Canadians who don’t file their tax returns are sometimes shocked to find out how much they’ve paid the federal government over the years for no benefit, says the head of a literacy-building non-profit. financial among low-income people.

Prosper Canada CEO Elizabeth Mulholland said her organization works with other community partners to deliver financial services and literacy programs. and filing, including tax relief programs that help Canadians who may not file their returns.

He said some people seeking such services find themselves owed tens of thousands of dollars in uncollected benefits.

That new found money can open the door to conversations about money and financial planning, Mulholland said, noting that a family could pay off a condominium after receiving the money owed. for him.

“Usually, the first question is, ‘Well, what am I going to do with all this money?'” he said.

CRA was responsible for providing new benefits

The federal government continues to rely on the Canada Revenue Agency (CRA) to provide income-tested benefits to individuals, including recent assessments of the Canada Housing Benefit and short-term increases. the GST tax credit.

However, some vulnerable Canadians are unable to pay because they don’t file their returns.

François Boileau, the ombudsperson for Canadian taxpayers, raised this issue in his latest annual report, published this week. During a press conference on Tuesday, Boileau said the CRA plans to make recommendations on how to solve the problem.

“We are still trying to fully understand the problem and offer concrete solutions, which is why there are no recommendations this year. But you believe there will be another time,” he said.

Jennifer Robson, an associate professor of political management at Carleton University in Ottawa, looked at the problem of non-tax payers in the tax system and their impact on the delivery of income-tested benefits. -money.

A tall brown-haired girl is wearing a black sweater.
Jennifer Robson is an associate professor of political administration at Carleton University in Ottawa. (Carleton University, Ottawa)

In a 2020 paper, Robson and co-author Saul Schwartz, a professor at Carleton’s School of Public Policy, found that about 10 to 12 percent hundreds of Canadians do not file their taxes.

In total, the researchers estimated that the lost benefits for those who do not work age was around $ 1.7 billion in 2015.

Why don’t people file their taxes? It’s a bit of an academic mystery, says Robson.

“We still don’t fully understand why people can’t file returns,” he said. “Why don’t people file returns if they’re leaving money on the table?”

According to his paper, non-filers are more likely to be male, young and single. And while there were non-registered people from all income groups, they were concentrated in low-income areas.

“It’s a real problem in terms of people missing out on some of those financial benefits,” Robson said.

It also affects the credibility of the program, he said, because many programs use tax payments to verify eligibility.

A short brown woman wears a white blouse, a blue sweater and a red necklace.
Elizabeth Mulholland, CEO of Prosper Canada, said there are many reasons why many Canadians do not pay their taxes, including language barriers, psychological problems and even lack of awareness. – really. (Prosper Canada)

The reasons are many

Based on her experience working with low-income people who don’t pay taxes, Mulholland of Prosper Canada says there are many reasons, including language barriers, psychological issues and even lack of awareness even.

In 2015, newly elected Prime Minister Justin Trudeau’s letter to the Minister of Revenue asked the CRA to actively reach out to Canadians who are entitled to, but not receiving, tax benefits.

He also said the revenue agency should delegate the task of completing taxes to some Canadians, especially those with low incomes.

A CRA spokeswoman said in an email that each year the agency helps more than 600,000 low-income people file their taxes to support free clinics. The agency is also working with Statistics Canada to better understand benefits uptake.

Robson said there is no “silver bullet” to solve the problem of fraudsters, but a starting point is to have the CRA offer pre-tax refunds to Canadians whose information is already with the agency.

“For example, think about people on social assistance. It’s a lot. The CRA knows their income,” he said.

Mulholland said he wants to see more coordination across federal and provincial government agencies, as well as community groups, to reach Canadians who may not benefit because they don’t pay their taxes.

“If we’re just running out of money in Ottawa, we’re failing, and that failure has severe consequences for the low-income people who were meant to receive that money,” he said.

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