Canada Revenue Agency automates most of your return, helping tax software
Canada moves closer to Denmark and Finland, where the taxman fills out your form for you
Electronic tax filing is getting easier this year with Auto-fill, a Canada Revenue Agency service that enters information for taxpayers using most kinds of certified tax software.
It may sound like Big Brother, but the CRA has always had copies of most of the forms about each taxpayer, receiving them from banks and employers before you do. That includes the T4 (income from an employer), T4A (income from a pension) and T5 (income from investment).
Last year it began a pilot program with the service it calls Auto-fill that allowed chartered accountants and other certified tax professionals to have this data entered onto a personal tax form automatically.
- Taxes without the filing headaches? It's already happening in some countries
- How safe is your data with the CRA?
This year that program rolls out to everyone. As long as you are filing on a software program that offers the option and have a "MyAccount" file with the CRA, the Auto-fill function will work.
Privacy concerns not yet tested
So should you worry about your privacy being compromised by having this information online?
Groups such as Open Media and the Canadian Civil Liberties Association say Auto-fill is too new to assess.
The CRA insists the Auto-fill function is secure, as information is only available if a taxpayer logs into MyAccount, which requires a robust password.
Ann Cavoukian, a former privacy commissioner, now executive director of the Privacy & Big Data Institute at Ryerson University, said it is right to worry about privacy and security whenever a new feature like this is rolled out.
"As part of the launch of this feature they would have certainly conducted a privacy impact assessment to identify the privacy risks — I would hope the government would have done their due diligence before launching," she said in an email to CBC News.
She points out that tax season has just begun and any weaknesses in the system are likely to emerge over the next few months.
Most software providers have partnered with the CRA to make the automatic download work seamlessly with their tax program.
More than two million Canadians used electronic software last year to file their taxes. This is a way to make it simpler for them.
Here are the lines Auto-fill will enter automatically:
- T3, Statement of Trust Income Allocations and Designations.
- T4, Statement of Remuneration Paid.
- T4A, Statement of Pension, Retirement, Annuity, and Other Income.
- T4A(OAS), Statement of Old Age Security.
- T4A(P), Statement of Canada Pension Plan Benefits.
- T4E, Statement of Employment Insurance and Other Benefits.
- T4RIF, Statement of Income from a Registered Retirement Income Fund.
- T4RSP, Statement of Registered Retirement Savings Plan Income.
- T5, Statement of Investment Income.
- T5007, Statement of Benefits.
- T5008, Statement of Securities Transactions.
- RC62, Universal Child Care Benefit Statement.
- RC210, Working Income Tax Benefit Advance Payments Statement.
- RRSP contribution receipt.
The service moves Canadians closer to a system like Finland's, where people with simple tax returns don't even have to fill out a tax form.
Chile, Denmark, Finland, New Zealand, Norway, Sweden and Slovenia already fill out most tax information automatically for most of their taxpayers. In the U.S., some financial institutions offer an automated fill function, though there is no central support from the IRS.
Keeping it simple
So instead of a time-consuming process in which you enter data incorrectly or in the wrong box or even decide to have your income tax prepared by a tax service, tax filing becomes more accurate and less arduous.
The process is simple:
- Enter basic information such as name and address in your tax software.
- Your tax software will ask whether you want CRA to auto-fill information.
- If you answer yes, it will link to the "MyAccount" service and you will have to sign in.
- CRA will then enter data in the tax software.
- You review it, to make sure everything is entered. You can change or delete anything you believe is inaccurate.
- The software completes all the calculations.
The CRA emphasizes the security of its service and says most of the information will be available by early in March.
Will forms be available for early filers?
However, as it gets data from third parties, including banks and other departments of government, everything might not be available that early in the year.
"Additionally, the individual may need to fill in parts of their tax return with information that is not available through the service," the CRA said in response to a query from CBC News.
"The individual is responsible for ensuring that all applicable fields on the return are filled in, including tax information not delivered by Auto-fill my return, and that the information provided in the return is true and accurate, before being filed with the CRA," the agency continued.
Gabriel Baron, a tax partner at EY Private Mid-Market Practice, said he's happy to see an expansion in electronic services for the taxpayer.
Review for accuracy recommended
But he warned everyone using Auto-fill to review their return carefully.
"It's important to remember that every taxpayer, when you submit your return, whether you submit electronically or on paper, that tax return is your responsibility as a taxpayer and you are certifying that the information contained is accurate," Baron said.
Other income streams, capital gains and losses and dozens of federal and provincial tax credits are not included in the information that uploads automatically — so there is plenty to review.