 in 2027, and then is projected to serve 50,000 annually thereafter. Key details remain unclear, including the income criteria for eligibility, how many people will ultimately be helped, and the benefits generated.  It is also uncertain what happens after their returns are filed: will these individuals file on their own in subsequent years, or will they need to turn to the CVITP for assistance?

Pre-filled returns will be introduced for the first time in 2027, when 1 million low-income people who are up to date in filing their returns and have simple tax situations will be invited to review prefilled returns prepared by the CRA through their CRA accounts.  By 2029, up to 5.5 million low-income people will receive prefilled returns.  To use this service, individuals will have to access their CRA account, understand the prefilled return, identify missing information the CRA needs, and trust that the CRA has prepared the return properly – a demanding set of requirements.  As with SimpleFile, many will be invited but few may take it up.   Key details remain unknown, including the income criteria for eligibility, expected uptake, and the benefits this service will generate.

In the second article in this series, I looked at the CRA’s plans for contributing to poverty reduction.  While I concluded that these are weak, I argued that any CRA program which makes it easy to file an income tax and benefit return is good, in principle, for helping those living in poverty to get the benefits to which they are entitled.

In this third and final article of this series, I first show that the CVITP is the CRA program currently best fit for the task of helping low-income households to file their returns, whether or not they have previously filed.  I explain why it is likely to do a much better job than automatic tax filing of getting non-filers the benefits to which they are entitled, the original reason for introducing automatic tax filing.  I then identify and explain three puzzles which raise questions about the CRA’s future commitment to the CVITP.   Finally, I speculate on why the CRA will likely leave these puzzles unresolved until 2029.

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The CVITP – a solid performer

The CVITP has a lot going for it.

A strong track record: The CVITP has been in existence for the past 55 years.  Why?  Because it is a service highly valued by low-income residents.

A clear focus on the most disadvantaged: Community-based organizations use the CRA’s suggested income ceilings to limit this free service to those on low incomes least able to file a return.  Because these organizations are rooted in their community, they know their clientele and can determine the poverty levels of the households they serve.

Demonstrable results: For the last five years, the CRA has been publishing figures on the benefits generated for CVITP clients which show they are accessing billions of dollars for federal, provincial and territorial benefits administered by the CRA

Significant scale: In 2025, the CVITP assisted 926,710 individuals to file 1,069,420 returns.  Based on recent growth trends, the CVITP is likely to come very close to serving 1 million in 2026.  These numbers dwarf those for people assisted using SimpleFile.

A growing share of filers:  While small compared to the overall number of filers, the CVITP’s share has shown steady growth.

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Table & Graph: Percentage of total filers using CVITP (2021-2025)

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So how does the CVITP compare with the other CRA programs designed to help low-income people file a return and get the benefits to which they are entitled?

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Table: Comparison of CRA programs targeting low-income residents

	non-filers Benefit Letter	simplefile	deemed filing	pre-filled returns	cvitp
Status	Discontinued	Active since 2018	Planned	Planned	Active since 1971
Method		By invitation 3 million (2026)	By invitation 3,000 (pilot – Fall 2026) 6,000 (2027) 50,000 (2028+)	By invitation 1 million (2027) Up to 5.5 million (2029)	Open to all who meet the income criteria
Eligibility		Low income Simple tax situation	Low income Simple tax situation Non-filer in previous year Owe no tax	Low income Simple tax situation Up to date filing returns Access to CRA account online	Low income Simple tax situation
Prior year returns		No	No	No	Yes
Adoption rate		~5%	TBD	TBD	926,710 assisted (2025)
CRA administered benefits generated		Unknown	TBD	TBD	$2.576 billion (2025)
Poverty levels		Cannot be determined	Cannot be determined	Cannot be determined	Can be determined

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Given the CVITP’s favourable performance targeting low-income residents as compared to the other programs listed above, three puzzles raise questions about the CRA’s commitment to the CVITP.

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Three puzzles

1. CRA’s exceedingly modest ambition for the CVITP

I have previously mapped out how the CRA’s ambitions for the CVITP grew and then waned during the period running from 2013 to 2024.  Since 2024, the CRA has continued to aim low for the CVITP’s growth.

In its Departmental Plan for the fiscal year 2024-25, the CRA planned for an increase of 10% in the number of returns filed.  (There is no reference to any target for the number of individuals helped.)  This followed an increase of 18.25% in 2023 over 2022.  The CRA’s own data show it easily surpassed its 10% target with a 12.97% increase in 2024.

Then, in its Departmental Plans for 2025-26 and 2026-27, the CRA expected annual increases of 5% in the number of individuals helped through the CVITP.  This followed an increase of 13% in 2024 over 2023.  The CRA’s statistics for the CVITP show it surpassed the 5% target with an 8% increase n 2025.

