Robo tax

Should the tax collector fill out your tax return?

Well, it’s coming. The announcement dropped Friday (before a long weekend when getting beer and a turkey were the top priorities) with Mark Carmey saying next year the CRA would start reporting for “millions” of lower-income Canadians. After that, probably you, too.

Could there possibly be a conflict of interest when the tax cops become the tax filers? You think?

Some people are screaming, “hell, yeah”, while others point to the fact the announcement itself was weird. While the idea of automatic tax filing has been around for five years (since Justin Trudeau unveiled it in 2020), the feds just got serious about it with the advent of banker Carney. The CRA launched an online consultation process which was flooded with response from September 9th until the cutoff – which was last Thursday.

But just hours after the deadline, the program was unveiled.

Here’s how Canadian Taxpayers Federation director Franco Terrazzone responded: “There’s no way that government bureaucrats pulled an all-nighter going through thousands of submissions and survey responses from Canadians before sending Carney out this morning to make this automatic tax filing announcement,” says Terrazzano. “Asking Canadians for their opinion and then ignoring what Canadians said is a bad look for Carney. It makes it look like the government is holding sham consultations.”

Sham or not, it’s coming next year. First to be affected are the 12% of Canadians who don’t file a tax return annually. Ottawa says these are mostly folks with little or no income who don’t see the point in sending a return to the CRA, and therefore miss collecting billions in benefits – like pogey for parents and the HST credit.

Said the PM: “The situation is that millions of lower income Canadians don’t file their taxes, either because they don’t have the resources to do so, or because they think that their income is too low for it to matter, and that means too often that the people who most need benefits often don’t get them.”

Okay, cool. Increase government spending ($2 billion) by giving people what they deserve but are too ill-informed, busy, uneducated or indolent to claim. We get it.

But the real goal of any national revenue agency, especially in a country which spends a massive amount more than it earns, is to increase collections. And how better to do that than by taking over the entire process? So next year the plan is that returns for one million people will be automated. By 2028 that number jumps to 5.5 million.

The thinking at CRA is that the bulk of the country’s 28 million tax returns can eventually be automated. And guess who would do that work? Revenue Agent AI, of course.

Other places do it. They include Slovenia, Norway, Denmark, Finland, Chile, Portugal, New Zealand and Australia. Britain tried, and ran into problems. The Aussie tax guys admit to using AI to screen and process returns. And in countries like Canada, where automatic source deductions are the norm – with a stream of year-round stream of tax flowing to government – more automation is a no-brainer. Ottawa is currently paying 52,500 CRA employees (down from 59,000 last year) and moving to robo-taxes would likely slash this count further.

But the critics are not impressed. “The CRA acting as both the tax filer and the tax collector is a serious conflict of interest,” says the taxpayers’ group. “Trusting the tax man to do your tax return is like trusting your dog to protect your burger.”

Says the government: “We’re working to make tax filing easier by offering a variety of services to reduce barriers to filing an income tax and benefit return. The CRA is consulting individuals, community organizations, academia, and the tax filing industry to help shape the future of automatic tax filing in Canada.”

What all this means is uncertain and unknown. Would auto filing – taking individual tax returns out of the hands of individuals – mean fewer audits, or more? Would it distance taxpayers from knowing what deductions and credits are available to lower their tax burden? Would this make it easier and less transparent for government to change or increase overall taxation? Is this an attempt to carve out accountants and tax professionals who work to minimize tax? And do we really trust the revenuers, or their AI buddies, not to screw up?

And, hey, do we get to vote on this?

Thought so.

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Source: https://www.greaterfool.ca/2025/10/12/robo-tax/