October 29, 2025
Summary: In the first article of this series, I showed – using Canada Revenue Agency (CRA) data – that SimpleFile, the agency’s attempt at automatic tax filing, had very poor rates of adoption in 2024 and 2025. Despite this, the CRA is consulting on using SimpleFile again in 2026 – this time with an important twist.
The CRA is considering altering the SimpleFile invitation to state that if recipients do not file their return using any method by a specified date (April 30th?), the agency would prepare a return for them. While CRA consultations suggest it would then file the return, the December 2024 Fall Economic Statement from December 2024 indicates that filing would only occur after the pre-filled return is shared with the recipient.
At most, about 140,000 individuals might receive a pre-filled return. Yet given the many challenges in understanding and modifying these returns, a significant share might still opt out of the process. It is unclear whether the CRA would file pre-filled returns without individuals’ consent.
Notably, those who have not filed for two or more years – and are therefore missing out on benefits – would remain excluded. Nor is it likely that the CRA would prepare pre-filled returns for prior years, even though these could represent substantial benefits and credits. Individuals in this situation would still need outside assistance to prepare and file their returns.
The final article in this series examines the Prime Minister’s most recent statement on automatic tax filing, its implications for 2027 and what it could mean for the CVITP.
In the first article of this series, I examined the performance of SimpleFile in 2024 and 2025. Marketed as automatic tax filing, the service has been largely avoided by low-income residents who were invited to use it, with most choosing other filing methods.
In this second article, I look ahead to 2026. Despite SimpleFile’s poor track record, the CRA appears ready to use it again. This time, however, the focus will likely be on the invitation rather than the service itself. I expect the CRA will inform recipients that if they do not file a return – probably by the usual April 30th deadline – the agency will prepare one on their behalf.
Online consultations
On October 9th, the CRA concluded online consultations on the next step for automatic tax filing. These consultations give a strong indication of what to expect in the 2026 tax season: the continued use of SimpleFile, but with a significant twist.
The CRA asked participants to comment on a single proposal to further advance automatic tax filing for “vulnerable Canadians with a lower income [who] are still missing out on valuable benefit and credit payments because they are not filing an annual tax return.”
The CRA outlined its proposal as follows:
“One option the CRA is considering to advance its work is to automatically file tax returns on behalf of certain individuals with a lower income using the information it has available, a process known as “deemed filing”.
For this option, eligible individuals would first receive an invitation to use the SimpleFile service. Eligible individuals can always opt-out of these services by calling or writing to the CRA, or file on their own using another filing method.
If the eligible individual does not opt out of the SimpleFile service by the deadline or file using any other filing method, the CRA would file on their behalf after a certain period of time. The CRA may need to confirm key information with the taxpayer.”
Contextual factors shaping the proposal
Under the Income Tax Act, the CRA can file returns and issue assessments for non-filers, a process known as “deemed filing”, usually applied when taxes are owed. In those cases, the CRA relies on income data such as T slips to calculate the unpaid income tax.
In discussing the enhancement of its automatic tax filing services for low-income individuals, the CRA identifies three key considerations:
- Taxpayer acknowledgement is required, which means the CRA must contact individuals before producing a notice of assessment (NOA) and calculating any related benefit or credit payments.
- The CRA must collect certain information to determine eligibility and payment amounts, such as their family situation and composition, rental payments, property tax paid, and self-employed income.
- The Canadian tax system allows individuals to make choices that may help reduce their tax burden when they file their tax return, and these choices may change the outcome of their return, such as deciding:
- which family member should claim certain credits and deductions
- if and how pension income should be split
- whether certain credits and deductions will be claimed during the current tax year, or carried forward to future years
By contrast with individuals who owe income tax, the situation outlined above by the CRA involves low‑income individuals who typically owe nothing; here, the CRA is proposing to prepare returns to ensure benefit eligibility. However, because the CRA lacks the expenditure information required to determine eligibility and calculate benefits, the “deemed filing” approach has serious limits with respect to low-income individuals’ situation.
The federal government’s 2024 Fall Economic Statement (FES) also touched on this issue:
“Eligible Canadians would receive a pre-filled tax return based on CRA data, and be invited to review and modify their information as necessary, or to opt-out of the automated filing process. If eligible Canadians do not opt out, the tax return would be filed on their behalf by the CRA, thereby helping more Canadians receive their benefits. Every effort will be taken to ensure that people have the opportunity to modify or opt-out as they choose.”
