Feds may oversee ‘costly’ automatic tax filing service for tax dodgers

Low-income Canadians could receive roughly $8.5 billion more in unclaimed benefits if the CRA implements an automatic filing service, says the Parliamentary Budget Officer. The tax agency met less than half of core performance indicators in the 2022/23 fiscal year.

Feds may oversee ‘costly’ automatic tax filing service for tax dodgers
The Canadian Press / Adrian Wyld
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Automatic income tax filing would pay low-income Canadians $8.5 billion more in unclaimed benefits for nonfilers, says the Parliamentary Budget Officer.

Published on June 13, a report by the PBO estimates an additional $1.6 billion in government benefits to non-filers this fiscal year should the Canada Revenue Agency (CRA) deploy the service.

Upwards of 12% of Canadians do not file timely tax returns and don’t receive their eligible benefits, including the Canada Child Benefit, Canada Workers Benefit, Canada Carbon Rebate, and Goods and Services Tax/Harmonized Sales Tax credit.

“Low income is clearly related to the likelihood of not filing,” reads a Carleton University study cited by the Budget Office Report.

Administrative costs for the service would cost an estimated $57 million this fiscal year, rising to $65 million in 2028/29, it said. 

Taxpayers would incur nearly $9 billion in benefit payouts and administrative costs over the next five years. These estimates were based on 2020 tax data, which may differ over time from expected costs.

The SimpleFile by Phone service has been available to Canadians since 2018, with more than two million people expected to be eligible next year.

The September 2020 throne speech saw the federal government commit to a “free, automatic tax filing for simple returns to ensure citizens receive the benefits they need.”

Low-income Canadians who access the service can file their tax return by answering a few questions by phone.

The CRA will pilot the filing system specifically geared towards those who don’t file.

The agency says it sent out invitations to Canadians in February as part of this expansion.

“The number of invitations increased from 700,000 in 2023 to more than 1.5 million lower-income Canadians this year,” it said last month.

However, performance-related concerns remain as federal workers continue to receive lavish bonuses without meeting targets, new records show.

Over a one-year period, since March 31, 2022, the CRA’s workforce grew by several thousand to 59,785 people. The agency hired 13 executives for a total of 467, according to most recent Statistics Canada data.

But the Canada Revenue Agency 2022–23 Departmental Results Report articulates the CRA only met five of 11 core performance indicators for taxation and benefits. The agency incurred $4.34 billion in costs that fiscal year.

Notably, their Service Satisfaction Index, another performative metric, declined in recent years.

Last year, 97% of CRA executives took home a cumulative $18 million in bonuses.

“Welcome to Ottawa, where failure is rewarded with taxpayer-funded bonuses,” said Franco Terrazzano, federal director of the Canadian Taxpayers Federation.

According to the PBO, Canada’s exploding bureaucracy met less than half (48%) of their performance metrics in 2022/23.

From 2015 to 2022, the Treasury Board said the federal public service fulfilled only 1,361 of 2,393 established targets. They failed to meet 702 performance indicators whereas 330 had no results available at the time.

The federal bureaucracy ballooned more than 40% from 2015, when it employed 257,034 workers. Hiring data from the Treasury Board revealed a workforce of 357,247 people last year.

Budget Officer Yves Giroux attributed this to parliamentarians approving new spending without having viewed the departmental results.

“You wonder, what is all that money doing?” said Giroux, who cites glaring issues across several federal agencies.

“More public servants, more professional and special services,” he said. “But the level of services and the service standards are not increasing commensurately with all these increases. Quite the opposite.”

Since the Trudeau government first formed government in 2015, taxpayer-funded bonuses in the public service have surpassed $1.5 billion.

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