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Every spring, as the grass regains its green and the days lengthen, one thing looms on the horizon: tax season. The legal obligation of every Canadian citizen, tax season extends from March until April 30 of each year. While COVID-19 changed a lot of things, it has not impacted the nature of this yearly obligation. Income tax is when you settle up your account with the government. Factoring in benefits (refundable and non-refundable alike), deductions, and your income, you’ll either get a return or end up owing.
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Tax season is stressful enough without having to worry about paying an accountant to file on your behalf. That’s why countless households are turning to tax software to complete their filing. Cost-effective and convenient, picking the right software is essential to recuperating as much as possible. You want to limit your amount owing and maximize your return and that means finding the right software. To achieve this, you should have a good understanding of what income tax is and what products are available to make your tax return easier.
Origins Of Income Tax In Canada
One way or another, taxes have been around since the confederation of Canada. Once under the purview of colonial governments, the income tax we now know only became law in 1917 with the introduction of the Income Tax War Act. Originally meant to assist with funding the First World War. It continued as a way to support debt interest and veterans’ pensions.
By the time 1948 rolled around, the tradition of annual tax was so commonplace that society expected it to stay. The Income Tax Act replaced its predecessor and remains the governing legislation that demands you pay your income tax every year. However, it’s not quite the Ides of March anymore. Nowadays, tech lets you file your taxes from home, requiring little time and effort (especially if your return is simple).
Ways To File Your Taxes
Unlike the old days when filing your taxes involved countless sheets of paper and at least a day’s investment, taxes are increasingly digital. In fact, it’s more intuitive and efficient than ever before, provided you file them correctly. There are two main ways to file your taxes in Canada: NETFILE and EFILE.
If you plan to file your taxes independently online, you will use NETFILE. It is Revenue Canada’s online system that allows individuals to file their own taxes. Conversely, EFILE is the CRA’s software that is used by professionals who are filing taxes on your behalf. The software is inherently similar, with the only notable difference being who is using it.
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Best Tax Software In Canada
Assuming you plan to tackle your taxes on your own, whether as a way to increase convenience or see more savings, it’s essential to pick the right software. All different tax software companies will tell you that they are the best — touting savings, efficiency, and intuitive platforms. To cut through the noise, we’ve analyzed each option and offered an objective assessment.
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One of the first names that come to mind when considering filing taxes on your own, you can purchase TurboTax in retail stores or download it online. Compatible with everything from Apple to Android to Windows, you can get either a paid or a free version. The free version is, obviously, the cheapest, but you can’t autofill your information using the CRA interface.
For a pretty reasonable price (less than $20) you can get the ease of autofill and access to previous returns. It also automatically searches for hundreds of credits and deductions to optimize your return. Customer support is available to paying customers; though, with an intuitive interface, most returns are quite straightforward.
Synonymous with taxes in Canada, you’ve likely heard of this company before. What you might not know is that it has an online interface to let you file your taxes remotely. A major advantage is that the tech is advanced enough to work for self-employed individuals or those with income from an investment portfolio. There is also optional audit protection and the option to have it reviewed by a professional.
It works on any major computer operating system; and, though you can use it on a smartphone, it is easier to work with on a PC or laptop. The software is quite intuitive, keeping a running tally of your tax return amount. Keep in mind that, while H&R Block does have software available, unless you have an extremely simple return, you’ll need to spend a bit on add-ons.
When you hear the company name, you might think of stock trading. In fact, they entered the tax return scene recently, taking over for a company once known as SimpleTax. The software is compatible with major computer operating systems, though it only works with Apple products for mobile devices.
The noteworthy aspect of this software is that it lets you ‘pay what you want. You can opt to pay zero or leave a donation of any size. Effective for those with investments and who are self-employed, you can file both a Revenu Quebec and a federal return using WealthSimple. Automatically scanning for potential benefits and deductions applicable to your situation, keeps track of your return as you go. Secure and convenient, this is a worthy candidate for those on a budget who have a relatively complicated return.
This software is not very well-known, perhaps because the free software can only be used by specific demographics. If you don’t fall into one of the approved categories, then you must pay for the software, running $41.95 for a family or $29,95 for an individual. Not the most competitively-priced software, it is geared toward those who meet one of the following requirements:
- First-time filers can use this software at no cost. This is helpful for those who just reached the age of majority or got their first job.
- Low-income earners can use the tech for free, provided the total family income is less than $20,000.
- Post-secondary students who can prove their enrollment are eligible to use UFile for free.
- Status as a dependent enables users to file for free, though they must show as a dependent for another individual filing separately.
- Recipients of Guaranteed Income Supplement can use UFile at no cost. This is a monthly payment to those receiving Old Age Security and have a low income.
- All income showing on T4 statements makes for a simple and straightforward return, thus letting you use the software for free. A T4 is the summary of annual earnings from an employer.
All of the above situations make for fairly simple tax returns, enabling the software and interface to remain basic. Since more complex financial situations involve more nuanced programs, this is a paid feature.
Check out these tax tips for low income earners.
A paid tax-filing software, you can access it via both Windows and Mac computers, though it is not compatible with smartphones. The $15 program received NETFILE certification and can be used for both advanced and straightforward tax returns. Working with the CRA’s autofill feature, the software enables you to get an Express Notice of Assessment. This gives you immediate access to your NOA once the return has been processed by Revenue Canada.
