A new tax filing system could give Canadians more than $1 billion in unclaimed benefits: PBO

Canadians would get more than $1 billion in unclaimed benefits each year through an automatic tax filing system, according to a report published by the Parliamentary Budget Officer (PBO).

Canadians would get more than $1 billion in unclaimed benefits each year through an automatic tax filing system, according to a report published by the Parliamentary Budget Officer (PBO).

On Thursday, Canada’s fiscal watchdog outlined how an automated tax filing system would benefit some Canadians, particularly those in low-income and vulnerable households who have never previously filed a return, or might have gaps in their filing histories.

According to a 2020 study conducted by two Carleton University professors, between 10-to-12 per cent of Canadians do not annually file their returns and might, as a result, miss out on benefits they're otherwise entitled to.

The PBO revealed that if the automated system were to roll out now, eligible taxpaying households would receive more than $1.6 billion in benefits this current fiscal year. In five years, it will reach $1.9 billion.

This billion-dollar figure includes all the benefits taxpayers receive after filing their individual tax returns, like the Canada Child Benefit, the Canada Workers Benefit and the GST/HST tax credits. The automated system would also provide the Canada Carbon Rebate to more households outside of British Columbia and Quebec, although it could slightly diminish the amount of money provided as more taxpayers would “share the same envelope,” PBO notes

While the automated system was first proposed in the 2023 federal budget, the Canada Revenue Agency (CRA) said this past May that it would start sending invitations this summer, but it did not specify when exactly that would start.

The PBO estimates the administrative cost of running an automatic tax filing system would be $57 million in the 2024-25 fiscal year, rising to $65 million in 2028-29. This assumes the CRA's automated service will complete the tax returns of all non-filers with sufficient tax information.