Auditor General: Government Cost Estimates Off by Billions

Geoff Currier

On November 6, one day after the release of the Federal Budget, the government’s financial statements for 2025-2026 were published. We learned that $4.5 billion of COVID benefits were written off, up from $26 million the previous year, and the potential losses from the Canada Emergency Business Account, or CEBA loans, increased to $5.6 billion in the last fiscal year, up from $5.4 billion previously. Further initial estimates from the Parliamentary Budget Office (PBO) regarding the cost of the Canadian Dental Care Plan (CDCP) have been analyzed by the Auditor General. What do you think was found?

The Backdrop: The initial estimate by the PBO is that the CDCP would increase federal spending by $10.1 billion over a five-year period. However, the most recent report from the Auditor General revealed that the costs will exceed those projections by $1.1 billion in the first two years.

Government figures suggest that 6.9 million Canadians have registered for the plan and about 61% have made use of the benefits.

One caveat for the estimates is the expectation that provinces and territories would maintain their programs. If the provinces and territories eliminated or reduced their programs the cost of the federal program could rise by nearly $5 billion over the five-year period.

How the Plan Works: Some of your clients may not be aware of the program or if they are eligible. This is where you can assist them before year end. First, they must have no access to private dental insurance or coverage.

Second, they must have filed their tax return in Canada. This applies to spouses or common-law partners as well. Reminding your clients of the importance of filing every year can help them access the CDCP and other benefits and tax breaks. 

They must be Canadian residents for tax purposes and finally, your client’s adjusted family net income must be less than $90.000. That’s where RRSP and FHSA planning comes in. Contributions to these plans will help to reduce that family net income to help with eligibility. Be sure to explain how the adjusted family net income is calculated. This will help to demystify the process and empower planning for discretionary income sources, like investment earnings from RRIFs or non-registered accounts as well. 

The family net income is on (line 236600) of the T1 return. Then:

• Minus any universal childcare benefit (UCCB) and registered disability savings plan (RDSP) income (line 11700 and line 12500)
• Plus, any UCCB and RDSP amounts repaid (line 21300 and line 23200)

This figure produces the adjusted family net income used to calculate the CDCP.

Note: If your clients have dental coverage through a provincial or territories plan they could still qualify for the CDCP. They can apply online at My Service Canada Account, by phone at 1-833-537-4342 to speak with an agent. 

The Bottom Line: This plan is sure to cost Canadian taxpayers more than the initial estimates would suggest. The consolation prize is that taxpayers who qualify should take advantage of the plan asap – we are certainly paying for it! You can help them take advantage of the plan by guiding them through the steps.

Client Education: Invite your clients to listen to Real Tax News with Evelyn Jacks and Friends to understand their tax system better. Go to learn.knowledgebureau.com/courses/real-tax-news-podcast or anywhere you get your favorite podcasts.

Advisor Education: The DMA-Tax Services Specialist Program. Earn your designation, help more people in your community.