There's no question about it. Web-savvy Canadians have embraced the electronic preparation and filing of income tax returns. A steadily growing number of Canadians choose e-programs over paper-based preparation as their "favourite" way of paying their taxes. More than half of the returns filed with the Canada Revenue Agency — 12.93 million out of 24.14 million returns — last year were filed electronically.

And it's not hard to see why the electronic option is becoming more popular. It's fast, secure, more accurate, and refunds can take as little as eight business days (versus three to six weeks for the paper variety).

Research has also shown that people who file online tend to get bigger refunds than people who file using pen and paper.

Many people who file their returns electronically use the Canada Revenue Agency's Netfile system. This is the web-based service that allows taxpayers to, in effect, be their own accountants and file their returns themselves over the internet. (Efile is the internet-based filing system used by those who prepare tax returns for a living). The much-less popular Telefile option lets those with relatively simple returns to file by phone using an interactive computer program.

How to Netfile

You'll need an access code to Netfile your taxes. You can find that on the label sheet of your T1 personal income tax return package. Or you can go online and enter some key data. (You'll need last year's tax return handy for one bit of info). Unfortunately, if you've never filed a tax return before, you won't be able to Netfile.

Once you have the access code, all you need now is a "certified" tax program. The CRA has a list of certified programs on its website.

QUICK FACTS

Number of returns filed in 2007

• On paper: 10.69 million (44.3%)
• Netfile: 4.12 million (17.1%)
• Efile: 8.81 million (36.5%)
• Telefile: 523,000 (2.2%)

Source: Canada Revenue Agency

At this point, taxpayers have two main options: using software that is loaded onto the computer's hard drive or using interactive web-based programs.

Some programs can be bought in a store and come on a CD that installs the software on your hard drive. Other programs allow users to download the software directly from the company so you don't even have to head to a store. Some programs offer both versions.

Often, these programs allow you to prepare multiple returns but are more expensive than the web-based tax programs where users interactively prepare their returns online without downloading the software onto their computers.

Here's a quick look at the particular bells and whistles of some of the most popular tax-preparation programs certified for Netfiling:

Tax software programs

QuickTax

Intuit's QuickTax is the most popular tax preparation software in Canada. Reviewers tend to like its "Easy Step" interview method for beginners. Available in CD and downloadable versions, it can be used to file up to 20 returns — the new maximum that's been imposed by the tax department. The Basic edition costs $19.99 for two returns and, as the name suggests, is for those with simple returns. The Standard edition costs $39.99 for two returns and is suitable for those who have RRSPs or medical expenses to claim. The $59.99 Platinum version adds features for those with rental or investment income to report. For the Standard and Platinum editions, you can get $10 back by filing online. For Windows-based operating systems only.

Ufile for Windows

Like QuickTax, Ufile uses the interview method to lead users through the tax-preparation process. Ufile can be purchased in some electronics stores or it can be downloaded. It costs $29.99 and allows users to prepare up to eight returns. For Windows-based operating systems only.

TaxTron Mac or Windows

TaxTron, which uses a "step-by-step" approach, can be bought at several national chains or downloaded from the company's online store. It is one of only two boxed or downloadable programs that are available for both PC and Mac platforms (the other is TaxFreeway); all the others are for PC only. A single-return license for the Windows version costs $12.99 or you can spend $24.99 for a family pack license for up to five returns. Additional returns can be filed for those with incomes under $30,000. For those with Macs, the cost is $19.99 for a single license and $39.99 for a family.

QUICK FACT

Deadline for filing 2007 tax returns: Midnight, Wednesday, April 30, 2008

Penalty for filing late: 5% of tax owing, plus 1% per month

Source: Canada Revenue Agency

Lesser-known downloadable programs include GenuTax, which costs $34.99 for unlimited returns and advertises that all annual updates in future years will be free; StudioTax 2007, which is free but asks for voluntary contributions (can't be used by Quebec filers); myTaxExpress, which costs $6.99 for one return and $12.99 for up to 10 returns; TaxFreeway, which costs $9.95 for unlimited returns (the version for Macs is $14.95); FutureTax, which cost $5.99 for one return, $7.99 for two and $9.99 for 10 (a CD version costs another $5); and eTaxCanada for Windows 2007, which costs $8.99 for one return and $15.99 for two returns (free for those with net incomes below $25,000).

Web-based programs (for Windows or Macintosh)

QuickTax Online

The online version of QuickTax Standard costs $19.99 for each return. Anyone with a gross household income below $20,000 can use the program free. For taxpayers with rental income or investments, the QuickTax Platinum online edition costs $29.99.

Ufile.ca

Ufile's online solution costs $15.95 for the first family member and $24.95 for two family members. Each additional family member is free, as are returns for those with a family income below $20,000.

H&R Block Online

The big tax preparation firm H&R Block has launched an online version for those who want to do their own return. H&R Block Online costs $19.95 for one return and a flat $10 for extra family members.

There are other web-based programs out there that can work out to be cheaper than the big firms above. But some cannot be used by those filing returns in Quebec. AceTax Online (formerly T1Filer) costs $8.99 for one return, $11.99 for a couple (but takes $2 off for returning customers). It's free when total family income is below $25,000; WebTax4U.ca costs $11.99 for the first return and $5.99 for each additional family member. It's free for households where total income is below $25,000; CuteTax Online costs $9.98 for one return, $15.98 for two returns and $19.98 for three to five returns. It's free for singles with incomes below $25,000 and couples with incomes below $30,000; FileTax Online cost $9.98 for one return and $15.98 for a family return. It's free for those with family incomes under $20,000; MBOTax costs $9.95 per return but is free for those with incomes below $25,000; EachTax.com, which costs $7.99 for the first return and $3.99 for each additional return. Repeat customers get a 10 per cent discount.

Of course, you can always do your return the old-fashioned way — by hand, on paper, via Canada Post. You can download all the forms you need from the Canada Revenue Agency's website or pick up a tax package at a Canada Revenue Agency service kiosk or at your local post office.

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