Millions of Canadians using tax software and becoming their own accountants

Luann Lasalle, THE CANADIAN PRESS
MONTREAL - Millions of Canadians are using software programs and becoming their own accountants when it comes to their taxes.

Software programs have been updated to take into account recent changes announced in the last federal budget, such as pension income splitting for seniors, children's fitness credits and reduced income tax rates.

More than 4.1 million Canadians filed their taxes through the Canada Revenue Agency's Netfile for the 2006 tax year.

Another roughly 8.8 million Canadians filed online through tax professionals for 2006.

That means for the 2006 tax year, the Canada Revenue Agency received just more than 50 per cent of its returns electronically, said spokesman Serge Paradis.

Tech analyst Andy Walker said easy-to-use software helps makes the difference.

"If you look at the new crop of tax software this year, it's very, very clever," Walker said.

"It asks you in plain language all of the questions you want to be asked and baring a supremely compex thing where you aren't sure which way to answer, it's going to get the job done for you."

"The reality is that software takes the complex and makes it simple. Even the professionals are going to use it," said Walker, a technology author who also has a tech advice website called Cyberwalker.com.

For those who want to do their own taxes, QuickTax now lists all possible deductions from A to Z in plain, everyday language.

"So if you're wondering whether you can claim your dentures, for example, as a medical expense you don't necessarily know that those are called medical expenses but you know that they are dentures," said QuickTax's Cameron Moore.

"You find it in this list and it tells you that you can claim it as a medical expense," Moore said.

"People don't necessarily know what they can claim and what they can't and by having this list in layman's terms they can immediately find that," he said, adding the list will be updated annually.

UFile's Joanne Birtch says that tax software calculates the best refund possible, eliminating guesswork and possibly faulty math.

"It's a refund analyzer that looks at all of the amounts you have put in to ensure that your family as a whole is paying the least amount of tax possible and getting back the best refund," said Birtch of Dr. Tax, software makers of Ufile.

Birtch said Ufile will also do an "automatic optimal split" for seniors who want to do pension income splitting.

"Ufile will provide an optimal split right from the get go," she said.

However, QuickTax's program is slightly different when it comes to splitting pension income.

"Once you've entered your pension income then it will actually calculate it and tell the maximum amount you are allowed to split, then it's up to the taxpayer to decide how much they want to split," Moore said.

Chartered accountant Charles Russell said his firm uses Efile exclusively and he perhaps doesn't see about 10 per cent of his clients, who upload their information to him.

"That 10 per cent last year we think it might get to 30 per cent of our clients this year," said Russell, who's based in Mississauga, Ont. "We expect we won't see them in that process anymore. They won't visit us. They will just transfer the data to us."

Efile is an automated service allowing those prepare and file taxes on behalf of others to electronically file to the Canada Revenue Agency via the Internet.

Russell also uses software for tax preparation at his six-person firm, which does estate and corporate work and personal tax returns, some involving investment portfolios.

Walker said sometimes complicated tax cases need both software and human help.

"If you've got a really weird one, then you want to go to an accountant who really understands those wrinkles and uses the software with their brain."

© The Canadian Press, 2008