With a record number of Canadians struggling with high deductibles, the Canadian Taxpayers Federation says there is a “high risk” that many of them will be left out of the tax system.
“I think it’s important that people have confidence in the system and that we can deliver the tax benefits that are promised,” says John Schulman, the executive director of the Canadian Association of Tax Administrators.
“We’ve seen the Canadian government come out with a series of plans and commitments that are designed to address the problems associated with the system.”
One of the new programs announced Monday will provide a $1,000 tax refund for every year of income up to $1 million.
The money will be distributed through a lottery system and the program will be open to anyone who files a tax return.
“These are significant changes and they need to be rolled out in phases,” says Schulmans.
“It’s important to have the confidence that we have in the tax administration and we’re doing that.”
The new tax system will also be free for all people to use, and will also allow individuals to claim up to 50% of their income as a deduction.
Schulmen says the government has promised to help reduce deductibles for high earners, which have risen in recent years.
“For people that are making more than $100,000, the average deductible for an individual is $1.3 million, and that’s up from $800,000 in 2015,” he says.
“So this is going to help people get to that $1-million mark.”
For the most part, Canadians have not been hit hard by the soaring deductibles and many expect the changes will be beneficial.
But it’s unclear how the new system will affect them.
“The government will not tell you that you’re going to get to the $1 trillion mark,” says HBR’s Paul Wells.
“You’re going at $800 million.”
With files from CBC News and The Canadian Press