File returns


How to file a return

To electronically file a taxpayer's return using the EFILE web service:

  1. Register or renew and receive approval to use the EFILE web service.
  2. Prepare the tax return from the client's documents.
  3. Ensure to complete and get your client to sign a Form T183, Information Return for Electronic Filing of an Individual's Income Tax and Benefit Return for each eligible return. As used here, the term client refers to the person who has to file the return under the Income Tax Act.
  4. Use an EFILE certified tax calculation software package.
  5. Access the EFILE web service to transmit your client's returns directly from your tax preparation software. You can only file during our regular system hours of operation.
  6. Obtain an acknowledgement of acceptance or rejection of the individual return instantly.

As stated in section 150.1(3) of the Income Tax Act:

"For the purposes of section 150, where a return of income of a taxpayer for a taxation year is filed by way of electronic filing, it shall be deemed to be a return of income filed with the Minister in prescribed form on the day the Minister acknowledges acceptance of it."

Note: For an electronic record to be deemed a return of income filed with the Minister in prescribed form:

  • a confirmation number must be generated by the EFILE web service.

All returns filed with the Canada Revenue Agency are processed in cycles. Accepted returns are entered in the next available cycle. Cycle processing usually begins in mid-February and Notices of Assessment for returns processed in the first cycle should be issued by the end of that month.

How to correct an electronic return

If we have accepted and processed your client's T1 return, you may be able to amend and retransmit the T1 return using the ReFILE service. Also, your client can use My Account's Change my return option. Alternatively, if you are an authorized representative for your client and you have a level 2 authorization on their account, you can also use Represent a Client’s Change my return option.

We conduct a review on each return transmitted to us. If there are problems which will prevent processing, the system will indicate the fields you will have to correct. This means the electronic tax return was not accepted for processing and your client's return is not considered to be filed.

Before signing off the system, print the EFILE web service response screen which contains the error messages. Review these messages or codes to determine what problems exist with the return.

For example, you may receive the following:

2037

A claim was made for a spouse or common-law partner amount at Field 303 of Schedule 1 and, if applicable, at Field 5812 of provincial or territorial Form 428. Where the taxpayer was married or living common law during the year but on December 31st the marital status was other than married or living common law, enter 1 at Field 5522.

The first two sentences of the message states the problem: you haven't indicated that your client is married, but your client is claiming a credit for a spouse.

The last sentence suggests a way to fix the problem. If your client is indeed married or living common-law, change the tax return to indicate that fact. If the taxpayer is not married or living common-law, your client is not entitled to claim the married amount and you should delete the claim from the tax return or enter a 1 at field 5522 as indicated above.

You can usually get the full text description of each error clue from your tax calculation software package or by accessing chapter 2 of the RC4018 – Electronic Filers Manual.

After you make the required changes, resave the return and retransmit it to us for processing.

Paper documentation

In this section, we refer to all elections, designations, agreements, waivers, and special elective returns as "elections".

The Income Tax Act provides for these various elections to be made. Some are made on authorized Canada Revenue Agency (CRA) forms, while others are made by providing specific information in a letter/note format. All elections, including supporting documentation, must be submitted to us in writing for electronically filed returns, unless otherwise indicated. For the election to be considered valid, it must be submitted by the due date established in the Income Tax Act.

Send paper documentation in support of elections, except Form T1135, Foreign Income Verification Statement, to the tax centre that serves the area in which the client lives. Send Form T1135 and any supporting documentation to the tax centre indicated on the form.

When submitting this documentation:

  • clearly state the client's full name, address, and social insurance number on all the election forms and letters/notes; and
  • clearly indicate in the covering letter that this documentation is being submitted in support of the client's electronically filed return.

All other documentation used to prepare the return (excluding "elections" as discussed above) is to be retained and sent to the CRA only if requested.

