Compliance
Automatic Federal Benefits: What Low-Income Canadians Need to Know
New measures seek to simplify access to key benefits for individuals who don’t file tax returns—the CRA may file returns for eligible low-income individuals to ensure they receive entitlements.
By NomadicTax Research Team • 5-8 min read • November 21, 2025
## Overview of the Automatic Federal Benefits Proposal
As part of **Budget 2025**, the Canadian government proposes to amend the Income Tax Act to allow the Canada Revenue Agency (CRA) to **file a tax return on behalf of eligible individuals** who meet specified criteria. The goal is to reach low-income Canadians who often don’t file returns—yet may miss out on benefits such as the GST/HST credit, Canada Child Benefit, Canada Workers Benefit, and others. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## Eligibility Criteria: Who Exactly Qualifies
An individual must satisfy all of the following:
- **Taxable income** is below the lower of either the federal basic personal amount or the provincial equivalent (plus age/disability amounts, if relevant).
- All income is from **sources already reported** via information returns filed with CRA.
- Has **not filed a return** for at least one of the prior three taxation years.
- Filed no return for the current year **before or within 90 days** after the deadline.
- Meets any additional criteria specified by the Minister. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
If eligible, the CRA would prepare a draft return, provide it to the individual, who would have **90 days** to review and make modifications. If they don’t respond, CRA may go ahead and file. A notice of assessment would follow. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## Why This Matters: Compliance & Access
- Ensures that individuals who don’t file still receive **benefits and credits** they are entitled to. “Missing out” becomes less common.
- Reduces burden for those who avoid filing due to complexity, cost, or lack of knowledge.
- Potentially increases compliance and administrative efficiency—more people brought into the tax-net for benefits properly without full active participation.
## Examples to Illustrate
**Example 1**: Maria is 65, no dependents, small pension income of $9,000/year, below basic personal amount. She did not file for three years, but her only income source was pension with T4A slips. CRA could prepare a return for 2025, send it to Maria for review. If she doesn’t respond in 90 days, they file it. Maria then receives her full credits.
**Example 2**: Alex has interest income, freelance work and employment income; some income not reported to CRA. Alex likely doesn’t qualify, since “all income must come from reported sources.”
## What To Do Now: Practical Steps
- Low-income Canadians should check whether they’ve missed filing tax returns—especially if you may have been entitled to credits.
- Keep copies of all slips and documentation for all income, even small amounts.
- If CRA sends a draft return, review it carefully and correct any missing or incorrect information.
- Consult a tax professional or CRA resources if unsure about eligibility.
## Caveats & Things to Watch For
- Law is **proposed**, not yet in force. Timing could shift with legislative process.
- Individuals always have ability to opt out if they prefer not to have CRA file for them.
- Possible privacy or administrative concerns about accuracy—CRA requires reliable information to prepare returns.
- Some benefits depend on marital status or partner/spouse returns—may need coordination.
This represents a big step toward ensuring fairness and ease of access to benefits. If you may qualify, start organizing your documents now so you’re ready when it comes into effect.