The familiar dread of tax season is settling in for millions of Canadians. As mid-January arrives, taxpayers and professionals alike face the daunting prospect of navigating another complex filing period, a process that expert Kim Moody argues is needlessly burdensome. In a recent analysis, Moody outlines five pivotal changes needed to reform Canada's tax system and alleviate the annual strain.
The Core Problem: A System That's Too Complex
The fundamental issue, according to Moody, is that preparing a tax return in Canada is not easy, even though it should be. He points to Estonia as a compelling model, where reports indicate the average citizen completes and files their return in just three to five minutes. This stands in stark contrast to the Canadian experience, where the complexity forces a majority to seek help.
Data from the Canada Revenue Agency (CRA) reveals the scale of the challenge: roughly one-third of Canadians pay a professional to prepare their taxes, and more than 60 percent of returns are filed by someone other than the taxpayer, including paid preparers, volunteers, or family members.
Five Proposed Reforms for a Better System
Moody's critique centers on several key areas where the CRA and the federal government must act. First and foremost is the long-promised move toward automatic tax filing for simple tax filers. Despite being highlighted in the 2025 federal budget, Moody remains skeptical, stating "I'll believe it when I see it." He argues that a true automatic system must be implemented, not one that waits for taxpayer consent, to genuinely reduce the burden for those with straightforward financial situations.
Compounding the administrative complexity is a growing capacity crisis within the accounting profession. While over 220,000 chartered professional accountants form one of Canada's largest professional bodies, the sector is under severe strain. Employers nationwide report persistent difficulties in attracting and retaining qualified talent, a problem especially acute in public practice. This is exacerbated by an aging workforce approaching retirement and fewer young professionals entering the field, all while compliance burdens and tax complexity continue to grow.
Recent History of Confusion and Uncertainty
The call for reform is amplified by the troubles of the past three tax filing seasons. Moody highlights a "trifecta" of confusion, starting in 2023 with the introduction of the Underused Housing Tax (UHT) filings for the 2022 tax year. He describes the legislation as poorly drafted and excessively broad, with non-compliance penalties starting at $5,000. This placed tax filers and their advisors in an extremely difficult position, scrambling to ensure client compliance with a poorly understood new rule.
This recent history underscores Moody's central argument: until the CRA and the government commit to serious systemic reform, the mid-January blues for taxpayers and preparers will persist, lasting well into May each year. The solution lies in simplifying processes, embracing technology for automation, and addressing the professional shortages that threaten the system's stability.