There is some ambiguity in all of this: while the CRA could prepare a return for a low-income individual, in the absence of input would it file their return, potentially depriving them of some of the benefits and credits that automatic filing is intended to deliver?
Experimenting with a new approach in 2026
Step one – the SimpleFile invitation
Anyone who receives a SimpleFile invitation but neither opts out nor files a return by the deadline would have their return prepared by the agency. The deadline might be April 30th, as return information is used to calculate benefits for the new period beginning July 1st.
Given SimpleFile’s persistently low adoption, once again few invitees are expected to use it in 2026. The invitation’s real purpose, then, would not be to promote SimpleFile itself but to notify recipients that the CRA will prepare their return on their behalf if they do not. Individuals could opt out of the process by filing a return themselves, through SimpleFile or some other method by the deadline.
In July 2024, the CRA reported that 90% of those invited to use SimpleFile by Phone in the first half of 2024 had filed a return.[i] In December 2024, the FES noted that by November, 93% of the 1.5 million invitees had filed a return.
Step two – preparing the return and seeking client consent to file
The CRA would prepare and send returns to all those who failed to opt out by the first deadline. Individuals could still opt out at this stage by filing a return using another method. But what happens if they do not opt out by a second deadline? Would the CRA file their return without their consent?
Assuming the CRA again mails out 2 million invitations to use SimpleFile, as it did in 2025, and using the FES estimate that 7% of invitees did not file, the agency could prepare returns for as many as 140,000 individuals in 2026.
Some of the 140,000 individuals would opt out at the second step by filing a return using another method. Of the remaining numbers, some would give the CRA feedback and consent to file. Others would not. As a result, the number of returns filed by the CRA through this process would likely to be somewhat lower than for 140,000 individuals.
2026 will be a year of experimentation, as the CRA tests how far it can extend the second step of preparing and filing returns on behalf of low-income Canadians.
Challenges with this approach
1. Preparing the pre-filled return
The CRA would base pre-filled returns on the income information it already has on file – namely, T slips submitted by employers, financial institutions, and government programs.
But for many low-income individuals, the real complexity lies in the benefits and credits, not the income tax situation. These often depend on expenses such as rent, property tax or childcare, which the CRA does not collect automatically. As a result, pre-filled returns would be unlikely to include estimates of the benefits and credits the individual is entitled to. Therefore, recipients would likely be asked to provide the missing information before the CRA could complete and file their return.
2. Completing and filing the return
Individuals who receive the pre-filled return will face several challenges:
- Trust and legitimacy: Some may suspect the letter is a scam, assume there is a cost, or distrust the CRA’s ability to secure all their benefits.
- Language and literacy: The pre-filled return would likely be written at a high school level in English or French, which may be a barrier for many.
- Numerical complexity: Pre-filled returns would include figures and calculations that many individuals may struggle to understand – one reason why each year, about 60% of Canadians rely on others to prepare and file their return through EFILE.
- Information gaps: Recipients would be asked to supply additional details for the calculation of benefits and credits, which may be confusing.
- Communication barriers: The best way to resolve questions is by speaking with a CRA agent, but this is often difficult due to long wait times on the phone and the challenges many face in successfully completing the CRA’s identity verification process.
Assuming these challenges could be overcome, how would the individual provide feedback, including consent to file, to the CRA? At present, this is unclear. But the procedure might also raise challenges of its own.
These suggest that even with pre-filled returns, many individuals might opt out by filing using a different method, struggle to complete the process or opt in unwittingly.
Conclusion
The CRA deserves credit for experimenting further with its SimpleFile model, but it is equally important to highlight what this experimentation will not address:
1Chronic non‑filers: Individuals who have not filed for two or more years—and are therefore missing out on benefits—will remain excluded.
2Outdated addresses: Those without a current mailing address on file will not receive invitations or pre‑filled returns.
3Prior years: Participants are likely to receive only a pre‑filled return for the current tax season (in 2026, that means the 2025 tax year). For those who missed earlier years, the CRA will not prepare pre‑filled returns, even though filing past returns can yield substantial refunds and benefits.[ii]
These limitations mean that many of the Canadians most in need of support will still have to look elsewhere for help.
The third article in this series examines the Government of Canada’s most recent statement on automatic tax filing and what it could mean for the CVITP.
[i] The CRA announced that a further 500,000 invitations would be sent out that month. No information has been published on the percentage of returns filed for the 500,000 invitations sent out in July of 2024.
[ii] To illustrate, one CVITP client for whom I had prepared the last 10 years of returns received more than $21,000 from the CRA.