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Your Guide to Netfile Requirements

Netfile offers you the time- and cost-saving convenience of filing your taxes with the Canada Revenue Agency (CRA) over the internet. To use the service, you just need to make sure you have Netfile-certified software. Most taxpayers have Netfile eligibility, though there are a few notable exceptions.

When Can You Use Netfile?

The Netfile system opens in February of each year and accepts returns until January of the following year. During that time, you may file tax returns from the previous year and the two years prior. For example, in February 2019, you can file returns from 2018, 2017, and 2016. You can’t use Netfile to file amended returns or to file on behalf of someone else.

CRA Netfile Requirements by Residency Status

Canadian citizens and permanent residents are eligible to use Netfile. If you’re a deemed resident or non-resident of Canada, then you can’t use the system. In most cases, deemed residents must pay federal income tax, so they must mail a paper return to the CRA. They don’t have to pay provincial or territorial income tax, however.

Additionally, people whose social insurance number begins with “09” on’t meet the Netfile requirements. This number applies to temporary workers who are not citizens or permanent residents. Those with an address outside of Canada, non-residents, and people who recently emigrated to the country, also don’t meet the qualifications to use Netfile.

Foreign Tax Exceptions

If you have distributions of spin-off shares from a foreign corporation and you plan to defer tax from those distributions, you’re not eligible to use Netfile. Similarly, people who qualify for the federal foreign tax credit but don’t claim the maximum amount available are ineligible. The federal foreign tax credit offsets taxes paid to foreign governments for foreign-earned income.

Netfile Income Restrictions

If you have any of the following types of income, you may not use the Netfile system:

  • Income from Lloyd’s of London with Canadian sources
  • Registered disability savings plan income (unless you have confirmed eligibility for the disability amount)
  • Income from employment with an international organization
  • Qualifying retroactive lump-sum payments

Additionally, if you are part of the AgriStability or AgriInvest program, you’re not eligible to use Netfile if one of your partners is a corporation or if you are a self-employed Indian with tax-exempt income. Those who report over a certain amount of type 9 financial data are also ineligible. Finally, anyone with more than six sets of financial statements can’t use Netfile.

Netfile Credit Restrictions

In other cases, the credits you claim may prevent you from using Netfile. In particular, you cannot use the system if you claim the following credits:

  • British Columbia, Ontario, Saskatchewan or Yukon mining reclamation trust credits
  • Federal non-business foreign tax credits from more than three countries
  • Scientific research or experimentation expense deductions
  • Stock savings plan tax credit in Alberta
  • Royalty tax rebate in Saskatchewan
  • Research and development tax credit in Nova Scotia, Labrador, or Newfoundland

Finally, if you claim more than 22 children, you should hire a babysitter and run to the post office, because you also cannot Netfile.

Learn more about how to use software to make filing your taxes easy. QuickBooks Online can help you maximize your tax deductions. Keep more of what you earn today.

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