CRA & Revenu Québec

How to File Income Tax Returns Electronically in Canada

The Canada Revenue Agency processes more than 25 million tax returns each year and almost two-thirds of these returns are filed electronically.

That number is poised to grow as telephone filing for simple returns is no longer an option. The CRA also has encouraged taxpayers the move away from using paper forms.

Electronic Filing Options

The CRA offers two ways to file tax returns electronically.

  • If you prepare returns only for yourself, Netfile supports direct transactions between you and the CRA.
  • If you prepare tax returns for others, or you have your personal return prepared, submit those returns through Efile Online.

Each service has its own format, so you must prepare your return with the filing format in mind. Since using Efile Online requires registration and approval, it is unlikely you would prepare an Efile-formatted return in error. Both services provide free filing, though you may incur costs for using CRA-certified tax preparation software to prepare your forms.

Your Online Profile

Keeping your personal information up-to-date ensures the best results when filing your taxes electronically.

Though not required to file a return, CRA’s My Account service provides benefits that streamline the tax process. You can check the status of your return, your eligibility for income-related benefits and RRSP limits, and you can sign up for direct deposit of funds such as tax refunds and GST rebates.

Service Canada’s My Service Canada Account (MSCA) provides access to your employment insurance, old-age security and Canada pension plan information. Registration with MSCA gives you access to electronic versions of T4 slips for each of these services, which you may require to complete your return. Registering for each service requires an access code that takes up to two weeks to receive, if you have not already signed up.

Netfile Restrictions

For submitting personal tax returns with Netfile, there are a number of factors that may restrict you from filing.

  • Netfile only processes original returns for the current year, so amended returns require a paper copy.
  • If your current name, address or direct deposit information is different than your previous tax return, and is not updated through My Account and MSCA prior to filing, you also must submit a paper copy.
  • You cannot use Netfile if you’ve declared bankruptcy or if you have business income from a province other than where you live.

There may be other restrictions that apply, so check the CRA website when you are ready to prepare your return for up-to-date information.

Gather Your Information

  • Collect all T4 and T5 slips, covering employment and investment income, respectively, and any other T slips you receive.
  • A copy of last year’s return is a handy reference for deductions and RRSP limits as well as any other amounts that may be carried forward.
  • Gather all receipts or documents that support claims you make for deductions and tax credits, such as medical expenses or children’s activities.

“While you aren’t required to submit supporting documentation when you file electronically, you do need to retain this information to meet CRA guidelines, in case your tax return is reviewed or audited at a later date,” says Karen Benke, certified financial planner and senior financial consultant with Investors Group in London, Ontario.

Advantages of Filing Your Return with Netfile

  • While tax preparers handle the nuts and bolts of filing for Efile Online, Netfile interfaces seamlessly with personal tax preparation software and online services that are certified for use with Netfile.
  • Returns generated with certified software comply with Netfile format and technical specifications and guide you through the Netfile process, though you may move between tax preparation software and CRA websites during the process.
  • Netfile no longer uses access codes, so you can file with just your Social Insurance Number (SIN) and birth date.

References & Resources