Accepted by both Revenu Quebec and Revenue Canada, you can file as many as 20 tax returns on a single license, though they expire every year. Without income restrictions and using a straightforward interface, StudioTax is a low-cost option for those seeking convenience.
Check out what happens if you can’t pay your taxes.
For those filing a straightforward personal return, CloudTax is a suitable option. It received certification from the CRA and uses secure digital infrastructure to keep your information safe. Working with the autofill feature, it works to quickly process basic income tax returns. A notable downside is that residents of Quebec and the Canadian territories can’t access the software.
It has both free and paid options. The free service comes with online storage and access to the digital platform on mobile devices and through the website. If you use the free service, you can purchase audit protection for less than three dollars per month. Expert assistance is available for less than $30 per return.
Stick to using CloudTax for basic personal tax returns. The paid program starts at $29, and the costs can add up quickly from there.
Looking for additional tax credits and benefits? Check out the going green tax credits, rebates and government programs.
If you would prefer to access your tax return in more than one language, AdvTax is a good way to go. In Canada, as many as 3.5 percent of people speak Chinese, while 56 percent of people use English and 21.4 percent rely on French. This software offers all of these languages. A NETFILE-approved software, it is free to use.
Keep in mind that this software is only useful for those with the most basic possible returns. Users spend an average of five minutes filing their taxes, meaning a lot of the nuances of advanced returns are skipped. Opt for another software if yours is anything more than the basic T4 income with no dependents.
With support offices throughout Canada, TaxTron offers assistance seven days a week. It is compatible with both Windows and Mac devices and is NETFILE-compatible. A standout feature of this software is that it works for any financial situation. Whether you’re self-employed, retired, or living off of investment income, this software can handle the nuances of your return.
The prices for this software vary based on the situation. An individual return costs $12.99 while a corporate package runs $249. There are multiple options, with prices based on the complexity of the return. Owned and operated entirely in Canada, the software is available in both official languages. One drawback worth noting is that you must have well-updated operating software in order to use the program.
GenuTax is a free software that can help individuals file their taxes for most situations, including more complicated scenarios like capital gains and rental properties. While it is free, donations are accepted and help Genutax maintain the software they provide. Genutax is designed in a simple way and is only accessible by downloading a file on a windows computer. Users who utilize Genutax will be walked through each step so that they can properly claim their tax credits and deductions.
Moreover, GenuTax is a Netfile-certified software, meaning, you can safely file your tax returns directly to the CRA through Genutax. Additionally, you can file up to 20 tax returns for different people without any income restrictions. If you need to add a tax return from a previous year, you can also do that through Genutax.
Features To Consider When Choosing A Tax Software
When you’re looking for tax software, it can feel like juggling dozens of criteria. Somehow, all the options seem so similar yet so unique. The good news is that by focusing on the core benefits of your tax software, you can easily pick out the one that is best for your needs. Consider the following:
Cost And Budget
There are a lot of paid options that are really affordable, especially when you compare them to using a paid professional. Compare the paid versions of the programs and their add-ons. If you have a nuanced return, know that you will have to spend a few bucks. On the other hand, if your return is basic, a high total should be a red flag. Especially if you’re working on a budget, make sure that you are finding a good balance between affordability and function.
Limitations Of The Free Version
Just because you can file at no cost, doesn’t mean there is no price for making that choice. Free versions are only able to operate because they are extremely simple. As a result, it will lack the sections needed for things like investment income, rental properties, and more advanced deductions. It could cost you more in the long run to use the free version, so be sure to weigh your options.
If Revenue Canada doesn’t accept returns done by that software, you risk being late on your return. So long as it is compatible with NETFILE, the program used by the CRA, you will be fine. If you live in Quebec, the software must also be accepted by Revenu Quebec. Should you need to file a return with this agency, be sure to check that the software explicitly states that you can use it as a resident of Quebec.
From audit protection to automatically checking for applicable benefits and deductions, special features can help you save. Many software options give you a running tally on how much you can expect for a refund (or how much you owe). These features might not be critical to its performance, but they make the program much more user-friendly.
Do you have a child? Check out these tax credits and deductions for parents.
Unless you’re a data-entry expert, it’s easy to make a typo. By automatically inserting the information into your tax return, you avoid the risk of inputting false details. The vast majority of tax software is compatible with this feature offered by the CRA, though for convenience alone, it is definitely worth double-checking.
Unless you’ve had specific training, it can be a bit intimidating to complete your own tax return (no matter how intuitive the software is). Companies that offer professional help, even if it costs a bit extra, can really mitigate this concern. If you’re worried about making a mistake or aren’t very tech-savvy, find an option that offers these consults.
As they say, the two things you can’t avoid are death and taxes. Instead of procrastinating and running the risk of late payment fees, take the time to choose the right tax software to meet your needs. If you pick something that’s advanced enough to tackle your return, you can avoid all the paper shuffle and stress. Now, more than ever before, tax filing is accessible to everyone with an internet connection.
With options available for every budget and each situation, there’s no shortage of choice. TurboTax is tried and true while WealthSimple lets you choose what to pay and works for self-employed individuals. It’s all about finding the most compatible option and making sure you file your taxes on time.
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