For many years, the Canada Revenue Agency (CRA) has been encouraging Canadian taxpayers to file their returns online, through the CRA’s website. And that message has clearly been heard, as the most recent statistics show that just under 92% of returns filed in 2022 were filed using one or the other of the CRA’s web-based filing methods. Those filing statistics also show that, even with the availability of tax software which greatly simplifies tax return preparation, most Canadians still don’t want to undertake that return preparation on their own. Of all returns filed, by any method, nearly 60% were filed using EFILE – meaning that the taxpayer paid someone else to prepare their return and file it electronically.
Notwithstanding the fact that the vast preponderance of returns are filed electronically, there are still other filing methods which are available and are used by taxpayers in substantial numbers. Last year, just over 2.6 million taxpayers filed a paper return, and a much smaller number (just under 53,000) filed a return over the phone.
Clearly, electronic filing is the overwhelming choice of Canadian taxpayers, and one of the greatest advantages of electronic filing is the speed at which returns filed by one of the CRA’s online methods can be processed. Generally, such returns are processed and a Notice of Assessment issued within two weeks (as compared to the anticipated eight-week processing time for paper-filed returns). Given that the majority of returns result in the payment of a refund, and that the average refund amount in 2022 was $2,093, it’s not hard to see why the vast majority of taxpayers have embraced electronic filing.
This filing season, as in past years, those who choose electronic filing have two choices – NETFILE and EFILE. The first of those – NETFILE (used last year by just under 33% of tax filers) – involves preparing one’s return using software approved by the CRA and filing that return on the Agency’s website, using the NETFILE service. The second method – EFILE – involves having a third party file one’s return online. Almost always, the EFILE service provider also prepares the return which they are filing.
The majority of Canadians who would rather have someone else deal with the intricacies of the Canadian tax system on their behalf can find information about EFILE on the CRA website at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/efile-individuals.html. This site also provides a listing (searchable by postal code) of authorized EFILE service providers across Canada, which can be found at https://apps.cra-arc.gc.ca/ebci/efes/epcs/prot/ntr.action.
Those who are able and willing to prepare their own tax returns and file online can use the CRA’s NETFILE service (which is available as of February 20, 2023); information on this service can be found at http://www.cra-arc.gc.ca/esrvc-srvce/tx/ndvdls/netfile-impotnet/menu-eng.html. While there are some kinds of returns which cannot be filed using NETFILE (for instance, a return for a non-resident of Canada, or for someone who declared bankruptcy in 2022), the vast majority of Canadians who wish to do so will be able to NETFILE their return.
At one time, it was necessary to obtain and provide an access code in order to NETFILE. While such a code is no longer a requirement, the CRA has provided tax filers with a taxpayer-specific code which can be included with the return for 2022. That eight-character alpha-numeric code is found (in very small type) in the top right hand corner of the first page of the 2021 Notice of Assessment, just under the Date Issued line for that Notice of Assessment. Including the code with your return is not mandatory: however, you will be able to use information from the 2022 return when confirming your identity with the CRA only if the code was provided on that return.
A return can be filed using NETFILE only where it is prepared using tax return preparation software which has been approved by the CRA. While such software can be found for sale just about everywhere at this time of year, approved software which can be used free of charge, or for a nominal charge, is also available. A listing of free and commercial software approved for use in preparing individual returns for 2022 can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/e-services/e-services-individuals/netfile-overview/certified-software-netfile-program.html.
Taxpayers who want to obtain a hard copy of the tax return and guide package for 2022 can order that package online at https://apps.cra-arc.gc.ca/ebci/cjcf/fpos-scfp/pub/rdr?searchKey=ncp%20, to be sent to the taxpayer by regular mail. Taxpayers can also download and print a hard copy of the return and guide from the CRA website at https://www.canada.ca/en/revenue-agency/services/forms-publications/tax-packages-years/general-income-tax-benefit-package.html. Finally, the CRA will have sent, by regular mail, a hard copy of the 2022 tax return and guide package to anyone who paper-filed a return for 2021. That package should have arrived by February 20, 2023; taxpayers who should have received such a package but did not can call the CRA Individual Income Tax Enquiries line at 1 800 959 8281 to follow up and, if necessary, to request that a package be sent by mail.
A minority of taxpayers will have the option of filing their returns using a touch-tone telephone. That option, called File my Return service, will be available to eligible lower-income Canadians whose returns are relatively simple and whose tax situation remains relatively unchanged from year to year. For such taxpayers, it is important to file, even if there is no income to report, so that they receive the benefits and credits to which they are entitled. The telephone filing option is, however, available only to taxpayers who are advised by the CRA of their eligibility for the File my Return service; letters advising those individuals of their eligibility were sent out by the CRA in mid-February 2023. Like NETFILE, the File my Return service was available for the filing of 2022 tax returns beginning Monday February 20, 2023.
Finally, taxpayers who are not comfortable preparing their own returns, but for whom the cost of engaging a third party to do so is a financial hardship, have another option. During tax filing season, there are a number of Community Volunteer Tax Preparation Clinics where taxpayers can have their returns prepared free of charge by volunteers. Once again this year, the services of such clinics are provided through a number of options, including drop-ins, in-person appointments, and telephone or virtual meetings. A listing of the available clinics (which is updated regularly throughout the filing season) and their method of operation this tax season can be found on the CRA website at https://www.canada.ca/en/revenue-agency/campaigns/free-tax-help.html.
While there are a number of return preparation and filing options available to Canadian taxpayers, there’s no element of choice when it comes to the filing and payment deadlines for tax returns for 2022. The deadline for payment of any balance of taxes owed for 2022 is April 30, 2023. As April 30 falls on a Sunday this year, the CRA has announced that payments of 2022 taxes owed will be considered to have been made on time if they are made on or before Monday May 1, 2023. There are no exceptions to this deadline and, absent very unusual circumstances, no extensions are possible. Not surprisingly, the CRA makes it as easy as possible for Canadians to pay their taxes, offering no fewer than a dozen possible payment methods. Those methods are listed, and the available methods of payment explained, on the CRA website at https://www.canada.ca/en/revenue-agency/services/payments-cra/individual-payments/make-payment.html.
For the majority of Canadians, the income tax return for 2022 must also be filed on or before April 30. Here again, the CRA has, as a matter of administrative policy, extended that deadline to provide that returns will be considered filed on time if they are filed on or before Monday May 1, 2023. Self-employed taxpayers and their spouses have until Thursday June 15, 2023 to file their returns for 2022 (but they too must pay any balance of 2022 taxes owing on or before May 1, 2023).
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.