Canadians who haven’t filed their income tax returns can be shocked to learn how much money they owe the federal government for years of unpaid benefits, says one of the lower class people. says the head of a nonprofit organization working to build financial literacy among them. income person.
Elizabeth Mulholland, CEO of Prosper Canada, said her organization works with other community partners to provide financial services and support, including a tax filing program to help Canadians who might otherwise not file their returns. It says it offers a literacy program.
She said some people looking for such services find themselves owing tens of thousands of dollars in profits that they haven’t collected.
That newfound cash could open the door to conversations about money and financial planning, Mulholland said, adding that one family could pay a down payment on a condo after receiving the money they owed. I remembered what I was able to do.
“Often the first question is, ‘What are you going to do with that money?'” she said.
CRA is tasked with delivering new benefits
The federal government increasingly relies on the Canada Revenue Agency (CRA) to provide individuals with income-tested benefits, such as the recent addition to the Canadian Housing Benefit and the temporary doubling of the GST tax credit.
However, some vulnerable Canadians are missing out on payments because they haven’t filed their tax returns.
Canadian taxpayer ombudsperson François Boileau raised the issue in his latest annual report released this week. At a press conference on Tuesday, Boileau said he plans to make recommendations to the CRA on how to address the issue.
“We are still trying to fully understand the problem and are really trying to come up with concrete solutions. So no recommendations this year. But I’m sure there will be suggestions at another time.” ‘ he said.
Jennifer Robson, Associate Professor of Political Management at Carleton University in Ottawa, has looked at the non-filer problem in the tax system and its impact on the provision of income-tested benefits.
In a paper published in 2020, Robson and co-author Saul Schwartz, a professor at the Carleton School of Public Policy, found that about 10-12% of Canadians do not file tax returns.
In total, researchers estimated that working-age nonfilers lost about $1.7 billion in profits in 2015.
Why don’t people file their tax returns? Robson says it’s something of an academic mystery.
“We still don’t fully understand why people don’t file returns. ‘If it means they’re leaving money on the table, why don’t people file returns?'”
Her paper found that nonfilers were more likely to be male, young, and single.
“This is a serious problem in that people are missing out on some of these cash benefits,” Robson said.
It also affects program integrity, she said, given that many programs use tax returns to verify eligibility.
Based on his experience working with low-income people who don’t file taxes, Mulholland of Prosper Canada says there are a variety of reasons, including language barriers, cognitive issues, and even a lack of awareness.
In 2015, newly-elected Prime Minister Justin Trudeau’s power of attorney to Minister of State for Revenue called for the CRA to proactively reach out to Canadians who are entitled to tax benefits but are not. rice field.
It also said the Revenue Service should provide tax return preparation work for some Canadians, especially low-income individuals.
A CRA spokesperson said in an email that the agency helps more than 600,000 people with moderate incomes file their taxes each year by supporting free tax clinics. . The agency is also working with Statistics Canada to better understand benefit utilization.
Robson said there is no “silver bullet” for dealing with the problem of nonfilers, but a starting point is to have CRAs pre-fill tax returns for Canadians whose information is already with the authorities.
“Think of people on Social Assistance, for example. That’s a lot of people. The CRA knows what their income is,” she said.
Mulholland said more coordination is needed across federal and provincial government departments and agencies, as well as community groups, to reach Canadians who may be missing out on benefits for not filing their taxes. I said there is.
“As long as the money is expiring in Ottawa, we are failing. That failure will have really harsh consequences for the low-income people who are the intended beneficiaries of that money,” she said. rice field.