It is too early to tell if the 5% growth target for 2026 will be met.  But between January 1 and April 30, 839,050 individuals were helped compared with 784,650 during the same period in 2025.  This represents a 6.9% increase.  Assuming the rest of 2026 plays out as it did in 2025, the CVITP will likely once again easily surpass the modest 5% target the CRA has set for itself.[i]

With the previous year’s CVITP performance in mind, the CRA has a habit of lowballing its planned increases.  This makes it probable the CRA can surpass its targets and claim success.  This is despite evidence suggesting the CVITP consistently serves only a fraction of those living in poverty.

2. Temporary funding

The CVITP’s core operations inside the CRA are funded on an ongoing basis.  However, starting in 2021 the CRA experimented with a three-year pilot project (extended for an additional two years) providing modest financial support to some community-based organizations.  This was introduced after the COVID pandemic and associated public health restrictions dramatically reduced the number of individuals assisted by the CVITP which had been built, up to that date, on an in-person service model.

I have previously argued that this pilot was a failure, in terms of the only objective with a measurable target that the CRA set for it: stimulating 5% annual growth in the number of host organizations.  Nevertheless, it may have helped to revive the CVITP after 2020 by encouraging existing host organizations to help more people file their returns.  (The CRA has not published any assessment of this pilot.)

The CRA’s own Ombudsman thought the funding issue was important enough to recommend in its 2023-24 and 2024-25 annual reports that the grant program be made permanent.  And the CRA agreed – in principle – with the Ombudsman’s recommendation.

However, the CRA failed to secure permanent funding for a CVITP grant program.  Instead, it has only confirmed funding for the 2026-2028 tax seasons.

It is difficult to understand why only temporary funding was offered – and on less generous terms than in the third and fourth years of the pilot.

3. No new strategy

The CRA’s CVITP grant webpage provides the following information:

On objectives: “[B]y providing financial assistance to community organizations, it will encourage more organizations to participate in the CVITP and increase the retention rate of existing organizations. The grant would also encourage CVITP participating organizations to expand the reach of their tax clinics, for example, by extending the number of days and/or hours of operation, or offering additional tax clinic locations.”

On expected results: “[I]ncrease the number of organizations that participate in the program each year; decrease the total number of organizations that do not return to the program after participating for two years or less; increase the annual number of volunteers who are associated with grant recipient organizations; and increase the number of returns filed each year by grant recipient organizations.”

On performance measures: “[A]n annual 5% increase in the number of organizations that participate in the program; an annual increase in the number of volunteers associated with grant recipient organizations; and an annual increase in the number of returns filed by grant recipient organizations.”

In reading this, one gets a disappointing sense of déjà-vu.  The only concrete measure on which the success of this temporary funding will be assessed is one that the CRA consistently failed to meet throughout the five-year pilot.  To be fair, the webpage reads “To measure the success of the four-year pilot grant”.  But then, is this reason enough to conclude that the CRA has not given any thought to the objectives, results and performance measures for this temporary funding?  Or has it simply forgotten to update this portion of the webpage?[ii]

Given the failure of the pilot project to meet its key performance target, the temporary funding could have been used strategically to promote alternative objectives.  For example, funding could have been targeted toward supporting rural clinics, clinics that increased the number of indigenous filers, clinics open year-round, or again clinics that significantly increased the number of volunteers they recruited.[iii]

The lack of any new explicitly defined objectives, expected results or performance measures combined with the late date on which this temporary funding was announced[iv], suggests that the CRA was instead trying to stickhandle a political problem: avoiding entirely cutting grant funding that community organizations have come to see as a concrete signal of the CRA’s ongoing commitment to the CVITP.  

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What is going on here?

The CRA is leaving the CVITP in limbo until 2029 without any new strategic focus.  Why?  Is it possible the CRA is gambling that pre-filled returns will overtake the CVITP by 2028 as the main service low-income residents will use to file their returns?

If this were to happen, then there might be no need to provide additional funding beyond 2028.  After all, the CVITP survived for 50 years, until 2021, without the CRA offering any grant funding at all. 

However, I have briefly outlined above the reasons why this is not likely to happen.  In any event, pre-filled returns and the CVITP will target two very different groups of low-income residents.  The former are likely to shift more knowledgeable individuals to a new, free form of filing whereas the latter will continue to focus on serving the more vulnerable.

The aim of automatic tax filing, as originally promoted by the Trudeau government, was to help non-filers get the benefits to which they are entitled.  In theory, the deemed filing initiative will best serve this objective.  However, the initiative is untested and the numbers the CRA plans to reach through this initiative are, at present, very small.  Furthermore, as indicated above, it is unclear how the beneficiaries of this initiative will, in subsequent years, find ways to remain up to date in filing their returns in order to receive their benefits.

