CRA Preparing for 2026 Digital Tax Filing Changes

The Canada Revenue Agency (CRA) is preparing to introduce automatic tax filing for low-income Canadians starting with the 2026 tax year. This initiative aims to simplify the tax filing process for those with straightforward tax situations, ensuring they receive entitled benefits without the burden of filing themselves. The CRA plans to scale up its existing SimpleFile service in conjunction with this automatic filing move to cover millions more Canadians. Meanwhile, Canada’s evolving tax landscape in 2025-2026 also includes important developments regarding the implementation of a Digital Services Tax and updates on the Global Minimum Tax, reflecting the country’s response to the digital economy and multinational tax reforms.

Automatic Tax Filing for Low-Income Canadians

Beginning in 2026, the CRA will utilize pre-filled tax returns and automatic filing to simplify tax compliance for approximately one million low-income Canadians with simple tax situations. This number is expected to expand to about 5.5 million by 2028. The move is funded by an allocation of $71 million over five years announced in Budget 2025 to automate tax filing and reduce barriers to tax compliance.

This program targets taxpayers who have minimal income sources, little variation in tax situations annually, and who have been identified as non-filers or at risk of missing out on key benefits like the GST/HST credit or Canada Child Benefit. The automatic filing is expected to increase benefit uptake and reduce administrative burdens on taxpayers who may find filing complex or cumbersome.

Successful implementation will depend on legislative changes allowing the CRA to file on behalf of eligible taxpayers in specific cases, which is under review by Parliament. Citizens will receive notices about their filing being automatically submitted, with opportunities to review and amend returns if desired.

Scaling Up SimpleFile Service

SimpleFile is an existing CRA service for eligible individuals with low or fixed income and simple filing requirements. It provides an easy, free digital option to file personal tax returns without needing outside software or complicated forms.

In 2024 and 2025, the CRA expanded SimpleFile by Phone to over 2 million eligible Canadians. For 2026, the plan is to integrate and scale this service further, complementing automatic filing initiatives. The expansion includes enhanced outreach to invite more eligible low-income Canadians to use SimpleFile and simplified assistance options for those with basic tax situations.

The scaling of SimpleFile aims to increase filing rates among low-income individuals who often face barriers to filing due to lack of resources, awareness, or complexity. By offering simple, accessible filing channels combined with automatic filings where appropriate, the CRA envisions better financial inclusion and increased access to tax credits and benefits.

Digital Services Tax (DST) Update

Canada introduced its Digital Services Tax Act (DSTA) to tax revenues earned within Canada by large multinational digital companies. The 3% DST targets revenues generated from online marketplaces, advertising, social media, and user data monetization involving Canadian users. Initially enacted with retroactive effect from January 1, 2022, companies meeting revenue thresholds were required to register and file returns by June 30, 2025.

However, in mid-2025, the Canadian government announced plans to rescind the DST to align with ongoing international tax negotiations, particularly with the United States. This decision came shortly before the first DST payment deadlines, signaling a shift toward cooperating on a global minimum tax framework and avoiding unilateral digital taxes that may disrupt trade relations.

Currently, the DST obligations and filings are suspended, pending the introduction of legislation formally repealing the tax. Businesses affected by the initial rules are advised to stay updated on legislative developments and consult tax advisors accordingly.

Global Minimum Tax (GMT) Act Legislative Proposals

Canada’s Global Minimum Tax Act (GMTA), enacted as part of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) Pillar Two, imposes a 15% minimum tax on large multinational entities to prevent tax base erosion.

In August 2025, the federal Department of Finance released draft legislative proposals to refine and amend the GMTA and related Income Tax Act provisions. These proposals incorporated recent OECD guidance and addressed Canadian-specific tax treatment, such as defining private investment entities and updating integration rules for foreign income.

Significantly, some measures like the undertaxed profits rule (UTPR) were deferred, reflecting ongoing international talks and a joint G7 statement adopting a new side-by-side approach. The GMTA amendments are progressing through legislative processes with consultations completed in September 2025.

Businesses operating in Canada, especially large multinationals, must monitor these developments as they may impact tax compliance, reporting, and effective tax rates.

How These Tax Changes Affect Canadians and Businesses

For low-income Canadians, automatic tax filing and SimpleFile scaling mean easier access to government benefits and fewer barriers to fulfilling tax obligations. This initiative supports financial inclusion and reduces the risk of missing critical support programs.

For businesses, particularly digital multinationals, the suspension of the Digital Services Tax shifts focus toward the global minimum tax framework, creating a more harmonized international tax environment but also requiring ongoing compliance vigilance.

The Government of Canada’s approach balances simplifying tax administration for individuals with adapting to complex international tax standards affecting corporations.

Table: Summary of Key CRA Tax Initiatives for 2025-2026

Initiative	Description	Target Group	Implementation Timeline
Automatic Tax Filing	CRA files simple returns automatically	~1 million low-income Canadians initially, scaling to 5.5 million	Starts 2026 tax year, scaling through 2028
SimpleFile Expansion	Scaled simple online filing option	Eligible low- and fixed-income taxpayers	Expanded rollout 2025-2026
Digital Services Tax (DST)	3% tax on digital revenue by large multinationals	Large multinational digital companies	Suspended mid-2025, pending repeal
Global Minimum Tax Act (GMTA)	15% minimum tax on large multinational corporate profits	Large multinational enterprises	Ongoing legislative process, proposals in 2025

Preparing for 2026 Tax Year

Canadians benefiting from the automatic tax filing program should keep their personal tax information up to date with the CRA to facilitate smooth processing. They will receive notifications from the CRA and can review their filings online through CRA My Account. Those with more complex tax situations or who prefer to file themselves can still do so.

Businesses affected by the GMT must prepare for new reporting requirements and possible tax liabilities as the legislative framework is finalized.

Conclusion

The CRA’s launch of automatic tax filing and the scaling of SimpleFile represent major steps toward streamlining tax compliance for low-income Canadians, increasing benefit accessibility, and reducing administrative burdens. Concurrently, Canada’s evolving stance on the Digital Services Tax and progress on the Global Minimum Tax Act reflect the government’s response to the challenges of taxing the digital economy and multinational profits. Together, these measures illustrate the Canadian tax system’s dual focus on simplicity and international tax fairness as it moves into 2026.