The Canada Revenue Agency (CRA) has made electronic filing of tax returns compulsory through NETFILE or EFILE as it ensures accuracy, faster refunds and security. In addition, it minimizes the CRA’s time and cost burden of handling and storing the paper returns (Read: Tax Filing Details for Canadians)[i]. Despite this, it is important that taxpayers be aware that under certain circumstances they will not be able to e-file their tax returns.
AG Tax professionals have prepared a brief overview of the circumstances in which taxpayers are not allowed to e-file their tax returns.[ii] It is always a better practice to consult a tax professional as he/she could provide you tax advice based on your situation to help avoid tax errors.
EFILE Web Service Cannot Be Used If the Taxpayer is:
- Filing an amended tax return or a tax return for year(s) other than 2013 or 2012.
- Not subject to provincial or territorial tax (a deemed resident) in Canada.
- A deceased taxpayer’s (died prior to the current tax year) for whom the personal representative is filing tax return.
- Holding a ‘Social Insurance Number’ (SIN) which begins with 0.
- Considered ‘bankrupt’ as per the CRA records, and/or if he/she is filing an in-bankruptcy or post-bankruptcy return. (Please note that only pre-bankruptcy returns are accepted through EFILE)
- An emigrant or a non-resident, or their address is outside Canada.
- Subject to more than one jurisdiction’s provincial/territorial income taxes.
- Reporting Canadian source of income but from Lloyds of London, or income earned from an International Organization.
- Reporting lump-sum pension income which accrued until December 31, 1971.
- Reporting self-employment/rental operations income or loss, especially for those in which more than six sets of financial statements are prepared.
- Claiming an Environmental Trust Tax Credit (also known as the Mining Reclamation Trust Tax Credit) in Ontario, Saskatchewan, British Columbia, or Yukon.
- Claiming a Nova Scotia research and development tax credit recapture, or a statement of qualifying retroactive lump-sum payment (T1198).
- Electing to defer tax on a distribution of spin-off shares by foreign corporations.
- Claiming less than the maximum federal foreign tax credit (FTC), or if business/personal foreign taxes are paid to more than three countries.
- Claiming a deduction for scientific research and experimental development expenses; or an Alberta stock savings plan tax credit, or a Saskatchewan royalty tax rebate.
- Claiming a disability amount for oneself or spouse/common-law partner without Form T2201: Disability Tax Credit Certificate in place.
- Reporting farming income with the ‘AgriStability’ and ‘AgriInvest’ application that involves farming income from a partnership reported on a T5013 slip, or a partnership that includes a corporate partner; or a Canadian Indian reporting self-employed income which is ‘tax-exempt’.
If a taxpayer is facing any on the above situations or is in doubt regarding their taxes, they should immediately consult a tax practitioner for proper guidance regarding their tax situation as non-compliance or incomplete tax returns are considered equally liable to penalty and interests.
AG Tax LLP Can Help
Tax laws are complex; consult a tax professional regarding any tax matter, be it filing of tax returns, claiming any credits or deductions or any other tax situation to ensure compliance to tax laws and applications.
If you have any tax-related concerns or need assistance with tax planning or filings, please contact AG Tax. Our tax professionals are highly-experienced with U.S. and Canadian personal, corporate, and estate tax laws and can guide AG Tax LLP is a full service accounting firm with a dedicated team of experts, whom are highly-qualified and experienced in handling situations related to U.S., Canada, and other international tax laws. We can assist with:
• Canadian Personal and Corporate tax returns
• Cross Border Taxation and Business Planning
• U.S. Personal and Corporate Taxation
• Disclosure of Foreign Assets and other information filings
• Retirement planning
• Estate Planning, Inheritance tax advice
Please contact any of our offices across Canada at 604-538-8735 (Greater Vancouver), 780-702-2732 (Edmonton and Alberta), or 416-238-5920 (Greater Toronto) to arrange for an appointment to discuss your tax related queries.
IRS Circular 230 Disclaimer: Please note that this document is to be considered other written advice. Any tax advice in this document was not intended or written to be used, and cannot be used, for the purpose of avoiding tax penalties that may be imposed on the taxpayer under the Internal Revenue Code or applicable state or local tax law provisions.
Furthermore, the information in this publication is accurate as of the time of its publication. AG Tax assumes no responsibility for changes to tax legislation subsequent to the publication of this document. The information provided is for general information purposes only and should not be acted upon without seeking professional advice. If you would like to engage our services, please contact our staff and obtain authorization to send our firm confidential information. A client relationship is not created by the transmission of information. A client relationship is only formed with our firm when a scope and engagement letter signed by the firm and the potential client detailing the terms of engagement is present.
[i] https://www.taxcycle.com/Blog/tabid/96/EntryId/47/CRA-mandatory-EFILE-for-income-tax-return-submission-by-Canadian-accountants-is-well-mandatory.aspx
[ii] http://www.efile.cra.gc.ca/l-xclsns-eng.html