The time for income tax auto-enrollment is now

Bee Lee Soh and I were members of Jean Yves Duclos advisory committee on poverty reduction which completed its work in August 2018. On the last day of our deliberations, we all decided that each of us would have an opportunity to raise the one issue of greatest importance to each of the 17 of us.

Bee Lee is an anti-poverty activist who continues to live in poverty and she took her few minutes in front of Minister Duclos, his staff and the rest of us to make a plea for Government auto-enrollment for tax refunds. She explained that filing her taxes was the last thing that she would ever do when she was homeless.

She told the Minister that people living in poverty often don’t know how to file their returns while they fear that they will either owe money or get very little from Government. She told us about people who sell their tax returns for immediate cash because they can’t wait for the money they are owed.

But most people think of auto-enrollment as much more modest: that the federal government would automatically sign people up for their benefits without having to do a calculation. They would still have to file their return.

What Bee Lee was talking about was true auto-enrollment where filing a return would not be required. In truth the federal government has already moved forward with a promising program called “File my return[1]”.

Here is what the Canada Revenue Agency (CRA) website says about this service:

“…eligible individuals will be able to file their income tax and benefit returns simply by giving some personal information and answering a series of short questions through an automated phone service. File My Return is free, secure and easy to use. There are no paper forms to fill out or calculations to do.”

The only problem is that there is a catch. You have to be invited by the CRA to participate:

“The service is only available to eligible individuals who were sent an invitation letter. The service will verify and confirm the caller’s eligibility at the beginning of the call. If the caller is not eligible, the automated call will not let them go further in the process.”

In other words, most low income taxfilers  still have to file their returns. This means that large armies of the poor will be mobilizing across the country just as we all have been told to self-isolate and observe social distancing.

In fact, social agencies in Toronto along with private tax outfits had just started to gear up for tax season when COVID-19 became a serious issue.

It doesn’t have to be this way.

The CRA could roll out ‘file my return’ immediately and keep legions of low income people in their homes confident that they will be receive their refunds.

There are many reasons why this is a good idea:

The CRA knows what most of the poor are going to get. For social assistance recipients, CRA has the T-5 information that the Provinces provide to both recipients and the CRA. This means that of the 43 basic questions on a tax return, CRA already know the answers to 41 of them. Besides, ‘file my return’ boasts that they need a few answers to some basic questions; and

  • Most of the volunteer tax clinics have already been cancelled. And those that are held in libraries would have to go elsewhere in any event. If the clinics are canceled, then low income people have nowhere to go and likely will not file their returns when they need the money most.
  • Many low income people have disabilities and are immune compromised. They are among the most important people to self-isolate and maintain social distance. Sending them out to file their return makes no sense. If the CRA program must prioritize, then people with disabilities should be first.
  • Volunteers get sick too. Now is not the time to have volunteers traveling to hastily rearranged sites where confusion will reign at the best of times. Construction and moving will require even more staff and unnecessary contact.
  • The CRA corrects return information. This proves that they already know what a refund amount is going to be. If they didn’t know, how are they able to correct it?
  • The amounts are often high. For families with children who are low income, it is not unusual for refundable credits to reach $10,000 or more through Child benefits, GST Credits, Trillium, the Canada Workers Benefit and other credits. It’s not chump change.

The federal government needs to roll out ‘File my Return’ to all low income people now. Do it for Bee Lee Soh and all low income Canadians.

The 43 Q’s & A’s that governments know & don’t know for Social Assistance recipients
Are you single?  y
Are you alive?   y
Province you live in?  y
Your age?   y
Regular Address?   y
Mailing address?   y
Marital status?   y
Phone number?   y
Are you disabled?   y
Residency in Canada?  y
Were you in prison?  y
Did you go bankrupt?
Do you have kids?
Child or grandchild transferring tuition?   y
Did you work?  y
Did you receive a pension?  y
Investments?  y
Rental property?  y
Foreign income?   y
Were you a student?  y
RRSP?  y
Political donations? y
Did you move?   y
Medical expenses?   y
Did you buy a house?   y
Sell a house?   y
Eligibility for home accessibility credit? No
Did you lose money?   y
Were you a volunteer firefighter? No
Other deductions?   y
Did you pay us by installment?   y
Did you get OAS?   y
Did you get CPP?  y
Did you get another pension?
Did you have a RRIF?   y
Did you sell your principal residence?   y
Contribute to RRSP  y
Property Tax or rent paid?   y
 Do you want a Hydro rebate?   y
Share info with elections Canada?   y
Are you a Canadian citizen?  y
Would you like to give your refund to the Gov’t?  y
Bank Account information? y

[1] https://www.canada.ca/en/revenue-agency/campaigns/file-my-return.html