Federal Budget – two articles: Grocery Rebate/Increased RESP Withdrawal AND Automatic Tax Filing For Vulnerable Canadians



Courtesy of Barrie 360 and Canadian Press Published: Mar 27th, 2023

By Nojoud Al Mallees and Mia Rabson in Ottawa

A second top-up to GST rebate cheques for low-income Canadians and “significant” new tax measures to keep Canada in the green technology game will be among the highlights in Finance Minister Chrystia Freeland’s federal budget on Tuesday.

The document, Freeland’s third since taking on the finance post in the early months of COVID-19, will try to balance demands from Canadians to help ease the bite of inflation, and the economic need to keep pace with allies, including the United States, on clean technology.

Marci Surkes, a political strategist at Compass Rose, and a former senior policy adviser in the Prime Minister’s Office, said in 2021, Freeland had to table a COVID-19 response budget. In 2022, it was a budget peeking around the corner from COVID-19, but still heavily tied to the pandemic.

“This budget really needs to be the ‘all that starts to come next’ budget,” said Surkes. “We are through the worst of the pandemic, let’s hope. Now it’s about how Canada needs to keep up and compete.”

But it will also have to do something to focus on the “here and now” said Surkes, as Canadians are still seized with the high cost of living following months of above-normal inflation.

To that end, a government official, who was granted anonymity to discuss matters that will not be public until the budget is released, said Freeland will offer a second GST rebate top-up framed this time as help to offset higher grocery bills. The measures, which were first reported by CBC News, will also include an increase to the withdrawal limit for a registered education savings plan from $5,000 to $8,000.

Prime Minister Justin Trudeau said Monday the goal is to help people in a targeted way.

“Groceries will certainly be part of it, but there’s others things as well that we’re going to continue to do to be there for Canadians,” he said before question period. The grocery benefit will be described as cash to help with food bills, but it won’t require any proof of how it’s spent. It will instead mimic the GST rebate top-up last fall.

Maximum benefits, generally paid to individuals and families with incomes up to $35,000 will be the same as they were for the GST top-up in the fall: $234 for a single person with no children, $467 for a couple with two children and $225 for a senior citizen. Smaller amounts are sent as incomes grow to a maximum income of $60,000.

Canada’s most recent Food Price Report predicted grocery bills for a family of four will be about $1,065 more this year.

Inflation overall fell to 5.2 per cent in February, after averaging nearly seven per cent in 2022. But grocery prices in February were still 10.6 per cent higher than a year earlier.

Regular GST rebate cheques will increase again in July, when they are automatically indexed to inflation. Statistics Canada said annual inflation in 2022 was 6.8 per cent so GST rebates, along with other benefits such as the Canada Child Benefit and Old Age Security, will be increased around that amount this summer.

The budget will also look to further Canada’s attempt to stay competitive on clean technology, a transformation Freeland has likened to the greatest economic overhaul since the Industrial Revolution. She has warned if Canada does not use this time to make Canadian industry competitive, it will lose the chance.

Three sources, whom The Canadian Press granted anonymity because they were not authorized to speak publicly about the budget, said there will be new tax credits for the green economy. One of those sources described the tax credits as “significant.”

That includes tax credits to spur growth in both critical mineral production and the electric vehicle supply chain. Both played a major role Friday when U.S. President Joe Biden visited Ottawa, as Canada and the U.S. make a play to create a North American supply chain for the green automotive industry.

The Liberals’ fall economic update already promised tax credits for hydrogen production and clean electricity, and those are both expected to roll out in the budget, but there will be additional tax credits beyond just those two.

All are expected to include new labour market standards, where companies that pay a market wage or include apprenticeship training, will be able to claim a bigger credit than those that do not.

Such incentives were inspired by the United States Inflation Reduction Act and Freeland included them for the hydrogen and clean tech tax credits in the fall economic statement. She later launched a consultation to guide the new policy, and details of exactly how they will work are expected Tuesday.

Surkes said the budget for any government is as much about politics as it is about finance. A budget, she said, is a sales pitch to Canadians about where the Liberals plan to “steer the ship” in the coming months and years. And one of the political challenges faced with a focus on tax credits for businesses, is keeping those in perspective for average people.

