The Canadian government promotes electronic tax return filing as a convenience for taxpayers.
For individuals who want to submit their own returns online, the Canada Revenue Agency (CRA) offers the Netfile service, while authorized professionals submitting tax returns prepared for clients have to use Efile services by using certified software such as Profile.
In both cases, you enter your information and perform tax calculations in compatible software before using the appropriate service to transmit your data.
Eligibility for Online Filing
Netfile your own return
Netfile is CRA’s electronic tax return filing system for the general public, but it has some restrictions. Not everyone is eligible to use Netfile. For example, Netfile does not accept returns from non-residents. If you are eligible, however, you can use approved tax software to prepare your personal return and file it using this service.
Netfile also does not accept amended returns, you would need to use the Refile system to submit those.
Efile your clients’ return
If you’re a tax professional, the Efile program makes it easy to submit tax returns for your clients. To use this method, you must register to get an Efile number; you have to renew your registration each year.
To register, you’ll need to provide information about your tax preparation business, as well as contact information, and details of how you plan to keep your client’s data confidential. Your profile undergoes a suitability evaluation by the CRA to ensure that your business is reliable and has not engaged in questionable business practices, especially with regard to filing taxes.
Your clients will have to sign Authorization forms:
- Authorizing a Representative: known previously as T1013; it allows you to get your client’s information from CRA by phone, internet, or both. You will need this form signed and approved before you start the tax return.
- T183 form: your client will have to sign this form to declare that they have reported the correct and complete information and that you are authorized to file their returns electronically.
Procedural Differences
While both Netfile and Efile transmit tax information via the Internet, the procedure that you follow when using the two systems is slightly different.
In each case, you have to use certified software, but the programs compliant with Netfile save a special tax file that you submit electronically via the CRA website.
The Efile software is automated, and some programs can submit data from within the software.
George Caners, MBA, CPA, a certified financial planner based in Brockville, Ontario and author of the book, “So You Want More Money” says “you have to get software that’s compatible with Efile. Once you file more than a certain number of returns, you have to use Efile — you’re not allowed to send paper forms. You put in the client’s data, complete the tax return in the software package and click a button to submit the data.”
For Tax Professionals
The first step is to fill out the online form to register for an Efile number. It may take the CRA up to 30 days to review your application, so you have to apply early. Ensure you that have adequate protection in place to safeguard your client’s data, such as encryption or secure logins.
Once you are approved for the program, the CRA sends you a registration confirmation with an Efile number and a password. You use these with your Efile-certified software such as ProFile to prepare and submit your clients’ tax returns.
Do-It-Yourself Filing
The Netfile method allows you to file your own tax return online, without a special application form. You have to use approved tax preparation software such as TurboTax products and fill out the tax forms on your computer. When you have completed your tax return, the software will ask you to certify your social insurance number and date of birth.
Then, once you’ve accepted the terms and conditions of Netfile, the only step remaining is to submit your return. CRA, the software will send all the required data directly and securely to the CRA.
Any refund or payment due will be reflected in your notice of assessment, but you can make an online or telephone banking payment immediately after filing your return.
Consider TurboTax Live Assist & Review if you need further guidance, and get unlimited help and advice as you do your taxes, plus a final review before you file. Or, choose TurboTax Live Full Service* and have one of our tax experts do your return from start to finish.
*TurboTax Live™ Full Service is not available in Quebec.
References & Resources
- George Caners MBA, CPA; Brockville, Ontario