Software can help your
approaching taxing times
by
Alan Zisman (c) 2006 First published in
Business
in Vancouver April 4-10, 2006; issue 858
High Tech Office column
Ah spring: daffodils, cherry blossoms. And tax
time.
In
2004, it was reported that with half of all Canadians preparing their
own returns, for the first time over half were using tax software, and
an increasing number are using online software. Electronic filing is
increasingly common. It grew by 16 per cent between 2004 and 2005,
according to the Canada Revenue Agency (CRA). Software-enabled e-filing
speeds both the time it takes to file returns and receive refunds.
However, if you’re among the half who prepare
their own returns, you might be feeling uneasy.
According
to a recent Decima Research poll sponsored by Montreal-based DR Tax
Software, 28 per cent feel as if they’ve likely shortchanged themselves
by missing a writeoff or exemption, perhaps because they’re rushing to
meet the April 30 deadline. (Forty-seven per cent report putting off
filing until April).
B.C. residents lead the country in the
percentage who miss a writeoff or exemption.
Dr
Tax has been providing Canadian tax software for over 15 years and now
offers UFile for Windows ($20) and UFile.ca online ($15; free for
students and people earning under $25,000).
The
software features a QuikClik on-screen interview process and MaxBack
refund maximizer. The boxed version can be used for up to 10 returns.
Most competing consumer tax products limit purchasers to six. When used
for an entire family’s tax returns, the MaxBack analysis feature of
both the boxed and online versions tries to optimize returns across the
family. The online version charges for each spouse’s return; additional
family members, however, are done for free.
This
year’s boxed product offers improved help functions that ask the user
“what would you like to do” at each stage in the tax “interview.”
As
well, users can send questions to an online support team or walk
through an updated tutorial. Aiming to gain customers from competitors
like Intuit’s QuickTax, UFile can carry over returns created in
previous years with other tax software.
B.C.
residents are the most likely in the country to use tax strategies to
reduce their taxes: 46 per cent polled claim to “always” use tax
strategies compared with 34 per cent of Albertans and 35 per cent of
Canadians overall.
If
they’re entitled to a refund, 33 per cent of B.C. residents polled said
they would use it to pay down debt, 26 per cent would invest it, while
a mere five per cent would put it towards a vacation. In contrast, 14
per cent of Albertans and 17 per cent of Quebecers would use their
returns to fund a holiday.
B.C.
residents are the most likely to miss the April 30 deadline: 26 per
cent report having missed the filing deadline at least once compared
with 19 per cent nationally. (And men are more likely to miss the
deadline than women.)
Missing that deadline can be fiscally painful.
According
to the CRA, the late filing penalty is five per cent of your
outstanding balance plus an additional one per cent of the balance
owing for each full month your return is late. If you were charged a
late-filing penalty in any of the previous three tax years, the
penalties double.