The federal government’s Budget 2026 proposal would give the Canada Revenue Agency (CRA) authority to enter into agreements with mortgage lenders and mortgage insurers to provide an income verification service.

According to the proposal, the government would provide $13 million over three years, beginning in 2027–28, to develop and pilot the service. Following that initial phase, the government intends for the service to be supported through funding arrangements with industry.

The objective is straightforward: make the mortgage application process more reliable and efficient while helping to deter mortgage fraud.

Why Income Verification Matters

Income verification is an important part of mortgage underwriting. Lenders need reliable information to assess whether an applicant can afford the proposed mortgage, while mortgage insurers use that information to evaluate risk.

Documents supplied during an application can be incomplete, inconsistent or, in some cases, falsified. A CRA-supported verification service could give participating lenders and insurers an additional way to check income information against tax records, reducing reliance on documents that may have been altered.

However, tax-reported income does not necessarily establish an applicant’s current earnings or ability to repay. Employment changes, variable compensation and self-employment income would still require careful assessment.

What the Government Is Proposing

The proposal has three main components:

• Legislative authority: Amend the Canada Revenue Agency Act to authorize the CRA to enter into agreements with mortgage lenders and mortgage insurers for an income verification service.
• Development and piloting: Provide $13 million over three years, starting in 2027–28, to develop and test the service.
• Longer-term industry funding: Move toward funding arrangements with industry after the initial phase.

The proposed funding period is not, by itself, a confirmed public launch date. The service’s availability, participation requirements and operating model would depend on the legislation and subsequent implementation decisions.

Potential Benefits for Borrowers and Industry

If designed effectively, the service could reduce document-handling requirements, help resolve discrepancies earlier and make some mortgage applications easier to process.

For lenders and insurers, a more reliable verification channel could strengthen fraud detection and improve confidence in underwriting information. Borrowers could benefit from fewer requests for supporting documents, although the proposal does not establish that the service would replace existing verification requirements.

Its practical value will depend on what information the CRA verifies, how quickly results are delivered and how well the service integrates with existing mortgage processes.

Privacy and Accuracy Will Be Central

Income information is sensitive. The service’s design will need to address who can request verification, what information they receive, how access is authorized and how the information may be used.

Important questions remain:

• Will applicants provide express consent for each verification?
• Will the service confirm an income figure or disclose underlying tax information?
• How will applicants correct errors or explain differences between tax records and current income?
• What security, retention and audit requirements will participating organizations face?
• How will industry funding affect participation costs?

These are implementation questions, not features confirmed by the proposal.

What Happens Next?

The proposed service signals a move toward more direct income verification in mortgage lending. But it should not yet be treated as an operational program or a replacement for lenders’ existing underwriting responsibilities.

Lenders, insurers and other mortgage-market participants should monitor the proposed legislative amendments, pilot announcements and participation terms. The eventual impact will turn on whether the service can deliver reliable verification while protecting taxpayer information and accommodating borrowers whose financial circumstances are not fully reflected in their latest tax return.