The taxman continues to encourage taxpayers to file electronically to reduce costs and make the process more efficient.
There was a time when a tax package would arrive in your mailbox at the beginning of the year, or you'd head to the post office to pick up a booklet filled with the forms and schedules you needed. While you can still do the latter, don't wait for the former. The Canada Revenue Agency stopped mailing packages to pen-and-paper filers last year as part of a push towards the efficiencies of online filing of personal income tax returns. The CRA also shuttered the little-used Telefile system that allowed those with simple returns to enter their information by telephone.
Not everyone supports this online push. The Canadian Association of Retired Persons has been particularly vocal about the hardship it will cause its constituency. Many seniors don't have Internet access and filing via paper is free.
But from an efficiency perspective, it's hard to argue against the CRA's NETFILE system. The CRA told the Canadian Press last year that 1.3-million tax packages went unused in 2011, and paper returns cost four times as much to process.
There are advantages for the tax filer, too. Returns can be processed and refunds deposited directly in as little as eight business days, because the CRA does not have to re-enter everyone's data. And there is little to no chance of the data entry errors that can occur with a paper return. About two-thirds of Canadians filed their tax returns online last year, whether on their own using an approved tax software package or through a tax preparer.
The CRA has tweaked the NETFILE experience to make it easier to use. Separately mailed access codes have been eliminated, so you only need your date of birth and social insurance number (SIN) to file. Until last year, first-time tax filers couldn't use NETFILE; now they can. And the agency has extended the window of time NETFILE will accept tax returns; for the 2013 tax year, NETFILE will be open to transmissions from February 10, 2014, to January 16, 2015.
The CRA's push for online transactions extends beyond returns. In October 2013, the last of the CRA's local payment and inquiry counters closed. The CRA is encouraging taxpayers to register for My Account, an online portal that opens the door to a wide range of inquiries and updates. Users can view details of their current and older tax returns, see their Registered Retirement Savings Plan (RRSP) and Tax-free Savings Account (TFSA) limits, arrange electronic payments and deposits, update personal information, and even dispute an assessment. If it involves the CRA and your tax account, you can get it here. The list is too long to include here, so check My Account Services on the CRA web site.
Here are a few facts to bear in mind in your online dealings with the tax man:
• If you don't want to electronically file your taxes through a tax preparer, you must use a package on the CRA's list of certified tax software in order to use the system. There are even some free options.
• Just because you don't have to mail in your supporting paperwork doesn't mean you don't have to hang onto it. If you want to challenge your assessment, or the CRA requests more information when it reviews your return, you'll need all those receipts or claims will be denied.
• There are still NETFILE exceptions. For example, if you've declared bankruptcy this year or you're a non-resident you can't use NETFILE. There's a full list of NETFILE restrictions on the CRA web site.
• The CRA boasts the most-up-to-date encryption for NETFILE transactions. You should be security conscious when filing, too. Don't file from a coffee shop or library; make sure the network you use is secure. You might even consider forgoing your wireless connection at home and plugging directly into your router. Never respond to an e-mail message claiming to be from the CRA requesting personal information or alerting you to a tax refund. The CRA simply doesn't work that way.
• Save a copy of your return on your computer, and back it up. USB keys are a good option.
• Don't wait until the last minute. If you try to file on April 30, CRA computer servers might be overwhelmed and unable to process your return.
If, despite the advantages and convenience of online filing, you still insist on filing a paper return, you can call the CRA at 1-800-959-8281 to request delivery of the tax forms, or you can order them online. Or pick up your form early at the local post office. You can still file your return via paper, even if the CRA wants you online.
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