Introduction
Online tax filing became a reality in Canada when the federal government started the “Government On-Line” (GOL) initiative in mid-2000 with the goal of using “information and communication technology to provide Canadians with enhanced access to improved citizen-centred, integrated services, anytime, anywhere and in the official language of their choice.” Since starting GOL, Canada has been the world leader in e-government for five years running according to management and technology consultant Accenture.
The Canadian government has noticed a significant increase in online tax filing as the population’s comfort and trust of technology grows. According to the Canada Revenue Agency (CRA) web site, “[in 2004] Canadians and their representatives filed more than 9 million tax returns electronically. The T1 electronic filing participation rate was close to 50% for most provinces and territories.”
Let’s take a look at the electronic tax filing methods offered by the CRA for individuals.
NETFILE
Can I use NETFILE?
NETFILE is the CRA’s online tax-filing service that is available to all Canadians from February 14, 2005, until September 30 2005, but with a few restrictions. Specifically, you cannot file your tax return with NETFILE if:
- you are in bankruptcy
- you are a non-resident of Canada
- you have income from a business with a permanent establishment outside your province or territory of residence
What do I need to use NETFILE?
To access the NETFILE service, you need 2005 CRA certified software (see table below). You can either use standalone software, with costs ranging from $25 to $100, or online web applications with cost ranging from $9 to $20. Most online web applications offer free tax filing for low-income earners.
| 2005 Canada Revenue Agency Certified Software |
| Product |
URL |
Platform |
Low Income Pricing |
| CuteTax Online |
http://www.cutetax.ca |
Web Application |
free below $25,000
|
| GenuTax |
http://www.genutax.ca |
Windows |
n/a
|
| myTaxExpress |
http://www.mytaxexpress.com |
Windows |
n/a
|
| QuickTax |
http://www.quicktax.ca |
Windows |
n/a
|
| QuickTaxWeb |
http://www.quicktaxweb.ca/content/index/index.php?b=intuit |
Web Application |
free below $20,000
|
| T1Filer |
http://www.t1filer.ca |
Web Application |
free below $25,000
|
| TAXcel |
http://www.taxcel.ca |
Windows |
n/a
|
| TaxTron |
http://www.taxtron.ca |
Windows & Macintosh |
n/a
|
| TAXWIZ DELUXE |
http://www.taxwiz.ca |
Windows |
n/a
|
| UFile |
http://www.ufile.ca/windows/default.asp |
Windows |
n/a
|
| UFile.ca |
http://www.ufile.ca/default.asp?ref=ccra |
Web Application |
free below $20,000
|
You also need the access code that is on the label sheet of your T1 personal income tax return package. If you do not have your label sheet, you can call the eservice Help Desk at 1-800-714-7257 starting February 14, 2005. You will need to verify your identity over the phone and state the dollar amount you entered in line 150 of your 2003 tax return.
Why should I use NETFILE?
Speed is the best reason to use NETFILE, both with filing your tax return and receiving your refund (assuming you have one!). The CRA claims refunds arrive “in as quick as eight business days.”
You don’t have to fumble with mailing in all your receipts and forms, but keep them on file if the CRA decides to contact you later. If you’re one of those who like to wait until the deadline to file your tax return, with NETFILE you don’t have to wait in those long lines at the tax office!
You also reduce the chance for errors with re-keyed information because you’re entering it yourself with software.
Another advantage is knowing that the CRA has received your tax return (on time) because you receive instant confirmation upon submission.
TELEFILE
Can I use TELEFILE?
TELEFILE is the CRA’s interactive computer program that allows Canadians with common tax information to electronically file their tax return over the phone. Eligible Canadians are those with common types of income tax information, such as:
- employment income
- pension income
- interest income
- registered pension plan contributions
- charitable donations
Complex tax information (i.e. capital gains) is not accepted by TELEFILE because it requires extended phone time and documentation before processing is possible. Also, if this is your first year filing a tax return, you cannot use TELEFILE.
What do I need to use TELEFILE?
Accessing the TELEFILE service, requires a touch-tone phone, your social insurance number (SIN number), and the access code from your personal label sheet. Although the access code should work for either TELEFILE or NETFILE, you can call the eservice Help Desk at 1-800-714-7257, to receive a personalized access code if you find that your access code is only eligible for NETFILE, or you feel that your tax situation qualifies you for the TELEFILE system.
Why should I use TELEFILE?
A compelling reason to use TELEFILE is it’s completely free, unlike NETFILE.
Much like NETFILE, the TELEFILE service is a faster way to file your tax return and receive your refund. The CRA claims that “over 98% of clients who used TELEFILE to file their tax returns last year received their refund within two weeks.”
You also enjoy the paperless/mail-less experience of filing your tax return, and you receive an instant confirmation number that indicates receipt of your tax return.
EFILE
Can I use EFILE?
EFILE is an online tax return filing service that is available through authorized service providers. The CRA claims that 95% of Canadians are eligible to file their tax returns with EFILE, but only through a registered tax preparer. Non-eligible Canadians include:
- non-residents
- people in bankruptcy
- those who have to pay income tax to more than one province or territory
What do I need to use EFILE?
All that is required to use EFILE is a registered tax preparer who can process your tax return for you.
Why should I use EFILE?
Unlike other electronic tax filing services, the EFILE service cannot be done yourself, and the cost of using a tax preparer may be higher than NETFILE. However, EFILE eliminates several manual steps in the tax filing process, so you could receive your tax refund in two weeks; or faster if you have direct deposit setup.
It is also more accurate because the CRA performs several computer checks and balances before processing your tax return.
Another advantage is the ability to file your taxes early and not have to pay any amount owing until April 30th.
Links
- Canada Revenue Agency
http://www.cra-arc.gc.ca/menu-e.html
- Government On-Line
http://www.gol-ged.gc.ca
- NETFILE
http://www.netfile.gc.ca/menu-e.html
- TELEFILE
http://www.cra-arc.gc.ca/eservices/tax/individuals/telefile/menu-e.html
- EFILE
http://www.cra-arc.gc.ca/eservices/tax/individuals/efile-ind/menu-e.html
Chris operates makeITwork.ca, a computer servicing business, and is a bubble hockey fanatic.