Exclusions

You cannot use EFILE web service to file an initial T1 return for any tax year except 2015, 2016, 2017, and 2018. You cannot use the ReFILE web service to file an amended T1 return for any tax year except 2015, 2016, 2017 and 2018. In addition, you cannot file a return electronically in any of the following situations:

  1. Foreign workers employed in Canada under the Seasonal Agricultural Workers Program who are non-residents or deemed non-residents. Refer to the guide RC4004, Seasonal Agricultural Workers Program.
  2. The taxpayer is a deemed resident (not subject to provincial or territorial tax).
  3. The deceased taxpayer year of death is prior to the current (2018) tax year. Early filed and Elective deceased returns also remain as exclusions.
  4. The taxpayer's social insurance number (SIN) begins with a zero. Only newcomers to Canada with a SIN starting with zero are eligible to use EFILE.
  5. When the taxpayer is coded bankrupt according to the Canada Revenue Agency’s records, the T1 return for the year immediately prior to the year of bankruptcy is an exclusion and must be filed by the trustee in bankruptcy (if not previously filed by the taxpayer). The in-bankruptcy and post-bankruptcy returns are also exclusions from EFILE. Only pre-bankruptcy returns that are not early filed are accepted through EFILE.
  6. The taxpayer is an emigrant or a non-resident.
  7. Taxpayers who are filing or reporting the following forms and returns are excluded from EFILE:
     a.     Schedule A, Statement of World Income - Non-Residents of Canada.
     b.     Schedule B, Allowable Amount of Non-Refundable Tax Credits - Non-Resident of Canada.
     c.     Schedule C, Electing Under Section 217 of the Income Tax Act - Non-Resident of Canada.
     d.     Section 116 – Disposition of taxable Canadian property by non-residents of Canada.
     e.     Form T1159, Income Tax Return for Electing Under Section 216.
      f.     Form T1136, Old Age Security Return of Income.
     g.     Income from the following information slips:
         i.  NR4, Statement of amounts paid or credited to non-residents of Canada.
         ii. T4A-NR, Statement of Fees, Commissions or Other Amounts Paid to Non-Residents for Services Rendered in Canada.
         iii. NR-OAS, Statement of Old Age Security Pension Paid or Credited to Non-Residents of Canada.
  8. The taxpayer is filing Form RC199, Voluntary Disclosures Program (VDP), Taxpayer Agreement, or the taxpayer is making a request to the VDP.
  9. The taxpayer’s address is outside Canada.
  10. The taxpayer is electing to defer tax on a distribution of spin off shares by foreign corporations.
  11. The taxpayer is reporting any of the following:
    a.     Canadian source income from Lloyds of London.
    b.     Employment income earned from an International Organization.
    c.     Lump-sum pension income accrued to December 31, 1971.
    d.     More than 6 Selected Financial Data (SFD) records.
    e.     Ontario, Saskatchewan, British Columbia or Yukon qualifying environmental (mining reclamation) trust tax credit.
     f.     Form T1198, Statement of Qualifying Retroactive Lump-Sum Payment.
    g.     More than 80 field codes present in the free format area of SFD types 01 to 08.
  12. The taxpayer is claiming any of the following:
    a.     Less than the maximum federal foreign tax credit.
    b.     Business income tax paid to more than 3 foreign countries.
    c.     Non-business income tax paid to more than 3 foreign countries.
    d.     Deduction for scientific research and experimental development expenses.
    e.     Form T89, Alberta Stock Savings Plan Tax Credit.
     f.     Nova Scotia research and development tax credit recapture.
  13. The taxpayer is reporting farming income with the AgriStability and AgriInvest programs which involves any of the following:
    a.     Farming income from a partnership reported on a T5013 slip.
    b.     Farming income from a partnership that includes a corporate partner.
    c.     Status Indian reporting tax-exempt self-employed income.
    d.     SFD type 06 that has exceeded the maximum occurrences for the following fields:
        i.  29 occurrences of “Commodity sales and program payments” at field 9950.
        ii. 29 occurrences of “Commodity purchases and repayment of program benefits” at field 9960.
    e.     SFD type 09 that has exceeded the maximum occurrences in the following sections:
        i.  50 occurrences for “Crop inventory valuation and productive capacity”.
        ii. 50 occurrences for “Livestock inventory valuation”.
        iii. 8 occurrences for “Purchased inputs”.
        iv. 19 occurrences for “Livestock productive capacity”.
        v.  8 occurrences for “Deferred income and receivables”.
        vi. 8 occurrences for “Accounts payable”.

Security

Security requires a partnership between two parties; in this case, the Canada Revenue Agency and you, the electronic filer.

The Canada Revenue Agency (CRA)

We permit only approved participants to electronically file income tax returns.

