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NETFILE Certified Tax Software – CRA NETFILE for 2018

NETFILE is “open” for those ready to file their personal income tax returns (T1) for the 2018 income tax year, on February 18, 2019.

Beginning February 18th, 2019, the Canada Revenue Agency (CRA) is open for business, and this officially opens the 2018 tax filing season.

Canadians who have all of their tax information ready, can now begin to file their income taxes.

What is Netfile?

NETFILE is a transmission service for individual taxpayers to submit their income tax returns electronically to the Canada Revenue Agency. The NETFILE filing service and a list of NETFILE-certified products is made available through the CRA’s website.

Using NETFILE shortens the time it takes for the CRA to receive your tax return, to process your tax return, and to issue you a Notice of Assessment with either a balance owing or a refund.  If you signed up for the CRA’s Direct Deposit, then that would even speed up the refund process, but it also gives the CRA your banking information which could be a problem if you have a balance owing and don’t pay it.

In the past, people were required to submit their returns through a third-party filing company such as a professional tax preparer or complete paper tax returns. However, NETFILE allows you to use its approved software to submit your return directly to the CRA online. NETFILE software facilitates a faster processing time with the CRA. All information submitted through the system in encrypted for your protection, with the CRA being held responsible for securing your personal data.

How do I file my 2018 income taxes to the CRA with NETFILE?

What you may not have known about NETFILE, is that you can only use it provided that you are using a NETFILE-certified software, of which all TurboTax are.  TurboTax is also Canada’s most popular tax preparation software, as well as being the easiest to navigate through, with the best support, and with the most-experienced tax experts available.

Thanks to these upgrades in NETFILE and the expertise of TurboTax, Canadians are filing for, and getting their tax refunds faster than years before, and the information being filed to the CRA is more accurate and more secure than ever.

You must file your return before midnight on April 30, 2019. For self-employed tax returns, you have until June 17, 2019; however, any taxes owed should be paid before April 30, 2019 after which interest will be applied to the balance by the CRA.

The Income Tax Confirmation Process

One additional, and important feature of NETFILE is the confirmation process.  Once your personal income tax return has been filed, your return is uploaded to the CRA through NETFILE, and you know this because you receive a confirmation number which is your proof that your tax return was filed and received by the CRA.

This confirmation number is important for two reasons, the first being, that you know your return was submitted and received by the CRA, and secondly, if there are ever any questions from the CRA around the filing of your return, like the date it was filed, you have the proof.

What happens after filing taxes with NETFILE?

Once you have the confirmation and your return is filed with the CRA, then you can turn your attention back to accurate record keeping, your self-employment or your job, and allow time for the CRA to process your tax return along with those of the entire country.  No need to waste time calling the CRA the following day asking for the status of your refund, instead, log into My Account and wait for the return to be processed.  That will likely take a week or two, depending on when you file.

It can also take upwards of 4-6 weeks for the return to be processed, so again, keep checking into My Account.  Once that return is processed, the CRA will send you your Notice of Assessment (NOA) into your My Account mailbox.  The NOA is your official tax notice and if you disagree with anything on that notice, you have 90-days from the date the NOA was issued to let the CRA know, otherwise they accept the NOA as being accurate.

If the information on your NOA looks good, and it’s a refund, then sit back and wait for your refund.  If, on the other hand, there is a balance owing to the CRA, then you should contact the CRA before the 90-days runs out to make arrangements to pay.  Otherwise, day 91 could be a wage or bank garnishment.

How to Fix or Amend Returns?

Effective February 2018, ReFILE was introduced by the CRA which allows TurboTax to amend and electronically re-submit tax returns, through NETFILE.

You can only utilize ReFILE, if you filed your return using NETFILE (or EFILE, in the first place).

Is Your Tax Information Safe?

The security surrounding your confidential tax information is extremely important to the CRA, and to TurboTax, so the CRA has ensured that NETFILE uses top-line encryption software, and security procedures in order to protect your information at all times.

The CRA, assumes the responsibility for the safety and security of your data once your information is received by them through NETFILE.

The Canada Revenue Agency also points out that they perform “a number of identification and tax-related validations” to prevent fraud and that their secure procedures include only sending the Notice of Assessment and/or refund to the address or bank account that the CRA has on file – information that only you, the taxpayer, or your legal representative can change.

There is no danger of someone else being able to access your tax return and get the refund you should be getting, for instance, or trying to NETFILE a second personal (T1) tax return under your name.

For safety, security, ease, accuracy, and expertise at tax filing time, make sure to use TurboTax and NETFILE.

Let’s just focus on the positive, right now, and look at eligibility.  While most Canadian taxpayers can use NETFILE, some however, cannot.

Personal Ineligibility

If you are filing your first ever income tax return to the CRA, and they do not have your date of birth on file, then you cannot use NETFILE.

Non-residents of Canada, deemed residents (who don’t have to pay provincial or territorial tax), emigrants and tax filers with permanent addresses outside of Canada also can not use NETFILE.

Additionally, Canadians who have filed for bankruptcy in the previous two tax years, or who have income from a business outside their province or territory of residence or have a Social Insurance number beginning with the numbers 09, cannot use NETFILE either.

Restricted Returns

The CRA does not have the ability to accept tax returns for tax years prior to 2014 over NETFILE, and they will not accept tax returns prepared on someone else’s behalf over NETFILE.   This impacts executors who prepare final tax returns for deceased persons, and authorized representatives, who will be preparing your return for you – which will have to be submitted through e-file instead.

Restricted Income

There are also certain types of income which the CRA does not presently accept on tax returns filed through NETFILE, and they are not significant.  This includes Canadian-source income from Lloyd’s of London and employment income from international organizations. Additionally, you cannot use the system either if you are reporting lump-sum pension income accrued to Dec. 31, 1971 or qualifying retroactive lump-sum payments.

Banned Credits

You cannot file using NETFILE if you are claiming mining reclamation trust tax credits, federal business or non-business foreign tax credits for more than three countries, or deductions for scientific research and experimental development expenses.

Additional credits that prohibit you from using the system include Alberta stock savings plan tax credits, Saskatchewan royalty tax rebates, Nova Scotia research and development tax credit recaptures, and Newfoundland and Labrador research and development tax credits.

If you are claiming a deduction on line 207 with amounts for foreign retirement contributions, you also cannot use the system.

Family Situations

If you claim more than 10 dependents on line 318 or if you claim more than 22 children on your return, you cannot use NETFILE.

Restrictions on Farmers

If you are part of the AgriStability or AgriInvest programs, you cannot use NETFILE if your partnership is required to file an information return, if a corporation is one of your partners, or if you are a Canadian Indian reporting tax-exempt self-employment income.

Additionally, if you are have more than eight occurrences of selected type-nine financial data reported in sections 10 through 12 or more than 10 occurrences in sections 7 and 8 on form T1273, you cannot use the system.

Issues With the Disability Tax Credit

If the CRA has not approved your request for a disability tax credit and you want to claim the disability amount, you cannot use NETFILE. In particular, the CRA cautions people who have submitted an application for the DTC but have not been certified to not report registered disability savings plan income in field 125.

Ready, Set, File

Now that you know the ins and out of what you can and can not file on NETFILE, make sure that you have all of your t-slips, use the Auto-fill my return feature, and then enjoy all the free time you will have after you have filed.

2018 & 2019 Provincial tax brackets

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