Compliance

Automatic Tax Filing for Low-Income Individuals: How It Works and What You Need to Know

Canada’s 2025 Budget introduces automatic federal benefits filing for eligible low-income Canadians, aiming to simplify access to credits and reduce missed entitlements by up to 5.5 million people by 2028.

By NomadicTax Research Team • 5-8 min read • November 21, 2025

## What Is Being Introduced The 2025 Budget proposes a new **Automatic Federal Benefits** system starting in the 2026 tax year. This change allows the Canada Revenue Agency (CRA) to **pre-fill and file tax returns on behalf of eligible low-income individuals** who meet certain criteria, ensuring they receive benefits like the Canada Child Benefit, GST/HST credit, and Canada Workers Benefit, even if they currently do not file returns. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) ## Who Qualifies To be eligible, individuals must: - Have taxable income below the federal basic personal amount (or provincial equivalent), including relevant age/disability amounts. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - Have all income from sources where information is already filed to CRA (e.g. employer T4s, pensions). ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - Be among those who haven’t filed in prior years. Specifically, **at least once in the previous three tax years**, no return was filed. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - Be inactive in filing after the deadline or within a 90-day grace period. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) Additional criteria may be set by the Minister. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) ## How It Will Work - CRA will **prepare a return** using existing CRA-held information: your slips, benefits data, etc. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - You’ll have **90 days to review or change** the return. If you don’t act, they will file it on your behalf. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - You may **opt out** if you prefer to file yourself. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - Assessments issued under this automatic process follow the usual CRA objection and appeal pathways. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) ## When It Becomes Effective - Applies to the 2025 and subsequent tax years (you’ll begin seeing automatic filings for 2026 returns). ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - After Royal Assent of the legislation. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai)) - Funding and CRA implementation begin in 2025-26, scaling to reach approximately 5.5 million eligible individuals by 2028. ([pm.gc.ca](https://www.pm.gc.ca/en/news/news-releases/2025/10/10/prime-minister-carney-announces-new-measures-lower-costs-canadians?utm_source=openai)) ## What It Means for You (Practical Examples) - **Example 1**: Jane, age 30, works part-time and earns so little her employer withholdings leave no tax payable, and she has no self-employment. Currently she doesn’t file because she thinks she isn’t owed anything. Under the changes, CRA could pre-fill a return for Jane, she reviews or confirms, and receives all credits she’s eligible for automatically. No extra work after the 90-day window. - **Example 2**: Peter has income only from a pension and covered by CRA slips. He missed filing one year. He’ll be considered under eligibility and could also benefit from automatic filing, allowing access to child benefits or credits he would otherwise miss. ## What You Should Do Now - Keep track of your income slips (T4, T4A, etc.) as these data will feed into CRA systems. - If you haven’t been filing, watch communications from CRA to confirm eligibility. - Set up or maintain your My Account online to receive and review pre-filled information when provided. - Be aware of deadlines: once received, you’ll have 90 days to review, change, or opt out before CRA files for you. ## Implications & Considerations - This is a major compliance simplification tool, reducing barriers for people who are eligible but not claiming benefits. - There may be concerns around privacy and accuracy; individuals must be able to review disclosures. - CRA systems must be robust to avoid errors when using third-party data. Canada’s automatic tax filing initiative signals a shift toward a more inclusive, less burdensome tax system—giving everyone a fair chance to claim their entitlements without red tape. **Category**: Compliance **TaxHome**: Canada **Author**: NomadicTax Research Team **ReadTime**: 5-8 min **Published**: true