Three ways to file tax returns

file tax returns

There are three major ways to file tax returns, including Efile, Netfile and paper mailing. Each way has its advantages and disadvantages.

1. Efile

EFile is the internet-based filing system used by tax professionals who prepare tax returns for a living. To locate an efiling provider, try CRA “postal code search”.

According to Canada Revenue Agency (CRA), more than 28 million tax returns were sent in 2014. 53% of these returns were Efiled.

Advantages of Efile your return

  • Faster refunds – Since Efile cuts out several manual steps, CRA can process most electronic returns in about two weeks.
  • Improved accuracy – Before CRA accept a return for processing, they perform a series of computer checks and balances. This results in greater accuracy.
  • Paperless – There are no paper returns to file and, unless CRA ask for receipts, none are needed. With few exceptions, Efile is an environmentally friendly, paperless system.
  • Ease of mind – You have a professional prepare and file tax returns for you.
  • Ease of payment – You can file tax returns early and do not have to pay an amount owing until April 30.

Disadvantage of Efile your return

  • You have to pay for the service.
  • You need to compare prices against services. Find out what is included in the fee for preparing your return. For example, does it involve year-round support if you wind up being reviewed by the CRA?

2. Netfile

Netfile is a do-it-yourself method. It allows you to file tax returns directly to CRA using the Internet. According to CRA, 26% of total 2014 tax returns were sent by Netfile. To Netfile your tax yourself, you will need a certified tax program, which is listed on CRA website.

Advantages of Netfile your tax yourself

  • You are in full control on filing your tax return
  • You probably can find a free software to prepare your tax return.

Disadvantages of Netfile your tax yourself

  • You need to have the knowledge. Your tax situation may be simple, but Canada taxation system is complicated. A small mistake may lead you into trouble and cost you hundreds of dollars.

3. By mail

You can mail your tax return to your tax centre. According to CRA, 21% of 2014 tax returns were received by mail. In 2014, just over 6 million Canadians filed their taxes the old-fashioned way — mailing in ink-and-paper forms — which, according to some very rough math, required introducing some 2,200 trees to the business end of a chainsaw.

Advantages of mailing your return:

  • None. Efile will also accept the transmission of prior year returns for the 2012 and 2013 income tax years. However, if you have to file your tax returns earlier than 2012, you can only mail paper tax returns to CRA.

Disadvantages of mailing your return:

  • For a mailed return, you can wait more than six weeks to get a refund.



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