The Decibel - What you need to know about taxes as the CRA aims to improve

Episode Date: April 13, 2026

It’s tax season again, an often tedious time dreaded by many Canadians. But this tax season could be different. After ongoing concerns around slow and inaccurate responses, the CRA is trying to improve by implementing AI and digital services, for instance. The Globe’s personal economics reporter Erica Alini has been looking into how effective these changes have been, and what this means for Canadians. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

It's tax season. That often means a lot of frustration for Canadians. Thank you for calling the Canada Revenue Agency's individual tax inquiry service. Waiting on hold forever with the Canada Revenue Agency. Listening to the same few songs playing on a loop over and over and over. Then you finally get through and you might get confusing information. And then there's a stress about whether you filed everything you needed to. Ah, April, the time for spring showers and being mad about taxes.

But this year, it might be better. At least the CRA hopes it'll be better. Erica Alini is here to walk us through what's changing and what you need to know this year. She's the Globe's personal economics reporter and resident tax season expert. I'm Cheryl Sutherland, and this is the Decibel from the Globe and Mail. Hi, Erica. Thanks so much for joining me today. Hey, Cheryl.

Thanks for having me. So how important is this tax season for the CRA? I would say it's especially important. So the CRA has had two pretty rough tax seasons last year and the year before, with all kinds of issues that got into the paper, caught the public's attention, caught politicians' attention. And there's also the longstanding issue of how long it takes to get somebody over the phone at the CRA and then the quality of the information that people get, which has prompted the Karni government

to launch this 100-day plan in the fall to try and improve service standards at the CRA. So there's a lot of stake for the agency this year. We often hear complaints about the CRA, but how bad has it been? Like you mentioned the past two years has been really bad, but can you give me a sense of when it comes to phone calls, for example, like how bad has that been? So the issue of call-centered delays is not new. Like it's been an issue for many, many years. So to give you an idea, the CRA's goal is to answer calls within 15 minutes or less, 65% of the time. Now, in fiscal year of 2024, 2025, it was meeting that goal just 18% of the time.

Oh, wow. And then things got even worse in the summer of 2025 when just 5% of calls were being answered within 15 minutes. 5%. Wow. That's really low. That's very low. And it was especially low for the summer, which is not peak tax season. And then there's also these issues of accuracy. Can you tell me about that? So those numbers I just quoted come from a recent report by the Auditor General of Canada. And they also looked at the accuracy of answers that were being provided. So once you get someone over the phone, are you getting the right information?

And so when it comes to business taxes and benefits, it was not too bad. It was like 54% accuracy. But when it comes to individual tax questions on, you know, general tax issues, it was as low as 17%. That's really interesting. Do we know why it's so low that we're getting inaccurate information from the CRA? So the CRA has not come out and said why this is an issue and it is a longstanding issue. Call center agents do a much better job when you ask specific information about your account.

Like where is my refund? More administrative bureaucratic questions, then they're very good. But if you ask them about sort of general tax questions, about especially individual tax issues, that's where they struggle. And so the general theory is that there's a problem with training. And also there's an issue with the fact that our income tax system is becoming more and more complex. And the CRA had been drawing down on call center staff. And to an extent that's kind of understandable. because those levels shot up during COVID.

CRA had a massive role in distributing the pandemic era benefits. And so you couldn't expect the government to maintain that level of staffing. So they started drawing down, but they were also under pressure to just cut spending like most other federal agencies. And so there was a real question at one point about whether they went too far. Okay. You mentioned the past few years being more chaotic than usual. Can you tell me what was going on in the past couple of tax seasons? So in 2024, the issue were a couple of sets of federal rules that had to do with trusts

and with homes that were deemed vacant or underused. The rules are extremely complicated. And so for a small number of people, they were facing the issue of, am I caught in these rules, do I have to file? Even if they didn't know owe any taxes, there were steep penalties for not filing the paperwork if you had to share information with the government and just figuring out do I need to file these special returns or not could cost hundreds, sometimes thousands of dollars. And people really needed to get that right because the government had imposed some pretty steep penalties for not sharing information if you were caught in these rules.

And so this is an issue that went completely under the raider if you weren't in that group. But if you were, then it was extremely stressful and at times quite costly. So then what happened in 2025? So in 2025, there were two main issues that, and those are issues of many more people are aware of since they ran into them. So the first big issue was the fact that in 2024, the Trudeau government had put forward this proposal to increase the capital gains inclusion rate. So capital gains is the profit that you get when you sell a stock or a house to say that's not your primary residence. Normally, 50% of that gain is included in income tax calculations and the government wanted to raise it to two thirds.

