I did a NETFILE once, or maybe it was a telefile (over the phone), I’m not sure. But then for many years I could not because I had some non-RRSP investments and there were some foreign dividends or something like that on them and that made me ineligible for the simpler T1 and NETFILE and telefile. So then I went back to paper returns but using software such as TaxWiz and Ufile.ca to create the return and then printing it. Nowadays, I no longer have those non-RRSP investments so I could use NETFILE but I choose not to because with NETFILE you don’t have to send in your receipts, so I figure that with NETFILE a) I’ll have a greater chance of being audited (I assume), which is a pain; b) all the receipts are with me, which means there is a danger of them all being destroyed which might be a bad thing (if I were audited); and c) there is no way for Revenue Canada to correct certain mistakes if I make one (and I have made some in the past) as they won’t have the receipts. The main advantage of NETFILE is that you get your tax refund sooner. If you don’t wait until the last minute to file a paper return you will get your refund fairly quick as well. If you are really that concerned about the quicker refund, you should consider getting your employer to take less tax off your paycheque in the first place.
9 thoughts on “To NETFILE or Not to NETFILE”
I’ve used NETFILE for years now and I have never been audited (knock on wood). I find using the computer programs for taxes forces me to review all my numbers so I don’t have any mistakes in the final return (or at least very minor ones).
Yet you do have a point about having to keep all your records. That is a bit of pain.
You’re right about the software reducing the number of mistakes. Now that I think about it, the mistakes I was referring to in my post were mistakes I made when doing 100% paper filing (ie. no software used at all).
I love netfiling.
It never occurred to me that netfiling would increase the chances of an audit. Regardless, since I have a fairly simple return and have no problem storing the receipts – I have no intention of going back to the pen & paper…
I really doubt there’s much of an extra chance of an audit if you netfile. Sure, you don’t have to send in your receipts, but I really doubt that anybody looks at your receipts if you send in a paper return, unless your math is wrong or your return is otherwise flagged for audit.
Even if they do audit you, you shouldn’t have anything to worry about if you keep your records in reasonable order. I keep everything pertaining to each year’s tax return in a 9×12 envelope. I’ve done this for a decade now, and I always have all my tax paperwork readily accessible.
FWIW, I’ve used Netfile ever since it first became an option (at least 5 years ago, I believe), and I haven’t been audited yet. Netfile is actually a great way for the government to save money, since dealing with electronically filed tax returns is much less time-consuming and labour-intensive than working with paper returns. If the government saves money, there is more money (in theory) for tax cuts or improved services.
George, I really like your last point. I’ll have to think about it. I may NETFILE after all. I usually have this same line of thinking with other things as well. ie. I don’t go to the doctor unless I have to so that there is more money (in theory) for the government to spend (or waste, depending on your outlook).
The CRA looks for certain patterns to flag a return for audit and Netfiling isn’t one of them. Netfiling reduces mistakes (don’t forget that the government pays someone to input data from your paper return into their database and they could well make a mistake), you get your refund faster and reduces costs (I considered developing tax software at one point and CRA was so frustrated that most people used software to generate returns, then printed it out and sent it in and CRA paid people to enter the data into software again that they considered developing their own software). Also, remember that the CRA also gets tax data from your employer, banks, brokers etc. and double checks all that information before issuing you a refund.
Alright I’ll give up on point a) completely, now that everyone else has filled me in on the facts.
Thanks everyone. I think I might NETFILE this year. Glad I made the title of the post “to NETFILE or not to NETFILE” instead of “why I don’t NETFILE” because that would have made me look like an ass…
Dave, you’re not an ass!
It took me a while to get into the netfilin’ thing but once I did it – never looked back.
Now if only CRA could get the Netfiling service working again…! I’m holding out for a couple of weeks to see if they can get the system back up. I’ve Netfiled for the past 4 or 5 years and I LOVE how fast that refund money gets deposited into our account.