Are You Eligible to Electronically File Taxes With Netfile?

by Craig Anthony

2 min read

Netfile allows you to file tax returns with the Canada Revenue Agency over the internet. To use the service, you need Netfile-certified software such as TurboTax. Most taxpayers can use Netfile, but there are a few notable exceptions.

Ineligible Returns

The Netfile system opens in February of each year and accepts returns until January of the next year. During that time, you may file tax returns from the previous year or the two years before that. For example, in February 2017, you can only file returns from 2016, 2015, and 2014. You may not use Netfile to file returns from previous years. Additionally, you cannot file amended returns, nor can you use the system to file on behalf of someone else.

Residency Status

As long as they meet the other requirements, Canadian citizens and permanent residents can use Netfile, but deemed residents cannot use this system. In most cases, deemed residents must pay federal income tax, so they must mail a paper return to the Canada Revenue Agency (CRA), but they don’t have to pay provincial or territorial income tax.

Additionally, if your social insurance number begins with “09” you also cannot use Netfile. This applies to temporary workers who are not citizens or permanent residents. If your address is outside of Canada, if you are a non-resident, or if you recently emigrated, you also cannot use Netfile.

Foreign Tax Exceptions

If you have distributions of spin-off shares from a foreign corporation, you cannot Netfile if you plan to defer tax from those distributions. Similarly, if you qualify for the federal foreign tax credit, but do not claim the maximum amount available, you also cannot Netfile. The federal foreign tax credit offsets taxes paid to foreign governments for foreign-earned income.

Income

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

  • Canadian-source income from Lloyd’s of London
  • Registered disability savings plan income without confirmed eligibility for the disability amount
  • Employment income from an international organization
  • Qualifying retroactive lump-sum payments

Additionally, if you are part of the AgriStability or AgriInvest program, you cannot use Netfile if one of your partners is a corporation or if you are a self-employed Indian with tax-exempt income. If you report over a certain amount of type 9 financial data, you also cannot use this system. Finally, if you have more than six sets of financial statements, you also cannot use Netfile.

Credits

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:

  • Mining reclamation trust credit in Ontario, Saskatchewan, British Columbia, or the Yukon
  • Federal non-business foreign tax credit from more than three countries
  • Deduction for scientific research or experimentation expenses
  • Alberta stock savings plan tax credit
  • Saskatchewan royalty tax rebate
  • Nova Scotia research and development tax credit
  • Newfoundland and Labrador research and development tax credit

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

References & Resources

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