Meet Canada's newest minority group -- people who file their tax returns on paper instead of electronically.
The Canada Revenue Agency reports that 50 per cent of the 23 million returns it received for the 2003 tax year were on paper, while 50 per cent came through the Efile system used by professional tax preparers, the Netfile system for individuals and Telefile, a service where you can file your taxes using a touchtone phone.
Based on growth patterns, it's a cinch that a majority of returns will be filed electronically for 2004. For example, 38 per cent of returns were filed electronically for the 2001 tax year and the comparable number for 2002 was 44 per cent.
The popularity of electronic filing has led to a big increase recently in the number of tax software programs and websites, and prices are falling. This year's cheapest tax return appears to be MyTaxExpress (http://www.mytaxexpress.com), which costs as little as $6.08 for a single return. At the high end is QuickTax Platinum (http://www.quicktax.ca), which as been selling for $79.99 at Best Buy and Future Shop recently.
There are actually three different ways to use Netfile -- with software purchased at a store, with software you download off the Internet and through Web-based services where you do your return on-line. The common thread is that once your return is done, you can file it over the Internet to the CRA, which generally takes eight business days to process it and get a refund in your hands.
You can't use Netfile unless you have an access code supplied by the CRA on the T1 personal income tax packages it mails out. If you lost your code or never received it, just call 1-800-714-7257 or visit the Netfile website at http://www.netfile.gc.ca. You'll need your social insurance number if you're using the website to get an access code, and you must also supply the dollar amount you entered on line 150 of your 2003 tax return.
The CRA says 2.7 million returns were completed using tax software last year and then printed and mailed instead of being submitted through Netfile. Tax software helps eliminate arithmetic errors and it's much faster than doing a return by hand, but it works best when you use Netfile because you get your refund in eight business days instead of several weeks.
By the way, you don't need to worry about security and privacy when you use Netfile. The CRA uses the same level of data encryption as the banks do, which is to say the risk of hackers getting access to your personal information isn't worth thinking about.
A list of all the tax software products and services certified for Netfile used can be found on the Netfile website. Links to each company's product are provided so you can get additional details.
If you prefer to buy tax software from a store, you have five choices. The first is QuickTax, which is by far the dominant product thanks to a mix of smart design, longevity in the marketplace and relentless advertising. The standard QuickTax version has a list price of $39.95, the same as last year, and you can install it on two computers and produce six returns.
Go with QuickTax if price is no object and you want something foolproof. Otherwise, TaxWiz (http://www.taxwiz.ca) at $24.95 and UFile (http://www.ufile.ca) at $24.99 are good alternatives. TaxWiz, which like QuickTax is produced by Intuit Inc., also gives you six returns, while UFile gives you 10. Another option is TaxTron (http://www.taxtron.ca), which was formerly known as GriffTax and offers the only Netfile-certified tax software for Macs.
People who are comfortable downloading software over the Internet -- it's safe and easy -- have an interesting new option in GenuTax (http://www.genutax.ca), which charges $34.99 for a one-time download and then sends you free updates each year. GenuTax also lets you do unlimited tax returns. Another choice in the downloadable category is Taxcel (http://www.taxcel.ca), which charges $8 for unlimited returns.
Other bargains can be found among the many on-line tax services that let you complete your return using a tax form displayed on a secure website. The cheapest option seems to be T1 Filer, which charges $8.70 per return, and CuteTax Online (http://www.cutetax.ca), which charges $8.98 for a single return and $15.98 for a couple.
If you're interested in a tax product you've never tried before, check its website to see if there's either a demo or free trial. Some products let you complete your return and then require you to pay only when you want to print or use Netfile.
Canada Revenue figures show that 6.1 million returns were hand-prepared by individual taxpayers last year. Even discounting Luddites and people with no access to a computer, there has to be a huge group of people who could benefit from the convenience of electronic tax filing. What are they waiting for?
© The Globe and Mail
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