The federal government is expanding the number of electronic services it offers to allow businesses to file tax returns over the Internet.
The service, which the Canada Customs and Revenue Agency (CCRA) launched earlier this month,
is expected to dramatically reduce the amount of paper corporate tax returns require as well as make it easier for companies to conduct tax-related business with government.
Mike Guigue, manager of CCRA’s T2 development section, says about 20,000 companies have been invited to use the Net filing system for the first phase of the project.
“”It’s not like T1 (personal) income tax where everybody has to file at the same time,”” he explains. “”Corporate filings are based on their taxation year end. They have six months after that to file so it’s a little bit of a gamble for us to try to figure out the best groups to target.””
Rémi Côté, director of CCRA’s business registration and corporation returns division, says businesses that want to file their returns electronically need only phone the agency and ask for a Web access code. While most would meet the criteria, a small number won’t. These include organizations that do scientific research and experimental development, who bundle photos and other images with their returns, and those whose returns exceed a certain size.
The CCRA, says Guigues, wanted to give the test group a little lead time before the majority of firms start to file at year’s end.
“”We went into production on Oct. 7 and we wanted to make sure the software was on the market and had a chance to be marketed properly, so we targeted corporations that traditionally filed in that December-January period; that’s when we expect to see some coming in.””
Although Guigues has no estimate of the amount of paper corporate e-filing will save, it will be substantial, he expects. But it will also create other efficiencies.
“”It saves the tax filing community paper as well as storage, stamps, envelopes and manual handling costs,”” he says. “”And when we get paper in we have to store it; none of that is going to happen now so those are significant savings for us.””
Guigues says the initiative came in on time and on budget, a challenge, he says, given the short time frame — a year — the agency was given.
“”We looked at other applications that were successful, such as T1 and said, why reinvent the wheel?”” notes Guigues. “”We talked to other people who have developed Net applications within CCRA and discussed this a lot with software developers because we rely on third-party developers to produce the packages.””
One of those third-party developers that has been certified for corporate Net filing — there are three so far — is Montreal-based Dr Tax Software Inc., which supports about 2,000 firms in Canada with T1 and T2 software. Vice-president Malcolm Campbell calls corporate Net filing a big boost for those who have to file commercial tax returns — accountants.
“”There’s a lot of mixed opinion out there with respect to the Internet,”” he says. “”Maybe it’s not the greatest tool in terms of selling products but certainly in terms of government services, it’s really powerful.””
Campbell predicts the service will eliminate about 90 per cent of paper documents used in corporate returns, which for the average-sized company run at about 50 pages, he says.
Certification, explains Brad Longworth, a programmer at Dr Tax, involves working with test cases the government provides to make sure the software is capable of handling all possible scenarios.
“”We submit them until they are right and have the information in the form they’re looking for,”” he says. “”They also take copies of our software and make sure it conforms to the way they want it.””
According to Côté, the corporate Net filing application is pretty much the last CCRA tax service to be made available — most others, such as GST and T4, are already online.
According to the CCRA, 24 per cent of personal income tax returns were filed electronically in 2001.
“”We’re looking down the road at other electronic products, such as access to your account online, but we’re not there yet.””