All you need to know about the Netfile Service

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 are made available through the CRA’s website.

The Netfile Service opens mid-February each year, dates vary for each fiscal year.

Why use Netfile?

Using NETFILE shortens the time it takes for the CRA to receive your tax return, process it, and 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 speed up the refund process.

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, (such as TurboTax) 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 is encrypted for your protection, with the CRA being held responsible for securing your personal data.

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

The service is offered through the CRA using a Netfile- certified software, such as TurboTax, which is the leading tax preparation software in Canada. It is easy to use software and provides exceptional support to the customer and we have a team of tax experts available to you.

Thanks to these upgrades in NETFILE and the expertise of TurboTax, Canadians are filing their tax return with accuracy and security and getting their tax refunds faster than ever before.

You must file your return before midnight on April 30 of each fiscal year. For self-employed tax returns, you have until June 15th (unless these dates fall on a weekend, then you have until the next open business day to file). However, any taxes owed should be paid on or before April 30, after which interest will be applied to the balance owing by the CRA starting May 1st.

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, as you will 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 your taxes are filed through Netfile – you can check the status of your return by logging into your MyAccount with the CRA. You may see the changes right away or it can take up to 48 hours for the processed return to appear. The advantage here is that your refund will process within 10 days if you have a direct deposit. But if you opted to have it sent by mail, you are looking at a 4-6 week turn around for the refund cheque to be sent out to you.

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, there are penalties and interest that must be paid.

How to Fix or Amend Returns?

First and foremost – if you have to make changes to your tax return after filing it through NETFILE. Please do not REFILE until you have received your Notice of Assessment from them, as sometimes the amendments can be caught, therefore, there may be no need to refile. But if you do, here is the rundown.

ReFILE was introduced by the CRA back in 2018, this service allows TurboTax to amend and electronically re-submit tax returns, through NETFILE.

You can only utilize ReFILE if you filed your return using NETFILE.

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 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.

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

While most Canadian taxpayers can use the service, there are restrictions, so let’s look at eligibility.

Personal Ineligibility

  • If you are filing your first ever income tax return to the CRA, and they do not have your date of birth or Social Insurance Number 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 cannot 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 that the CRA does not presently accept on tax returns filed through NETFILE.

This includes Canadian-source income from Lloyd’s of London and employment income from international organizations. Additionally, you cannot use the service, if you are reporting lump-sum pension income accrued to Dec. 31, 1971, or qualifying retroactive lump-sum payments.

Banned Credits

You cannot use 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 20700 with amounts for foreign retirement contributions, you also cannot use the system.

Family Situations

If you claim more than 10 dependents on line 31800 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 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.

For more detailed information on the eligibility of Netfiling from the CRA, please click here.

Ready, Set, File

Now that you know the ins and out of what you can and cannot file using the NETFILE service, get all your T-slips together, open your TurboTax software, use the Auto-fill my return feature, and then enjoy your free time.