It has been a time-consuming job trying out every one of the twelve web tax preparation packages certified for NetFile by the Canada Revenue Agency. Entering the same tax data over and over has been a revealing and at times frustrating task.
Ratings Method: total score out of 45 max points on 5 factors
- Privacy and security (10 points) - How well does the online tax prep company protect your data and your privacy? What do they promise and what evidence is there of their capability to deliver? Unfortunately, this is the weakest area of the ratings - my numbers could be fairly wide of the mark - since it is hard to get much tangible proof of the reality vs the promises made, even compared to the minimal promises as are publicly made on the websites. Only one company (Acetax) actually claims to have been audited by an external party. CRA does not do anything, so far as I am aware, to check up on the companies and how they handle our data, which I think is shocking and unacceptable, given that a lot of people likely believe that NetFile certification somehow gives assurance of security protection.
- Flow, readability and layout (10 points) - How does the appearance and the flow of the program guide the taxpayer through all the steps, ensuring that everything is entered correctly in the right places? Is it easy to go back and forth, to review results and check one's work or make changes? The programs vary enormously on this factor, from simple on-screen versions of the paper forms, which merely do the arithmetic correctly and transfer amounts (or are supposed to!) between forms, to sophisticated interview processes akin to interaction with an accountant, asking questions to uncover all income and deductions and credits.
- Help (10 points) - How much access to explanations about tax rules is provided and how well placed is it? One of my pet peeve test items this year is the infamous T1135 Foreign Income Verification Statement which a taxpayer with foreign property over $100,000 in cost must fill in, sign and send in to CRA. Does the program tell you, ideally at the point when you have to tick that box, that it is not required for foreign holdings within registered accounts like RRSPs? Some do not say so and others do not say that the T1135, if required, cannot be done online and that it must be submitted by mail on paper.
- Responsiveness (5 points) - How fast is the online application at saving data and refreshing the screen? slow = frustration! Well done to QuickTax for a major improvement in upping its speed to acceptable levels this year.
- Accuracy (10 points) - new rating factor this year! How good a job does the program do at calculating your taxes and helping you legally pay the least amount? For those who think that NetFile certification means the programs will all come up with the same answer (as I believed myself before starting to look at all these packages a few years ago), it is time to recognize the reality. As I commented last year, CRA's certification only means the program is correctly including all the revenues. the programs differ enormously in their ability to automatically detect and claim all deductions and credits to which you are entitled. As a result, in my own case with all the packages my total income on line 150 was identical but balance owing on line 485 showed five different amounts, one of which was a few thousand dollars different (impossibly wrong) and the others anywhere from a few dollars to a few hundred dollars apart. The very best package (TaxChopper) at using deductions and credits for an individual and/or shared amongst family members is like having an skilled accountant doing your taxes - it is essentially an expert system for income tax. Three examples tested the packages' ability to optimize using age amounts and pension splitting, tuition and education transfers, foreign tax credits with inter-provincial residence thrown in for the trickiest rule. In no case did any other package beat TaxChopper - it always found deductions, transfers and credits to use and end up with the lowest taxes to pay. The difference on a potential $4700 tax bill was about $500. Optimization can be very worthwhile.
#1 UFile and TaxChopper - tied with 38 points.
Both are outstanding programs but excel at different things.
UFile - "Polished, easy to use and handles all but the more sophisticated tax reduction optimizations".
TaxChopper - "An expert system for income tax – Delivers on the biggest refund / lowest tax to pay promise"
#3 H&R Block - 34 points "Technically, it's UFile but it has a few undesirable privacy features of its own"
#4 QuickTax - 33 points "Guidance every step of the way with plenty of questions, reminders and some useful suggestions for future tax planning"
#5 Acetax - 32 points "For those who need minimal help and are familiar with tax forms"
#6 WebTax4U and Taxnic.ca - tied with 26 points
WebTax4U "For those who know where things go and are familiar with tax forms"
Taxnic.ca "OK package if you know what forms to fill and credits to claim."
#8 EachTax - 22 points "Looks like the forms. Not much more than a spreadsheet with colours."
#9 MBOTax and eTaxCanada - tied with 21 points
MBOTax "It's like working with the paper forms except amounts get transferred automatically and arithmetic is done correctly."
eTaxCanada "Still looks like a beta version – Too many rough edges, not intuitive and some key omissions and errors"
#11 FileTaxOnline - 16 points - "Not recommended – too many weaknesses, some fatal"
#12 5dollartax -2 points - "Crude, half-finished effort, not worth using."
I would highly recommend taking the trouble to enter your data into at least two of the top packages to see if the results match. You do not even need to pay the fee before seeing the end result and enough detail to figure out where one likely differs from the other, which could be due to your input error or to package optimization differences. Once you've fixed the errors, you can see which package gets you the most back.
Wikipedia's tax software page has a list of prices, freebies and limitations (e.g. ones not offering Québec provincial returns) for the various packages in a single table.