Who Doesn’t File a Tax Return? A Portrait of Non-Filers

Abstract

The Canada Revenue Agency administers dozens of cash transfer programs that require an annual personal income tax return to establish eligibility. Approximately 10–12 percent of Canadians, however, do not file a return; as a result, they will not receive the benefits for which they are otherwise eligible. In this article, we provide the first estimates of the number and characteristics of non-filers. We also estimate that the value of cash benefits lost to working-age non-filers was $1.7 billion in 2015. Previous literature suggests either a rational choice model of tax compliance (in which the costs of filing are weighed against its benefits) or a more complex behavioural model. Our study has important consequences for policy-making in terms of the administrative design and fiscal costs of public cash benefits attached to tax filing, the measurement of household incomes, and poverty rates.