Barriers to benefits: Tax returns in Canada

As February comes to an end and T4s are arriving in our mailboxes, many Canadians are beginning to think about tax returns for 2009. Taxes sometimes have a negative connotation, but in terms of lessening the gap between the rich and poor, they could make the difference between living in poverty and having adequate income.

Canadians with low incomes, including people in low wage jobs, students, and often single parents, are eligible for tax benefits (including child tax benefits for parents). According to the Canada Revenue Agency (CRA) family benefit calculator, a single mother earning about $15,000 can receive $8,000 in benefits, to help her and her family live more securely.

But John Stapleton from the Metcalf Foundation (as cited in the Toronto Star) says that many low income Canadians are not filing tax returns and therefore not accessing the benefits available to them. Stapleton offers multiple reasons for this, most related to a lack of access to services or a misunderstanding of how the system works.

One of the quickest ways to file income taxes is through online tax software. These programs are usually free to download for people with incomes below $25,000, but first one needs to own or have access to a computer and the Internet.

In addition, filling out the form, online or by hand, requires literacy and mathematical skills, which can be a potential barrier for many. Low income Canadians likely cannot afford to hire an accountant or tax consultant to double check the information on the forms. The CRA sponsors free tax-help clinics, but sessions are often packed, especially just before the deadline, and they are run by volunteers who may not know all the ins and outs of eligibility requirements for specific benefits.

Stapleton also states that many low income Canadians have the misconception that because they have income levels too low to pay taxes they do not need to file returns. But if returns are not filed, benefits are not granted either.

Others fear that they will lose their social assistance benefits, or they fear their benefits will be cut if they apply for more than one category (for example regular income benefits and child-tax benefits). Still others do not file returns because of past negative experiences with taxes in other countries.

As Stapleton says, in order for all Canadians have access to their full tax benefits, the government needs to take more initiative to ensure that the system is accessible to all through public education, easy access to tax resources, and programs to better ensure benefits go to the people that need them most.