But in January of 2025, Parliament was preroged, and that proposal had not become law yet. And initially the CRA said that they would uphold the rules anyways, and then they reverse their position. And the rules were written so that they, you know, had already come into effect. So there were a lot of tax forms that had to be changed at the last minute, tax slips that had to be changed at the last minute. So that created quite a bit of chaos and confusion. And then the other main issue was the issue of missing tax slips. So the CRA had put through a systems update that changed some of the ways that tax slip issuers, employers, banks, other financial institutions, it had changed the way that they were supposed to upload the tax slips to the CRA. The result was that a lot of people didn't have all of their tax slips in their CRA portal.

Okay, so how is the government trying to fix these issues? So in September of 2025, finance minister Champaign announced sort of a 100-day plan to improve service standards at the CRA, make sure that it would be faster and easier to get somebody over the phone and that just the quality of service would also be better. So what are some of the measures that the government brought in to improve the CRA. One thing that they did right away is they froze some of the plans for further layoffs

that they had. They reversed those layoffs. And so, you know, like they beefed up staffing at call centers a little bit. And then the other big area of focus is trying to improve digital services, give people more options to do more things that they have to do with the CRA online, on their own, so that there's less of a need for them to call and clog the phone lines. Yeah. There's something that I think that people will be very familiar with, which is sometimes you get locked out of your account. And what do they do to change that? Because I remember getting locked out of my account

and having to call all the time to get that changed. So that's one of the big changes. So now if you get locked out of your online account, there's a way for you to reset your credentials on your own without having to get somebody over the phone. Another one is people can set up payment plans in some cases. So if they have tax debt of more than $1,000 or they owe, you know, they have got benefit overpayments above that amount, there are ways for them to set up a payment and plan on their own, again, without getting somebody over the phone. We'll be right back. Has the CRA been using AI at all to help improve its efficiency?

Yeah, we're also seeing AI being rolled out. So there's an AI powered chatbot that can answer some of those pesky general questions about individual income taxes. And so if you've been on the CRA website recently, you've probably seen it. It's like a tiny little cute robot face. You can start a chat with it. Sort of like, you know, chat GPT or, you know, whatever other AI-powered chat. And you can ask it questions about taxes.

But you can't ask it questions about your specific situation. And the CIA does not want you to put in sensitive personal information. In fact, they say that if you try and the system detects personal information, it will delete it. What about audits? Can you tell me about what the CRA is doing with that? Yeah, so the CRA is certainly also using machine learning and AI to help with audits. Obviously, the CRA does not say exactly what they're doing when it comes to audits.

They're very careful about protecting how they conduct audits. But the general idea is that machine learning helps them go through, massive amounts of data, not just tax data, but things like income data, real estate transactions, all kinds of transactions to try to spot sort of unusual patterns. I mean, we've been talking a lot about issues of accuracy when it comes to AI tools, right? Is there perhaps a concern about using AI at the CRA, especially for something as important as an audit? What I've heard from experts, so tax lawyers and accountants that sort of talk to the CRA about audits and get presentations from the CRA is not that the CRA is using AI to sort of go through someone's tax return, but they're using AI to pinpoint areas of risk. In terms of AI, where we have heard that it's creating problem during tax season, it's actually from a.

accountants complaining about the fact that they're seeing extravagant errors from clients who have been using AI or clients have gone strange ideas about what they can do and what they can claim. So this is outside of the CRA. This is people using it on their own. Outside of the CRA on their own. People going on chat GPT and asking questions or going on sort of Gemini and the likes.

The AI chat bot from the CRA has been around for a while. And initially there was some frustration from people saying that it could only answer super basic questions and wasn't that useful. But the CRA was saying, you know, as is the case for AI in general, that the more you use it, the more information you feed it, the better it gets. And the CRA was saying that it seems to have gotten better. and I haven't seen, I'm monitoring sort of social media to seize or what people are saying and what they're complaining about this tax season. And I have to say it's pretty quiet. And I haven't seen complaints about the chat bot this year.

We talked about the CRA and what they're changing. Let's talk about what's different this year for people that will be filing their taxes. What should we know? The good news this tax season is that not much has changed, which is likely a lot of the reason why things seems to be smoother this year. The one major change when it comes to personal income taxes is the fact that the current government has lowered the lowest marginal income tax rate from 15% to 14%.

Because that happened sort of in the middle of 2025 for that tax year, which is what we're declaring this tax season, the rate is 14.5%. This is a good time to remind everyone what a marginal tax rate is. Yes, it's a good time to talk about how taxes work, which a lot of people do. Please. So taxes in Canada and many other countries work this way.

