I can still vividly recall the first time I attempted to complete my own tax return. I was living away from home as a student and had only minimal annual income from my summer employment. Indeed, my income was well below the threshold at which I would have to pay tax due to the basic personal amount. But my friend, Jonathan, convinced me that it was worth filing since by doing so I would be eligible for the GST credit, which, back in the day, was worth nearly $200 — enough to cover almost a month’s rent on my shared student apartment.
So, Jonathan and I got copies of the tax return packages containing numerous schedules and forms, all of which was completely foreign to me. We worked our way through the forms together and after an hour or so of mind-numbingly tedious calculations (which turned out to be pointless since the tax owing was zero), we had completed our returns and mailed them in. Then, that summer, I received my first GST cheque — jackpot!
Fast forward several decades (I’m being deliberately vague here), and we find ourselves in a very different tax preparation landscape.
For starters, we have the Canada Revenue Agency’s “Auto-fill my return” feature. It allows individuals to using certified software to automatically fill in parts of a 2017 (or 2016 or 2015) income tax return with information that the CRA has available at the time of filing.
To use the Auto-fill my return service, you must be registered for the CRA My Account program and be using NETFILE-certified software that offers Auto-fill my return. (There are at least 20 different software packages and online web offerings to choose from).
When you are ready to use Auto-fill my return, your software will prompt you to enter your My Account user ID and password. You simply follow the steps provided in the software you are using and Auto-fill my return will populate your return with the information.
The CRA receives tax information from third parties and should have already received most tax information slips and other tax-related information for the 2017 tax year by this weekend (mid-March 2018.) Common tax information slips available include: T3, T4, T4A, T4A(OAS), T4A(P), T4E, T4RIF, T4RSP, T5, T5008, and the RC62.
The service also contains other tax-related information, including: RRSP contribution limit, Home Buyers’ Plan and Lifelong Learning Plan repayment amounts, non-capital losses carried forward, capital gains and losses, federal and provincial tuition, education, and textbook carryforward amounts.
You can use the Auto-fill service on your own or your tax return preparer, with your authorization, can use the service to download this information on your behalf when preparing your return.
While historically the majority of Canadians don’t actually prepare their own return themselves, a recent survey conducted by TurboTax Canada showed that Canadians are increasingly looking to take the lead when it comes to preparing their tax return this year. The survey found more people want to do their own taxes this year than did in 2017, with 54 per cent planning to file themselves compared to 41 per cent who said they did so last year.
The survey was conducted in December 2017 among 1,206 randomly selected Canadian adults who are members of the Angus Reid Forum or LegerWeb panel. It was balanced on gender and region, with a margin of error of +/- 2.82 per cent, 19 times out of 20.
The survey showed that 41 per cent of Canadians are “not comfortable” filing their taxes themselves. The most common reason cited for Canadians not doing their own return was that “Tax professionals know more than I do … I don’t want to miss out because I don’t have the same level of expertise.”
Other excuses cited for having someone else prepare their return include confusing instructions and forms (28 per cent) and simply finding time (24 per cent) to do their return.
If you have modest income and a simple tax situation but need some help with your return, local community organizations and their volunteers host free tax preparation clinics through the Community Volunteer Income Tax Program where volunteers will do your taxes for you. These tax clinics are typically open from February to the end of April, but some are open year-round. To find one near you, use the MyCRA mobile web app or visit canada.ca for a list of clinics by province.
If your situation is more complex, or your income is higher, and you just need a bit of help while working through your own return, TurboTax is there to help with a new service that mixes self-preparation with some expert tax advice.
“We can assist you and give you a second look at your taxes,” says Jeff Cates, President of Intuit Canada, the maker of TurboTax. “It goes beyond product support and actually provides tax advice. It gives you another option versus going to a tax store.”
TurboTax’s new, real-time, personal tax advice offering is supported by an expansive network of product and tax experts, who have an average of 17 years of tax preparation experience, allowing users to get personalized tax advice and answers to specific tax questions. Users can also access one-way video technology (you can see the expert, but they can’t see you) to quickly connect taxpayers to a live person who can view your TurboTax screen and guide you through the preparation process.
And, if you’re really lost, TurboTax does offer a service that will actually complete the entire return and file it for you. Mr. Cates expects this offering to be particularly popular with individuals who may have both personal and (unincorporated) small business taxes, making it ideal for freelancers, people with side jobs and those having tax returns with multiple sources of income.
With an estimated 45 per cent of Canadians expected to have some self-employed income by 2020, “this new service is designed to meet the realities of the changing Canadian labour force and the tax complexity that comes with it.”
Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Financial Planning & Advice in Toronto.