The Canada Revenue Agency (CRA) is set to open the doors for automatic tax filing to millions of Canadians during the 2025 tax season. More than two million individuals will benefit from the introduction of the SimpleFile service, which will now include both phone and digital options. This move aims to ease the tax season burden for Canadians with low or fixed incomes.
According to the CRA, the automatic tax filing service is available to those with simple tax situations who have seen minimal changes year on year. This season, the CRA spokesperson Déborah Cléry stated, "The invitation letters to eligible Canadians will be sent out via mail or their CRA account over the next couple of months," opening the pathway for more Canadians to easily file their taxes.
Last year alone, over 1.5 million individuals participated in the SimpleFile by Phone service. The CRA reported staggering success, with 93 percent of those invited completing their tax returns by November 2024, resulting in nearly $3 billion flowing back to Canadians through various benefits and credits.
This tax season, Canadians can begin utilizing both the phone and online filing services starting February 24, 2025. The CRA has ensured these services will be available each day from 6 a.m. to 3 a.m. eastern time, providing ample opportunity for filing without the need for lengthy interactions with CRA agents.
The SimpleFile services are primarily focused on verifying information and answering quick questions, with no calculations required from users. "You do not need to speak to a CRA contact centre agent to use either of these services," Cléry reassured potential users, emphasizing the simplicity of the process.
For those who prefer filing online, it is estimated to take no more than 20 minutes to complete the return using either computer or mobile devices, with phone filing clocking in at just five to ten minutes.
Meanwhile, the federal government is working on broader improvements to tax filing systems. Minister of Finance and Intergovernmental Affairs, Dominic LeBlanc, noted plans to expand automatic filing to include middle-class Canadians with uncomplicated tax situations. This development aims to make tax filing processes less cumbersome and more accessible for many Canadians.
Contextually, the federal government said on January 31, 2025, it would defer the effective date of the capital gains tax increase, moving it from June 25, 2024, to January 1, 2026. This change follows looming legal challenges from tax organizations concerned about the original enforcement of the tax hike, which would have raised the taxable portion of capital gains for individuals and businesses from the current 50 percent to two-thirds.
LeBlanc stated, "The deferral of the increase to the capital gains inclusion rate will provide certainty to Canadians, whether they be individuals or business owners, as we quickly approach tax season." This decision addresses growing concerns among entrepreneurs and individuals alike about the economic impact of such tax changes.
While the capital gains tax change had been included in the government’s latest federal budget, it faced significant backlash, prompting discussions about potential policy revisions and the need for clarity as tax season approaches.
The CRA intends to fully implement and administer the automatic filing services without delay and will maintain open communication with Canadians about their filing opportunities. Eligible Canadians will soon receive detailed invitation letters outlining how to proceed with automatic filings.
With the automatic filing service available and the deferral of the capital gains tax modifications, Canadians can look forward to less stressful tax applications in 2025. The deadline for filing taxes remains April 30, 2025, marking the final date by which returns must be submitted to avoid penalties.
The changes being put forth are not only aimed at easing the tax filing process but also at ensuring Canadians understand their tax obligations and rights. The CRA’s expansion of services will allow thousands more to take advantage of simplified tax returns, fostering greater financial empowerment and awareness as tax season approaches.
Overall, the CRA’s efforts combined with the government’s responses to tax-related concerns signify progress toward making tax compliance more user-friendly for all Canadians.