With the opening of the Canada Revenue Agency’s NETFILE service, and the March 1st RRSP contribution deadline quickly approaching, tax season is truly upon us once again. Some people shudder at the thought of devoting time to their taxes, often procrastinating right to the April 30th deadline before filing. However, there is no need to fret – we’re here to help you.
In this post, we’ve provided answers to some important questions related to filing your taxes and NETFILE.
Why file your taxes even if you have no income?
You could have:
- Room for a your future RRSPs & Tax-Free Savings Account to shelter your income from future taxation
- Money owing to you from taxes withheld on paychecks
- Benefits like the Working Income Tax Benefit
- The GST/HST Credit
- Monthly Canada Child Tax Benefit money
- Automatic re-enrollment in the Guaranteed Income Supplement (GIS) for seniors
- Non-capital loss claims carrying back to prior years
- Unused tuition, education and textbook amounts to use
How can you get your refund faster?
|How You File:||Average Processing Time:|
|File Online and On Time||Eight days|
|File paper returns on-time||Four weeks|
|File late||Eight weeks|
Sign-up for direct deposit and get your income tax refund deposited directly in your bank along with your GST/HST credit, Canada Child Tax Benefit (CCTB), Universal Child Care Benefits (UCCB) and Solidarity Tax Credit (if you’re a Quebec resident).
What happens to you if you file late?
If you owe money, you will be charged interest every day after taxes were due. The penalty for late filing is 5% of your outstanding balance, plus 1% of the balance for every month your taxes are late up to 12 months. If you were charged penalties for late filing in any three of the last three years, your penalty amount will be doubled.
What if late filing wasn’t your fault?
The Canada Revenue Agency (CRA) has a Request for Taxpayer Relief form where you can outline the circumstances that caused you to file your taxes late and they may waive your late-filing penalties.
What if you filed on time but realized later you unintentionally did not disclose taxable income?
The CRA has a Voluntary Disclosures Program where you can report undisclosed taxable income and they may waive your penalties.
Why is NETFILE the better way to file taxes?
The CRA recommends filing your tax return through NETFILE, their electronic tax-filing option, for these features:
- Convenience – you can print your return at home and you do not have to send in receipts.
- Accessibility – you can NETFILE from mid-February to November 30.
- Speed – you get your return in about eight days.
- Correctness – most of the tax software you use with NETFILE can help avoid errors.
- Accuracy – recommended tax software to use with NETFILE often automatically calculates your benefits.
It’s also the future. This year the CRA discontinued its TELEFILE service and stopped mailing out paper forms.
How easy is NETFILE to use?
Using CRA-certified tax software such as TurboTax, NETFILE is very easy to use.
Prepare to file.
- Gather all your paperwork
- Make sure you are eligible to file through NETFILE by reading the restrictions online
- Change address or banking information before file.
Use your CRA-recommended tax return software to prepare your taxes.
- Save your return file for NETFILE (or .tax).
File your return.
- From the CRA website file online by entering your information in four steps.
- Confirm your filing and print the page with your confirmation number for your records.
Why should I feel confident filing my taxes online?
The CRA ensures all your personal and financial information is transmitted using encryption so no third-parties can view or access your data. They do this by using sophisticated security techniques with procedures that protect data at all times.
More Canadians are NETFILING
In 2012, 16.8 million Canadians filed their returns electronically, up by over 600,000 from 2011, and got their refunds faster. That is more than all the cattle in Canada (15 million). Only 8.6 million Canadians paper filed, down from 8.8 million paper filings the previous year.