Does free tax software come with a catch? No, say developers
Creators of free programs say they got into the business to make your life easier
Filing your taxes can be a chore. You have to keep up with Canada's tax rules changing year to year. There are piles of forms to fill and questions to answer — a complicated process that involves combing through T-slips, receipts and other paperwork.
Those who choose not to hire a professional to deal with their returns can take on the task themselves with the help of any number of tax-preparation software programs.
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Over the years, as the number of Canadians filing digitally has grown, so has the number of companies offering such software, with many smaller players entering a field once dominated by big names such as H&R Block, UFile and Intuit.
As the choice of providers has grown so has the number of available free programs, but just why would someone go to the trouble of developing tax software and not charge money for it?
Why pay for tax returns?
Interviews with several developers of free tax programs suggest many were simply offended by the notion of having to pay to file your taxes and decided to create free alternatives to existing paid programs — which cost anywhere from $7 to $70.
"We as Canadians already pay tax for our incomes and many other services," said Faxin Zhao, the main developer behind easyCTAX. "Why do we have to pay again for the tax returns?
EasyCTAX was developed by Zhao and a team of about 10 of his co-workers at Mississauga, Ont.-based New Rainbow Inc., where Zhao is a director. The company's for-profit business helps fund the free program.
Free tax programs, which are also offered by the big firms for certain income brackets, are just as secure as paid ones as long as they have been certified by the Canada Revenue Agency. All are bound by the Personal Information Protection and Electronic Documents Act when it comes to protecting your personal information, and all use an encrypted system of transmitting data to the CRA.
In order for a return to be accepted by the tax agency's digital filing system, Netfile, it has to have been filled out using one of the CRA-approved programs. Once it's filed, "the CRA accepts responsibility for the security of information," said CRA spokeswoman Jennifer McCabe — although the tax agency is not immune to security breaches.
As with paid programs, users of free software have the choice of deleting personal information such as their address and SIN from their account or storing it in the program from year to year. Some programs store the data in an encrypted account that can only be accessed by users; others provide downloadable software that stores the information on a user's own hard drive.
All developers CBC interviewed said they don't collect user data for tracking or analytic purposes.
Just another form of freeware
The idea of providing a free service when others are charging for it is not foreign to the tech sector. Everything from web browsers to video players and word processing programs can be found for free online.
This is not a new idea — free software.- Badreddine Karoui, StudioTax developer
"This is not a new idea — free software," said Badreddine Karoui, the main developer behind StudioTax, which became available online in 2004 and bills itself as the pioneer free tax software in Canada.
"You can virtually have your computer, all your tools, for free. It's not a noble idea. What's missing was there's no free software for income tax. This is why we brought it in," he said. StudioTax is produced by BHOK IT Consulting, a group of software development professionals based in Ottawa.
People who use StudioTax can opt to give a donation once they finish their return. Karoui said, on average, users donate about $15.
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Karoui said he doesn't know exactly how much it costs him to run StudioTax.
"It's not something I keep track of," he said. "You're talking to not your traditional business here. And it doesn't matter because this certain thing, you don't put a cost on. People volunteer for nothing."
Karoui, who said he used to make a decent salary as a software architect at a U.S. firm, said money is not what drives him.
"It's purpose in life," he said. "You get up in the morning, and you want to do something interesting. That's more motivating than making more money."
Design-focused tax software
A similar philosophy motivates Jonathan Suter, one of the founders of SimpleTax, a small Vancouver company that became CRA certified two years ago and also doesn't charge users but accepts donations.
Suter said he believes that if you build a great product that attracts users, the money will follow.
He and his two colleagues got into tax software because they saw a gap in the market — namely, design-focused programs. SimpleTax distinguishes itself by using a clean, uncluttered interface that Suter describes as "beautiful."
You need to be a little bit crazy to build tax software.- Jonathan Suter, SimpleTax
"Given how complex our tax system is, what we're trying to do — given that we can't change the tax law itself — is try to make it accessible to as many people as possible, because we really do believe that most Canadians should be able to do [their] own taxes.
He admits that the venture is "an experiment" and that it remains to be seen whether it is sustainable in the long term.
"We're also a little bit crazy. But then again, we are building tax software, so I think you need to be a little bit crazy to build tax software."
- A previous version of this story said Faxin Zhao of easyCTAX worked for BHOK IT Consulting. In fact, he is a director at New Rainbow Inc.Apr 20, 2015 2:19 PM ET