NETFILE is a transmission service that allows eligible Canadians to submit their personal income tax return to the Canada Revenue Agency using the Internet. Tax returns filed via NETFILE must first be prepared using a NETFILE-certified product. The software or Web application produces a .tax file, which must then be uploaded to the CRA independently to constitute a tax filing. NETFILE was introduced in 2001. [1]
According to CRA, 26% of total 2014 tax returns were sent by Netfile. [2] To Netfile taxes, users need a certified tax program, which is listed on the CRA website.
According to the CRA website: [3]
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A pay-as-you-earn tax (PAYE), or pay-as-you-go (PAYG) in Australia, is a withholding of taxes on income payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns. PAYE may include withholding the employee portion of insurance contributions or similar social benefit taxes. In most countries, they are determined by employers but subject to government review. PAYE is deducted from each paycheck by the employer and must be remitted promptly to the government. Most countries refer to income tax withholding by other terms, including pay-as-you-go tax.
The harmonized sales tax (HST) is a consumption tax in Canada. It is used in provinces where both the federal goods and services tax (GST) and the regional provincial sales tax (PST) have been combined into a single value added sales tax.
A Canadian tax return refers to the obligatory forms that must be submitted to the Canada Revenue Agency (CRA) each financial year for individuals or corporations earning an income in Canada. The return paperwork reports the sum of the previous year's taxable income, tax credits, and other information relating to those two items. The return is the method by which the Canadian government determines the appropriate amount of tax that should be paid by individuals and corporations. The result of filing a return with the federal government can result in either a refund, or an amount due to be paid. There is a penalty for not filing a tax return.
The Canada Revenue Agency is the revenue service of the federal government, and most provincial and territorial governments. The CRA collects taxes, administers tax law and policy, and delivers benefit programs and tax credits. Legislation administered by the CRA includes the Income Tax Act, parts of the Excise Tax Act, and parts of laws relating to the Canada Pension Plan, employment insurance (EI), tariffs and duties. The agency also oversees the registration of charities in Canada, and enforces much of the country's tax laws.
A registered retirement savings plan (RRSP), or retirement savings plan (RSP), is a type of financial account in Canada for holding savings and investment assets. RRSPs have various tax advantages compared to investing outside of tax-preferred accounts. They were introduced in 1957 to promote savings for retirement by employees and self-employed people.
Taxation in Canada is a prerogative shared between the federal government and the various provincial and territorial legislatures.
Intuit Inc. is an American business that specializes in financial software. The company is headquartered in Mountain View, California, and the CEO is Sasan Goodarzi. As of 2019, more than 95% of its revenues and earnings come from its activities within the United States. Intuit's products include the tax preparation application TurboTax, personal finance app Mint, the small business accounting program QuickBooks, the credit monitoring service Credit Karma, and email marketing platform Mailchimp.
A tax refund or tax rebate is a payment to the taxpayer when the taxpayer pays more tax than they owe.
TurboTax is a software package for preparation of American income tax returns, produced by Intuit. TurboTax is a market leader in its product segment, competing with H&R Block Tax Software and TaxAct. TurboTax was developed by Michael A. Chipman of Chipsoft in 1984 and was sold to Intuit in 1993.
Form W-2 is an Internal Revenue Service (IRS) tax form used in the United States to report wages paid to employees and the taxes withheld from them. Employers must complete a Form W-2 for each employee to whom they pay a salary, wage, or other compensation as part of the employment relationship. An employer must mail out the Form W-2 to employees on or before January 31. This deadline gives these taxpayers about 2 months to prepare their returns before the April 15 income tax due date. The form is also used to report FICA taxes to the Social Security Administration. The Form W-2, along with Form W-3, generally must be filed by the employer with the Social Security Administration by the end of February. Relevant amounts on Form W-2 are reported by the Social Security Administration to the Internal Revenue Service. In territories, the W-2 is issued with a two letter code indicating which territory, such as W-2GU for Guam. If corrections are made, it can be done on a W-2c.
Tax withholding, also known as tax retention, Pay-as-You-Go, Pay-as-You-Earn, or a Prélèvement à la source, is income tax paid to the government by the payer of the income rather than by the recipient of the income. The tax is thus withheld or deducted from the income due to the recipient. In most jurisdictions, tax withholding applies to employment income. Many jurisdictions also require withholding taxes on payments of interest or dividends. In most jurisdictions, there are additional tax withholding obligations if the recipient of the income is resident in a different jurisdiction, and in those circumstances withholding tax sometimes applies to royalties, rent or even the sale of real estate. Governments use tax withholding as a means to combat tax evasion, and sometimes impose additional tax withholding requirements if the recipient has been delinquent in filing tax returns, or in industries where tax evasion is perceived to be common.
The T1 General or T1 is the form used in Canada by individuals to file their personal income tax return. Individuals with tax payable during a calendar year must use the T1 to file their total income from all sources, including employment and self-employment income, interest, dividends, and capital gains, rental income, and so on. Foreign income must also be declared and included in the total income. After applicable deductions and adjustments, the net income and taxable income are determined, from which the federal tax and the provincial or territorial tax are calculated to give the total payable. Subtracting total credits, which include the tax withheld, the filer will either receive a refund or have balance owing, which may be zero.
The T2 Corporation Income Tax Return or T2 is the form used in Canada by corporations to file their income tax return. All corporations other than registered charities must file a T2 return for every taxation year, regardless of whether tax is payable. The form has to be filed within six months of the end of each corporation's fiscal year.
Income taxes in Canada constitute the majority of the annual revenues of the Government of Canada, and of the governments of the Provinces of Canada. In the fiscal year ending 31 March 2018, the federal government collected just over three times more revenue from personal income taxes than it did from corporate income taxes.
The Canadian Scientific Research and Experimental Development Tax Incentive Program provides support in the form of tax credits and/or refunds, to corporations, partnerships or individuals who conduct scientific research or experimental development in Canada.
A tax-free savings account is an account available in Canada that provides tax benefits for saving. Investment income, including capital gains and dividends, earned in a TFSA is not taxed in most cases, even when withdrawn. Contributions to a TFSA are not deductible for income tax purposes, unlike contributions to a registered retirement savings plan (RRSP).
EFILE is the system used by the Canada Revenue Agency as a means for electronically transmitting tax returns. It became a national program in 1993. EFILE is only available to professional tax preparers and is not to be confused with the publicly available NETFILE. EFILE is a form of Electronic Data Interchange.
A tax return is the completion of documentation that calculates an entity’s or individual's income earned and the amount of taxes to be paid to the government or government organizations or, potentially, back to the taxpayer.
The Disability Tax Credit (DTC) is a non-refundable tax credit in Canada for individuals who have a severe and prolonged impairment in physical or mental function. An impairment qualifies as prolonged if it is expected to or has lasted at least 12 months. The DTC is required in order to qualify for the Registered Disability Savings Plan, the working income tax benefit, and the child disability benefit. Families using a Henson trust, the Canada Disability Child Benefit other estate planning methods for children with Disabilities are not excluded from the DTC. While the credit is valuable, many have found qualifying for it challenging.
The Canada Workers Benefit (CWB) is a refundable tax credit in Canada, similar to the Earned Income Tax Credit (EITC) in the United States. Introduced in 2007 under the name Workers Income Tax Benefit (WITB), it offers tax relief to working low-income individuals and encourages others to enter the workforce. The WITB has been expanded considerably since its introduction, and restructured in depth by the 2018 Canadian federal budget when it was renamed the Canada Workers Benefit.