Some people do their own taxes. Other people pay a professional to do theirs. Many people trust a friend or family member to do their taxes for them. So, that person is not a professional tax preparer. They are just filing tax returns on behalf of someone else.
The NETFILE service from CRA, which is how CloudTax forwards your taxes, is really for people to prepare their own taxes. People filing tax returns on behalf of someone else fall into a grey area. If you ask a family member or friend to file your taxes, that is certainly allowed using CloudTax. Ideally, you make a final review of your return and oversee sending it to CRA.
If someone prepares over 20 tax returns on behalf of someone else and/or collects payments, they are considered a professional tax preparer. The professionals use CRA's EFILE service (not NETFILE).
For information about restrictions on the NETFILE service, visit the CRA website.
Professionals Filing tax returns on behalf of someone else
If you are going to hire someone to prepare your tax return, make sure they have specialized training. Because, if they do something wrong and you underpay your taxes due to negligence, you pay the penalties. So, even when someone else files your tax return, you're ultimately responsible that they report the correct information. Always provide them with complete and organized information.
So, anyone who charges a fee to prepare your tax return signs as the preparer on page 4 in box 490. If they do not sign, get someone else, or do your taxes yourself! Reputable firms stand behind their work, plus they have insurance.
Perhaps then you want someone to file your tax return. The most common reason is that taxpayers worry that they will make a mistake or miss something important. With CloudTax, filing tax returns on behalf of someone else is so easy. Once you create an account, all you need to is select YES to the question, ‘Are you filling out this information for someone else (i.e family member)?’ (Personal Info > My Residence). So, gather your friends together and have a CloudTax party!
Nimalan Balachandran
Nimalan Balachandran is the Founder & CEO of CloudTax, an income tax filing platform, certified by the Canada Revenue Agency, that allows simple tax filers to file their taxes from home. He was a former employee at the Canada Revenue Agency, and has been in the tax preparation industry for over 10 years. His goal was to bring his passion for technology and assisting Canadians in minimizing their taxes together, by building new software that allows Canadian residents to file simple taxes on their own. Along with his background in accounting, finance, artificial intelligence & business strategy from Seneca College and Massachusetts Institute of Technology, Nimalan has also worked as a Financial Advisor at Sun Life Financials. Nimalan also co-founded a not-for-profit organization, ATI Foundation, serving individuals with intellectual and physical disabilities in the Greater Toronto Area.
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