“It has to be all about jobs,” said Surkes. “They need to connect the points for the public, be clear, simple, direct and to the point.” They also have to keep the NDP happy, and the move to top-up the GST is helping do that.

NDP Leader Jagmeet Singh, who previously called on the government to send a second GST top-up, took credit for the expected GST budget measure. “It looks very much like what we’ve been asking,” he told reporters Monday afternoon.

In 2022 the NDP agreed to support the Liberals on confidence matters, such as budgets, in exchange for the government enacting some NDP priorities, including affordability measures and dental care.

The Conservatives, who have been highly critical of government spending and blame it for driving up inflation, want to see signs of restraint on Tuesday. Conservative Leader Pierre Poilievre asked the Liberals to match every dollar of new spending with cuts elsewhere.

Conservative MP Garnett Genuis said Monday the GST top-up “helps, but it’s not addressing the core problem, which is out-of-control inflation across the board.” The budget is also expected to introduce a plan to go after hidden or unexpected fees — called “junk fees” — tacked on to the price of goods and services.




Courtesy Barrie 360 and Canadian PressPublished: Mar 30th, 2023

Nojoud Al Mallees, The Canadian Press

As some vulnerable Canadians who don’t file their taxes miss out on benefits, the Canada Revenue Agency is expected to pilot a new automatic system next year.

This week’s federal budget said the agency will also present a plan by 2024 to expand the service, following consultations with stakeholders and community organizations. 

The move toward automatic tax filing, first promised in the 2020 speech from the throne, is one of several budget measures the Liberals say are meant to help Canadians with the cost of living.

Jennifer Robson, an associate professor in political management at Carleton University, said she’s “cautiously optimistic” about the move. 

“This has the potential to be transformative,” said Robson, who has published research on people who don’t file their taxes. 

Automatic tax filing is already a reality in many other countries, including the United Kingdom and New Zealand. 

Robson said that in Canada, it would likely involve the CRA pre-filling a tax return with the information it has on file. Then the agency would give the individual an opportunity to update the return or submit additional information, such as eligible medical expenses. 

Experts and advocates have called for automatic filing, noting many vulnerable Canadians miss out on benefits to which they are entitled.

Canadians are generally not required to file tax returns every year unless they owe money, but the federal government is increasingly relying on the Canada Revenue Agency to deliver income-tested benefits to individuals.

That includes Canada Child Benefit, as well as the recent top-up to the Canada Housing Benefit and the temporary doubling of the GST tax credit.

Although a move toward automatic filing isn’t a “shiny new program,” it’s a small change that could have a significant impact on affordability, said a former head of economic strategy and planning for Prime Minister Justin Trudeau’s government. 

“Sometimes, actually, having a big transformational impact on people’s lives can come through doing some boring stuff,” said Tyler Meredith. 

“For many people who might not be receiving some of those benefits today that they’re entitled to, that’s potentially thousands of dollars that they could access.”

A 2020 report co-authored by Robson estimates that 10 to 12 per cent of Canadians don’t file their taxes. Although there were non-filers across all income groups, they were most heavily concentrated in lower income brackets.

The report estimated the value of benefits lost to working-age non-filers was $1.7 billion in 2015.

Beyond getting benefits to people, Meredith said the change might also help the federal government better connect with underserved individuals. 

As people become aware of the benefits they’re entitled to, they might be encouraged to explore their personal accounts with the CRA or Service Canada to learn about other government programs available to them, he said. 

A move toward automatic filing would pose a threat to the tax preparation industry, which relies on people needing to proactively file their taxes. But Robson said some people may still want to seek professional help.

“There’s going to be some continuing need for those services in the sense that there will be people who have complicated tax situations who need the advice of professionals and advisors,” Robson said. But how long will it take for automatic filing to be a reality? Robson said it’ll depend on both the CRA’s administrative capacity as well as the federal government’s political will. 

The federal budget also said the Canada Revenue Agency will expand access to a service set up in 2018 that allows some Canadians with lower or fixed incomes to auto-file simple returns over the telephone.

The budget says that two million Canadians will be eligible for that service, called “File My Return,” by 2025, which is nearly three times the number of people who can use it now.

Patricia Dent

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