Personal and financial information must be transmitted to us in an encrypted format. Encryption is a way of encoding information before it is transmitted over the Internet. This ensures that no unauthorized party can alter or view the data.

We also ensure that all personal and financial information is stored securely in our computers. We use state-of-the-art encryption technology and sophisticated security techniques to protect this site at all times.

We have made every possible effort to ensure the safety and integrity of transactions on our Web site. However, the Internet is a public network and, as a result, is outside our control.

The electronic filer

If you want to transmit your clients' returns electronically, you must first register or renew on an annual basis your participation in EFILE with the CRA. Once the application or the renewal has been accepted, a confirmation page will display an EFILE number and password. These two pieces of identification make up an electronic signature required to access our confidential areas and services.

You also have to use approved security protocols to access our site. Data from your computer must be encrypted before being sent. This changes your data into a format that can be safely transmitted over the Internet. Once the data is encrypted, it cannot be read until it reaches its destination and is decrypted, using a decryption key.

In simple terms, the information from your tax return is broken down into small packages of information called packets, and Transport Layer Security (TLS) encrypts each packet. These encrypted packets are sent into the Internet separately, like pieces of a puzzle, each individually addressed. Once they've all reached the safety of our secure Web server, they're reassembled and decrypted.

Confidentiality

As an electronic filer, you can help ensure your clients' income tax information remains confidential:

  • Keep your EFILE number and password secret. Notify the EFILE Helpdesk immediately if you believe your EFILE number and password has been compromised.
     
  • If you leave your computer on after completing activities in an encrypted area of the site, clear the cache and turn off and restart the browser. This eliminates any copies of webpages that may have been stored on your computer's hard drive. Remember, information stored in the browser cache is not encrypted.
    • If you are using Internet Explorer, clear your disc cache and then shut down and restart your browser.
       
  • Unless you are using a firewall to prevent hackers from getting personal information from your hard drive, we suggest you remove any personal information, such as client tax information, from your hard drive and store it on an encrypted data storage device, such as a USB stick. Note that a firewall may not protect you if you install peer-to-peer networking products, like those used at some popular Internet music sharing Web sites. In that case, moving personal data off your hard drive is the best option. As a minimal precaution, ensure that you are not storing any personal data in a shared folder. You might also need to change the setting on your firewall to allow communications between our server and your computer.

  • Never send confidential information such as your client's SIN via Internet email. Our Internet email does not have secure transmission capabilities.

  • Dispose of all documents properly to protect your clients' confidentiality.

Verification

You do not have to send us information slips and paper documents (except for elections) when you file a return electronically. Inform clients that elections, designations, agreements, waivers, and special elective returns must be submitted in paper format by the appropriate due dates as established in the Income Tax Act. However, it is important to remind your clients to keep all receipts, forms, books, records, and other documents used to prepare their returns, in case we ask to see them.

Reviews of returns filed electronically may be perceived as having an increase in verification activity. This is not the case. The selection process for reviewing income tax returns is the same for both paper and electronic versions. We may contact you more often when you electronically file because we will need to verify supporting documents that were not sent electronically.

The purpose of these reviews is to maintain the integrity of Canada’s self-assessment system of taxation by ensuring returns are assessed in accordance with the provisions of the Income Tax Act and with Agency policies and procedures.

The electronically filed return contains a field for you, the electronic filer, to tell us where and how to send the request for supporting documents. Unless otherwise indicated by the tax preparer pre-assessment and/or post-assessment review contact code, we will send it directly to you by mail.

When supporting documentation is requested, please send to the attention of the requesting unit and ensure your envelope and/or covering letter clearly indicates the full address of the area requesting the information. This information will be provided in the initial contact letter.

Pre-assessment review program

 

An indicator (2139) may appear beside the client’s surname on the accepted acknowledgement file when a return has been selected for pre-assessment verification. This indicator does not necessarily mean that supporting documentation will be requested. However, you should advise your client that there may be a delay in processing the return and that documentation may be requested to support the claim(s) in question or verify the taxpayer’s return. All documentation related to these returns is to be retained and sent to us only if requested.

Processing review program

All returns, whether they are filed electronically or on paper, are subject to a routine review after we initially assess them. In some cases, this review will result in a request for supporting documents. This does not necessarily mean you or your client made any errors or omissions. We will contact the taxpayer, unless the taxpayer has designated an authorized representative registered on file.

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