Automatic Tax Filing Sounds Like A Good Idea, Right? Not So Fast

Draft legislation, now working its way through Parliament, could soon lead to automatic tax filing for some Canadians. But, not everyone thinks this is such a good idea. Earlier this month, both the Taxpayers’ Ombudsperson, and Tax-Filer Empowerment Canada (TFEC), made submissions asking the government to reconsider the proposed amendments now being studied by parliamentary committees.

The concept of automatic tax filing – where the government prepares your tax return for you – has been discussed for years. After all, the government already has much of the information we enter on our tax returns. Take, for example, employment income. The government knows exactly how much employment income you were paid, to the penny, as well as how much taxes were withheld, along with your Canada Pension Plan (CPP) or Québec Pension Plan (QPP) contributions, and Employment Insurance (EI) premiums. All of this information must be reported to the Canada Revenue Agency by employers, annually, via your T4 slip.

Similarly, if you earn investment income from your brokerage account or income from a mutual fund, these are also reported to the CRA on your T5 or T3 slips. Even your annual registered retirement savings plan (RRSP) contributions are electronically tracked by the CRA.

Which begs the question: why do we spend so much time, and money each year to essentially re-input information into our returns that the government already has? While the government has a tool, Auto-fill My return , which makes inputting tax information easier, we still need to complete the return ourselves, and submit it.

Over the past decade, the CRA has been working to make tax filing easier for some Canadians by introducing programs such as SimpleFile . This program offers secure tax filing methods (digital, phone, paper) to eligible individuals with a lower income and a simple tax situation that allows them to answer a series of quick questions. The CRA then processes the return with the information it has on file.

Many other countries have already pursued full-scale automatic tax filing . In nearly 30 countries, the tax authorities provide residents with a prefilled tax return, which includes a preliminary tax liability assessment. Taxpayers can then review and modify the information on their tax return, if needed, before submitting it.

Among the items contained in last year’s federal budget were proposed amendments to the Income Tax Act to grant the CRA the discretionary authority to file a tax return on your behalf, provided certain conditions are met. This legislation is now contained in Bill C-31 and would expand automatic tax filing beyond SimpleFile to include both deemed, or automatic, filing, and pre-filled tax returns through your CRA My Account .

To qualify for the automatic filing, an individual’s taxable income must be below the lower of either the federal basic personal amount ($16,452 for 2026) or provincial equivalent amount (plus the age amount and/or disability amount, if applicable); all the individual’s income must be from sources for which the CRA has already received the information; the individual hasn’t filed a return in least one of the preceding three taxation years and the individual still hasn’t filed their return 90 days after the tax filing deadline.

Before auto-filing on an individual’s behalf, the CRA would provide them with the information it already has, giving them 90 days to review the information and submit any changes to the CRA. If the individual doesn’t confirm the information (with or without changes) within 90 days, the CRA could file a tax return on the individual’s behalf, allowing them to receive any available credits and benefits. Individuals would also have the ability to opt out of automatic tax filing.

From September to December 2025, the CRA held a public consultation process to get feedback on the future of automatic tax filing. It received 11,000 submissions and held roundtable discussions. Participants included community and Indigenous organizations, academics, members of the tax filing industry and individuals. In May 2026, it issued its findings in the Automatic tax filing consultation report .

Participants expressed broad conditional support for automatic tax filing services for individuals with a lower income and a simple tax situation. Support was especially high from community organizations and academics.

Participants described the benefits that automatic tax filing services could have for those who would be eligible. They said that automatic tax filing services would increase access to benefits and credits, ensuring that individuals receive the benefits and credits for which they are eligible. It would reduce individuals’ reliance on and the cost of tax preparer and software services, and be an efficient tax filing option, ensuring returns are filed on time.

They did, however, raise concerns, including a risk that online, automatic tax filing services would exclude vulnerable populations, such as those who don’t file or are behind on filing, those with locked CRA accounts, newcomers and seniors. They also noted the risk of inaccurate or incomplete pre-filled returns, including missed credits and deductions. Some expressed concern about lower personal autonomy and responsibility in tax filing, as well as potential conflicts of interest with the CRA both filing and assessing individual returns.

Bill C-31 is currently being considered in committee, after second reading. Earlier this month, the Office of the Taxpayers’ Ombudsperson submitted a brief to the House of Commons Standing Committee on Finance outlining its concerns and recommendations about the proposed automatic filing. In a press release, François Boileau, the Taxpayers’ Ombudsperson, said that while helping lower-income Canadians access the benefits and credits they are entitled to is a worthy objective, “any automatic tax filing system must be practical, effective, and designed to provide uninterrupted access to essential financial support.”

The Ombudsperson is concerned that deemed filing, as currently proposed, could create several service issues. For example, the proposed legislation does not prescribe a specific date when taxpayers must be notified or when returns would be filed on their behalf, creating a risk of benefit interruptions. Further, continued participation in deemed filing will ultimately lead to ineligibility because the proposed legislation stipulates that to be eligible, a taxpayer must not have filed for one of the preceding three tax years. In addition, safeguards are also needed to ensure taxpayer information is accurate before benefit payments are issued.

The Taxpayers’ Ombudsperson recommends that the CRA prioritize pre-filled tax returns through CRA accounts rather than deemed filing on taxpayers’ behalf.

Last week, TFEC, a national association of leading tax preparation and software companies, also called on the government to pause the rollout of automatic tax filing.

“We fully support the government’s goal of ensuring vulnerable Canadians receive the benefits they are entitled to,” said Dan Pfeffer, executive director of TFEC, in a release. “But automatic filing will not achieve that goal if the CRA lacks the information needed to prepare complete and accurate returns.”

TFEC says automatic filing risks leaving vulnerable Canadians with incomplete returns and missed benefits. It identifies three primary concerns. First, the CRA may not have information about expenses, life changes or other circumstances that affect eligibility for credits and benefits. Second, the program targets previous filers and does not help people who have never filed or recovered benefits from unfiled prior years. Finally, benefit payments may not reach recipients when the CRA has missing or outdated banking and mailing information.

In the end, while automated filing may be a laudable goal, Canada’s personal tax system may be too convoluted to make it work. In an April 2026 C.D. Howe paper, Simple on Paper, Complex in Practice : The Limits of Automatic Tax Filing, author Alexandre Laurin,
drawing on the U.K. experience, argues that successful automation is closely linked to tax simplicity.

“Canada’s complex federal-provincial system, with its many tax and benefit provisions requiring direct taxpayer input, makes automatic filing difficult for most individuals,” wrote Laurin.

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Jamie Golombek, FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto. Jamie.Golombek@cibc.com .

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