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A system that requires millions of Canadians with simple tax situations to spend money, time and emotional energy to meet a basic filing obligation fails that test. Automatic tax filing is not about eliminating choice or judgment; it is about recognizing that routine compliance should not impose disproportionate costs.

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Over the years, the CRA has introduced various tools designed to ease the filing burden. “Auto-fill my return” allows income and benefit data already held by the CRA to populate certified tax software. The agency has also experimented with simplified filing initiatives, such as SimpleFile, aimed primarily at low-income Canadians with very basic tax situations.

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Despite good intentions, uptake of these programs has historically been low. Participation depended on taxpayers being invited and then choosing to act. As a result, these initiatives never meaningfully changed the overall filing experience for most Canadians.

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The federal 2025 budget finally marked a notable shift. It announced the government’s intention to move forward with expanded automatic tax filing, starting with low-income and low-complexity taxpayers who meet certain criteria.

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However, the budget was light on implementation detail. Key design questions, such as reassessment rights and safeguards, were largely left unanswered, but the government is currently consulting on some of those design matters with Canadians until Jan. 30.

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If automatic tax filing is to deliver real benefits, it cannot depend on traditional opt-in consent. A system that requires affirmative action before anything happens simply recreates the friction automation is meant to eliminate.

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The 2025 budget announcement seems to give credence to that concern since it proposed that prior to the CRA automatically filing a return, eligible individuals would have 90 days to review the information and submit changes. I generally like the proposal, but fairness must be embedded into the system’s design.

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Many Canadians are intimidated by the CRA, are uncomfortable with technology or lack confidence reviewing even simple tax returns. Automatic filing should simplify compliance, not create anxiety or silence taxpayers through inaction.

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One way to address this concern would be to extend the normal reassessment period for automatically filed returns. Currently, most individuals are subject to a three-year normal reassessment period. For auto-filed returns, extending that period to something more reasonable — say, six years — would provide taxpayers with additional time to revisit their filings, obtain advice and correct issues without penalty.

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In addition, the 90-day period should be longer — perhaps 180 days — while accommodating an extended filing due date beyond April 30 (so as to avoid late filing penalties).

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These are sensible trade-offs. The system gains efficiency and reduced compliance costs upfront, while taxpayers gain comfort and flexibility on the back end. Again, like many automatic systems, automatic tax filing will work best where judgment is minimal and complexity is low.

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Automatic transmissions do not eliminate driving. They do, however, make it easier. The same for automatic tax filing: it should simply remove unnecessary friction from routine compliance. For millions of Canadians with simple tax affairs, that would be a long-overdue improvement.

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When judgment isn’t required, friction isn’t a virtue, but automation is.

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Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.

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