So you get tax at a certain rate up to a certain level of income. So for 2025, we're talking about it used to be 15% for earnings up. to around $57,000. And then anything above that is taxed at a higher rate. And then, you know, gradually, like any additional money is taxed at a higher rate. So it's not all of your money that is taxed at the higher rate when you move to a higher bracket, right? Hmm.

That's really interesting. Okay. That's good to know. That and because it, that's why the system works, right? When it doesn't punish you for making more money. Okay. And so what the Carney government did is it took the. lowest marginal rate, and it reduced it. And then the only other thing to know about this is that there

are some rare circumstances in which some people claiming a lot of money for non-refundable tax credits like medical expenses, the tuition tax credit, there could have been worse off with this tax cut. And so the government has made a little technical tweak that makes sure that this doesn't happen. All right. Good to know. you file your taxes, that's done. What about audits? Like, what should we know about audits this year? So the CRA has been getting more and more money to improve compliance. In 2023, 2024, they did significantly more audits than in 2022, 2023. They have better tools. So they're suddenly using machine learning and AI to try to spot unusual patterns. But it's, as always, with taxes,

It's a bit of a game of cat and mouse. The mouse is also getting ever more sophisticated at dodging the rules, evading the rules. Yeah. What are the areas that audits might be focusing on this year? There's a few areas that they've been focusing on now for a few years, and real estate is always in there. So one thing to know is short-term rental. So there's now a lot of rules in a lot of cities about what you can do and cannot do

with short-term rentals. And those rules have been traditionally pretty difficult to enforce, but one clever workaround the government has now found is for the CRA to look at the paperwork. And if they assess that as a landlord, you're not playing by the rules, they can disallow the expenses that relate to the short-term rental. And that's massive. It can really increase the taxes that you might have to pay on your short-term rental. So that's a rule that actually was already into effect for tax year 2024. But the CRA said it was pretty lenient is what I heard from accountants. They sort of treated the first 12 months as a transition period to allow people to become aware of the rule and, you know, comply.

But now the music has changed and they're really cracking down. The other sort of longstanding one is the gig economy. So it's always been the case that if you have income from, you know, gig platforms, you were always supposed to declare it. But more and more those platforms now have to report that income directly to the CRA, just like an employer would do. And so there's a lot more transparency. So this is like Uber, Lyft, those kind of companies. Yeah, right. Interesting.

You know what I always thought about when it comes to taxes? You know, the government has a lot of our paperwork, right? And then they ask us to file paperwork. Why do they make us do that? Yeah. It's a question that a lot of people have. Yeah. You know, and there is, you know, some talk towards moving more and more,

towards the government doing more of the work. Oh, interesting. So, you know, already we have things like auto fill my return, right? And then the government has talked about pre-filled returns for millions of people. And, you know, they're hoping to roll out. these pre-filled returns, which sounds like a beefed-up version of autofill for hopefully 5.5 million people by 2029. There's also a much smaller pilot about automatic tax filing. Really for a very small number of people who are very low income don't owe taxes and have a very simple situation. And these

are people that generally are quite marginalized and might miss out on their benefits if they don't file taxes. So it's kind of like an effort to make sure that they get the support that they're entitled to. But we are still quite a ways away from countries like the UK where most people who have, you know, a 95 job, you know, what we would call a T4 job here in Canada, don't generally have to worry about filing a tax return. Yeah. Okay. So far ways away from that standard. But let's end here on what the CRA has done and what you think. So, Do you think the changes to the CRA are working? Is it getting better?

So the government released, has already released some numbers that showed that, you know, the frequency with which they were answering phones had shot up. It was a lot better. It actually exceeded their longstanding service standard. But that was before tax season. So we'll have to wait and see, you know, get some of those statistics to know exactly how things are going. But as a sort of an external observer, I can tell you that things have been a lot quieter this tax season.

It has taken up all of my time between March and April to cover tax season the past two years. There's lots and lots of angst on social media, lots of people complaining about all kinds of issues. And this year, things are quite quiet. So hopefully that's a good sign. Ooh, signs that perhaps this might be less of a headache for people this year. Hopefully. Erica, thank you so much for coming on the show. Really appreciate it. Thank you for having me. That was Erica Alini, the Globe's Personal Economics Reporter.

That's it for today. I'm Cheryl Sutherland. Our associate producer and intern is Emily Conahan. Our producers are Madeline White, Rachel Levy McLaughlin, and Mikhail Stein. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening.