Netfile is an online tax filing service provided by the Canada Revenue Agency. It has restrictions on eligibility and types of returns that can be filed, and requires the use of CRA-certified third-party software and a four-digit access code.
Netfile is a service of the Canada Revenue Agency (CRA) that allows taxpayers to file their tax returns online. It is intended for individuals, rather than professional accountants or tax preparers. Although the CRA generally lists the service in all capital letters, such as “NETFILE,” it is not an acronym and simply refers to Internet Filing.
Not all taxpayers are eligible to use Netfile. Among those prohibited are individuals who have filed for bankruptcy in the current or previous calendar year, residents living outside of Canada, and those with income from a business that has a permanent physical presence in a territory or province other than the place where the taxpayer resides. There are also a number of more complex situations in which the taxpayer cannot use the service.
Additionally, there are restrictions on which returns can be filed through Netfile. A taxpayer cannot use the service in the first year they file an income tax return, and amended tax returns are also not eligible for the service. Also, returns prepared by someone other than the taxpayer are not eligible. Although professional tax preparers filing returns on behalf of their clients cannot use Netfile, they can use a similar service known as EFILE. Tax preparers must have CRA approval before using EFILE.
To file through Netfile, a taxpayer must prepare an electronic tax return using CRA-certified third-party software. These include standalone applications for Windows and Mac computers, as well as a range of web-based applications. As of 2010, around 30 applications were CRA certified, although the list is reviewed and revised every year. While most apps have a fee, some are available at no cost.
The tax software will prepare a file stored in a dedicated “.tax” format. Only files in this format can be uploaded via Netfile. The user must locate this file when submitting their return. Although it may vary from app to app, the default location will be in the main “Documents” folder on Windows or the “Startup” folder on Mac.
Tavpayers will need a four-digit access code to file a return using Netfile. This is printed on the information sheet of the T1 tax return package received in the mail. Users who have lost this information can retrieve their code through the CRA site by providing their social security number, date of birth, and a figure taken from the previous year’s tax return.
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