Saturday, March 16, 2013

Tax Efficiency

Until this year, I have prepared and filed a paper annual Income Tax return.  I looked at the tax guide for any changes, and completed the return by hand, carefully double-checking the schedules and calculations and referring to my prior year's return.

This year Canada Revenue Agency advised that they were no longer sending out paper forms or tax guides and suggested that I complete my return using computer software and file it electronically.  A little slow to move past my comfortable habits, I realized that most filers had probably made this transition and that I was a straggler.

CRA provided a short list of approved software, and I selected Studio Tax, rather than UFile or TurboTax, because it was free (donation) and I had no idea of their relative merits.

Studio Tax turned out to be easy to use.  After a few questions regarding identification, residency, and status, it asked me to transfer information from my tax statements to their similar statements and produced a preliminary tax return with schedules, worksheets, and tax calculations completed.  I added other earnings for which I had not received statements, plus my quarterly instalments, recalculated, and my tax return was done.

Because it looked similar to my previous return and the figures seemed in line, I decided to accept that the calculations were correct (after all it was CRA approved), saved it, and then created a "Netfile" version for CRA.  Using their website, I submitted the return to CRA, checked my online account, and saw that it had been received.    

Last year, I had been a little annoyed that it took six weeks for CRA to process my return (submitted March 6, but not processed until April 16).  This year, I submitted the return on Monday, March 10, and when I checked on Friday, it was processed and I could print a summary.  CRA did not identify any errors and indicated that my refund would be deposited on the following Thursday.

Reducing the processing time from six weeks to four days was certainly an improvement, suggesting that the slow service from the previous year was possibly intentional to get filers to change over. 

On the cautionary side, the return did not require a signature, and I could have filed a return for someone else if I had their Social Insurance Number and birthdate.  There is also the downside that as they make it more convenient, I will become less knowledgeable, so I  should probably find an online tax guide to review before taking too much for granted.     

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