Next to deemed filing, the CVITP best fits the objective of helping non-filers get the benefits to which they are entitled.  Although the CRA does not published data showing which individuals served by the CVITP were previously non-filers, we know that the number of returns filed annually through the CVITP consistently exceeds the number of individuals helped by about 13%.  This suggests that the CVITP has been effective in helping some non-filers get the previous years’ benefits to which they are entitled.

The CVITP also represents probably the best option for beneficiaries of the deemed filing initiative to remain current in filing their returns in future years.  And, as I have shown in previous articles, there are ways to further reduce the numbers of recent non-filers and chronic non-filers by using the CVITP better.

The reality is that making automatic tax filing a viable solution for many low-income residents is a much more complex endeavour than the Trudeau government ever anticipated.  Simply to implement the deemed filing initiative, the government has had to make changes to the Income Tax Act. 

Making automatic tax filing a realistic alternative for a much larger number of low-income residents would first require large scale reform of the income tax code with the aim of simplifying the system.  Yet such reform could prove complicated and politically contentious.  The federal government could be distracted from its goal of simplifying the system as different groups lobbied to retain special treatment.  In fact, this is one reason the income tax system has become so complicated.  Few governments are likely to want to expend the political capital required to pursue serious tax reform.

In the meantime, the CRA has been under pressure to show significant progress toward meeting the government’s commitment to introduce automatic tax filing.  SimpleFile was its first move in this direction.  The introduction of pre-filled returns in 2027 demonstrates it is making progress.  That neither SimpleFile nor pre-filled returns address the government’s original reason for introducing automatic tax filing is left unstated by the CRA.

The CRA’s ambitions for automatic tax filing (deemed filing and pre-filled returns) are supported by the government’s budget allocation.  The 2025 budget includes $71 million over the next five years and $8.3 million per year thereafter to run these two programs.  The ongoing funding indicates that the government sees the initiative as part of the CRA’s permanent operating base.

For many Canadians, automatic tax filing sounds like the promise of the future, relieving them of the burden, and accompanying stress, of preparing and filing a return each year.  But the government never committed to expanding this initiative beyond low-income residents for whom filing a return is a necessary condition for receiving poverty reducing benefits.[v]

When combined with the complications of reforming the income tax system, it seems likely that automatic tax filing will remain limited to low-income households with simple returns for the foreseeable future.  And it is not going to have a significant impact on the audience it was originally intended to target.  In a recent paper, Laurin of the CD Howe Institute reaches the same conclusion.[vi]

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What does this mean for the future of the CVITP?

I believe that the CVITP will be largely in a holding pattern until 2029.  By that time, there will be evidence showing rates of adoption for pre-filled returns.  And there may be some indication of what has happened in subsequent tax years to the filing habits of beneficiaries of the deemed filing initiative.

By the end of 2028, the government will have to make some decisions about the way forward for the CVITP.  In addition to the evidence from its two automatic tax filing initiatives, the government will also look at trends in the CVITP.  Will the CVITP continue to grow its share of current year filers in the intervening years?  How close or far the government is from meeting its own poverty reduction target for 2030 may also play a small role in its decision making.

After 2028, there are at least two distinct directions the government might take with the CVITP.  The government could reduce further financial support, arguing that this is how the CVITP operated prior to COVID.  Or the government could make the current grant program, or something very much like it, permanent.  Funding will be a very important signal of the government’s future strategy for the CVITP.

Look to Budget 2028 for concrete indications of those decisions.

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[i] These figures were shared by the CRA in its annual thank you letter to CVITP volunteers.

[ii] The webpage shows it was last updated on April 29, 2026.

[iii] The CRA’s CVITP end-of-season 2026 survey hints at some of the objectives that the grant funding could have been used to more directly promote the program.

[iv] This temporary funding was announced on February 3, 2026.

[v] Given the recent operational problems the CRA has experienced, its own Ombudsman recently recommended that the Minister of Finance explore introducing automatic tax filing – by which it means the preparation of pre-filled returns in CRA accounts – for more than just low-income Canadians.  However, there is already one group that would probably like to see automatic tax filing limited to low-income households: commercial providers of tax return preparation services.  Estimates of revenues from these services run from $1.7 billion (in 2024) to approximately $8 billion (in 2023).   While there are some low-income households that make use of these service providers, most of their clients probably come from middle and high-income households.  Introducing automatic tax filing for middle and high-income households would represent a real threat to these service providers’ bottom line. This alone makes the introduction of automatic tax filing for a wider audience more politically difficult.

[vi] However, Laurin stops at the conclusion that “More meaningful progress will likely require broader reforms, including simplifying the tax system and reconsidering the link between tax filing and benefit delivery.”  My concern is that this may be a long time in coming.  In the meantime, what should the government do?  Improving access to the CVITP strikes me as the simplest answer.