The rise of free tax software has substantially reduced the unpleasantness associated with filing your annual income tax. You just plug in your numbers, or snap photos of your slips, and away you go.
So why aren’t more people taking advantage?
Canada Revenue Agency numbers show that 52.4 per cent of tax returns received between Feb. 9 and March 29 came via Efile, an electronic service for tax preparers and accountants, and 40.6 per cent were through the Netfile portal for individuals. Almost all of the remaining returns came in paper form.
By all means pay for help with your taxes if you’re pressed for time, have better things to do than completing your return or you don’t have the bandwidth for all the slips, numbers and jargon. But, really, you owe it to yourself to at least check out the 15 free tax-filing options certified for Netfile by CRA for the 2020 tax year.
One of the CRA-certified free software options is CloudTax, brought to you by 31-year-old Nimalan Balachandran, a onetime tax preparer who thought there was a better way for people to file their tax returns. “I started seeing that a lot of the clients I was serving simply had a T4 slip and some pension slips,” he recalls. “They’d come in, wait for half an hour or an hour just to see me for five minutes. I felt like I wasn’t adding so much value to it. I was entering the T-slips and charging $40 for it.”
Like many free software versions, CloudTax can be used on your computer or your mobile device. There’s a live chat option if you get stuck. For more help, you can pay $19.99 for a consultation where someone goes over your return to make sure you haven’t made any mistakes, or $29.99 to have someone at CloudTax look after your tax return for you. If you’re wondering about the economics of free tax software, this is an answer.
Concerned about security and privacy when using tax software? Mr. Balachandran said CloudTax uses a similar level of encryption to the big banks. Also, data is inaccessible to CloudTax itself and only accessible if clients want this. No information is shared with third parties and there’s no cross-selling of other products, Mr. Balachandran said.
Other providers of free tax software included TurboTax, TaxTron, Wealthsimple Tax, H&R Block, GenuTax and StudioTax for its Android and Apple apps (the Windows and Mac versions cost $15). Do a google search for reviews and then try one to see how it fits.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
Variable-rate mortgages are back in vogue
There was a time when variable-rate mortgages were hugely popular with home buyers and owners because of their record for offering substantial savings over fixed rate mortgages. The tables turned in recent years, but now fixed-rate mortgages are coming on strong. This blog post on a mortgage rate website might change your mind if you’re looking at the variable rate option.
Time for your quarterly financial edit
A helpful comparison is made in this article between reviewing your finances and going through your wardrobe to see what clothes work and which need to go. An alternative path for budgeting.
The reason for all that inflation speculation
A clear, readable guide to what’s happening in financial markets these days and how it can be read as a sign of rising inflation.
Personal finance is harder than we admit
Some pushback here against the idea that you can be successful in personal finance by following a few simple rules. Five personal finance complications are mentioned, including your family background and your level of income.
Ask Rob
Q: I’m in my early 30s, married and bought a pre-construction property single home detached in Oshawa, Ont. I’m worried about the future real estate market and a housing bubble. Do you think real estate prices will keep growing up in near future? I will be living in the property for at least five years as we’re planning to have a baby and it looks like a decent neighbourhood to raise a child.
A: Enjoy your new home. Your plan to stay five years or more should help you through whatever happens in the next year or so. Housing prices are rising by double-digit amounts in 2021 compared to last year, and this has led to speculation about a pullback caused by factors such as rising mortgage rates, government intervention or declining affordability. The longer you stay in your home, the more time you’ll have for the market to work through any disruptions ahead and start rising again.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
Here’s a useful summary of how to spot frauds involving the Canada Revenue Agency. Example: Those phone calls where someone hollers at you for an unpaid tax bill. Fraud attempts have surged in the pandemic, so ramp up your usual level of caution. Educate yourself about fraud, or report a fraud, on the Canadian Anti-Fraud Centre website.
The money-free zone
This will lift you up – Like a Ship Without a Sail, by Pastor T.L. Barrett and the Youth for Christ Choir.
Tweet of the week
A reader suggested jacking up the annual TFSA contribution limit for people who don’t own homes. A way of giving renters a tax benefit to offset the capital gains tax exemption owners get when they sell a principal residence. Check out the vigorous discussion that erupted when I tweeted about this.
ICYMI
What I’ve been writing about
- The only way young buyers will afford houses is if current owners give up some of their gains
- These preferred shares are right at home in a rising rate world
- ‘We’re really discarded’ – an 83-year-old on taxes and discrimination against singles
More Rob Carrick and money coverage -
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: How to survive the gig economy • How to get out of debt • Is now the right time to buy a house? • Crisis-proof your finances • Does investing change during a pandemic? • Can you afford to live downtown? • The cost of kids • Should you move back in with your parents?
- ✔️ A 10-point pandemic personal finance checklist: Create a "wartime" family budget; stop worrying about bank deposits; clean out your big-bank savings account; get relief on car payments; get preapproved for a mortgage; WFH? Save $1,000 a month; save, save, save; build resilience by not anxiety-buying; consider the cost of mortgage deferrals; get ready for the second wave of financial distress.
- 📈 Investing: The case for a tight portfolio of big blue chips dividend stocks; robo-advisers beat human advisors (and they’re thriving), why online banks that are better than the branch; is it time to invest your 2020 TFSA; don’t get your mortgage at a bank; why it’s so hard to invest in preferred shares; stock up on stocks to retire early; and are you following the 10-year rule with your investments?
- 💰 Saving: Food waste is wasted money; why you might regret that SUV and find out if CAA is worth it; juice your PC Optimum points; how an ex-Bay Street lawyer got out of debt; blindly easy tweak to your retirement investments to survive economic downturn; should you buy that latte?
Editor’s note: This story has been updated to note that some of StudioTax's apps have a fee.
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob Carrick