One Comment About Taxation – Friction Isn’t a Virtue in Tax Filing —  Automation Is

I like many things that are automatic. Automatic transmissions. Automatic doors. Automatic bill payments. Automatic software updates. In each case, the automatic feature makes my life easier by handling routine functions or frictions that I’d otherwise have to spend time on or endure.

 

When things work as intended, automation is often a clear improvement. But there is an important caveat. Automatic systems are efficient – until judgment is required. Much like artificial intelligence and large language models, they can be powerful tools – but they cannot replace wisdom, experience and judgment.

 

That distinction matters when discussing tax administration and the introduction of automatic tax filing, something that I’ve long been an advocate of. Variations of automatic tax filing exist around the world, but at its core, it involves government using information already at its disposal to prepare and file a tax return for low-complexity taxpayers. After an opportunity to review and amend the return, it can be filed automatically if no action is taken.

 

Some people and organizations are vehemently opposed to this idea, often arguing that automatic tax filing represents government overreach and that governments should simply stay out of the way. I disagree.

 

The simple fact is that most Canadians’ tax affairs are straightforward. The Canada Revenue Agency (CRA) has virtually all of the relevant taxpayer income information at its fingertips. Having government take the additional step of preparing a pre-filled tax return – one that can be reviewed, confirmed or amended by the taxpayer – is not government overreach. It is a basic convenience, especially when judgment is not involved.

 

The case for automatic filing becomes clearer when one considers how many Canadians currently outsource tax compliance and how large the supporting industry has become.

 

Businesses in the accounting, tax preparation, bookkeeping and payroll services industry earned $30.3 billion in operating revenue in 2024 with tax preparation and representation being 27.7% of that revenue or about $8.4 billion. Not all of that figure would represent personal tax preparation but a material amount of it would.

 

Roughly one-third of Canadians pay a professional to prepare their taxes, but according to CRA data, more than 60% of returns are filed by someone other than the taxpayer — including paid preparers, volunteers, or family members. In other words, a majority of Canadians don’t file their own return – even if they don’t always pay for help. The overarching message here is that preparing your tax return is not easy and can be expensive for the average low complexity taxpayer. Not good.

 

This reality matters because one of the foundational objectives of a good tax system – articulated centuries ago by Scottish economist Adam Smith in his landmark book The Wealth of Nations – is convenience. Taxes should be levied and collected in a way that is easy to comply with and minimizes unnecessary burdens. A system that requires millions of Canadians with simple tax situations to spend money, time and emotional energy simply 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.

 

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.

 

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.

 

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. 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 January 30, 2026.

 

In my view, 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. The 2025 Budget announcement seems to give credence to that concern since it is 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. However, fairness must be embedded into the system’s design. 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.

 

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 – such as six years – would provide taxpayers with additional time to revisit their filings, obtain advice and correct issues without penalty. 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).

 

In my view, these are sensible trade-offs. The system gains efficiency and reduced compliance costs up front, 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.

 

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.

 

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

 

One Comment About Leadership – When Leaders Talk But Don’t Follow Through

 

Do you know “leaders” who love to talk but rarely follow through? I do. Plenty of them. They give great “speeches,” love to be the centre of attention at every function and always try to be the smartest person in the room.

 

(Believe me – they’re not, despite what they think.)

 

Leadership should be judged by actions. Yes, words matter. But in the end, it’s about what leaders do with the tools, resources, and influence at their disposal.

 

Without meaningful action, leaders can drone on and on – and sooner or later, they’ll lose their audience. Some people may keep cheering the “inspirational” words, but most will quietly tune out.

 

Leaders: don’t be the endless talker. Be the one who pairs strong words with real action. And grit.

 

One Comment About Economics / Politics  – Speeches are Fine but Actions Speak Much Louder.

 

By any measure, Canada’s business economy is lagging. Tensions and tariffs aren’t helping. And provoking an unpredictable U.S. president with “deals” with China doesn’t help either (not even considering the obvious other issues with making deals with a communist bully nation).

 

Last week, PM Carney gave a speech in Davos at the World Economic Forum. It was widely hailed by liberals, progressives, and the media for its indirect jabs at President Trump – who later didn’t take very kindly to either the jabs or the previously announced “deal” with China. In predictable fashion, anyone who despises Trump hailed Carney’s speech as transformative. Some media outlets even compared the speech to one of the best ever delivered by a Canadian PM in decades – and some even put it up there with Sir Winston Churchill’s speeches.

 

Simply put, those comparisons are hyperbolic bullshit.

 

Even if one accepts that PM Carney’s speech was a good one (I’m not one of them), speeches are one thing; actions are another. Which of those speaks louder? Actions. By far.

 

Since taking the PM chair, Carney has delivered plenty of speeches and promises. Two small examples: he promised project implementation speeds not seen since WWII (still waiting to see a shovel in the ground), and he promised a “transformative” first budget – which most certainly fell flat, unless you define “transformative” as huge spending and massive deficits.

 

The simple fact is that political leaders can deliver all the speeches and promises they want. But again, actions speak louder. Much louder. And there is no shortage of to-dos on Canada’s list to improve our economic output – for the benefit of all Canadians.

 

Conservative MP Michelle Rempel Garner had a great rebuttal to Carney’s speech. It’s worth the short read. Conservative leader Pierre Poilievre also gave a strong response, outlining what needs to get done and offering the PM a commitment to cooperate on delivering results.

 

I agree with Rempel Garner and Poilievre. Canada doesn’t need a Chief Orator. We need a Chief Executive.

 

We need action – not more grandiose speeches with no follow-through.

 

Bonus Comment – Quote From Peter Drucker – The Father of Modern Management – About Leadership Actions

 

“Plans are only good intentions unless they immediately degenerate into hard work.”

 

Exactly. Plans combined with action and hard work is good leadership.

 

Hope you enjoyed this edition of 1-1-1. If you’re not already part of the In the Mood Network, now’s the time. Please sign-up today.  Whether it’s through consulting, coaching, speaking, or writing, my work is about planting acorns: deliberate, principled actions that challenge the status quo and grow into something far bigger. The goal? Bold reform. Stronger foundations. And a country that values hard work and common sense.