A sneak peek at this year's tax software|
Jonathan Chevreau • The National Post • Saturday, March 04, 2000
The T4 slips and charitable receipts are dribbling in and the last-minute RRSP contribution receipts are in the mail.
With less than two months until the April 30 tax filing deadline, it's time to gather up those charitable receipts and other required documents to reduce taxable income and face up to the annual ordeal of tax preparation.
Every year the task gets more daunting. If you don't think so, consider how much the tax industry's bible has expanded. CCH just distributed its 1999-2000 edition of Arthur Andersen's Preparing Your Income Tax Returns, and this year's edition is a monstrous 1,180 pages, costing $45.50. Compare that with the 1982-83 edition, which had only 397 pages and cost $9.95. Warren Baldwin, vice-president of Toronto-based T.E. Financial, calculates the compound rate of growth for the cost of a good Canadian Tax Guide has been 9.35% over the past 17 years while the compound rate of the page count has been 6.61%. I challenge any human alive to read it from cover to cover. Talk about complexity run amok.
How then does the hapless taxpayer respond? It's bad enough that our paycheques are subjected to merciless confiscation throughout the year, but there's also the time and anxiety associated with this unpleasant task.
Most people nowadays either hand the whole shooting match over to an accountant, or do it themselves with tax software for personal computers.
There's not quite as much choice as there was a year ago. CanTax and HomeTax have given up on the single-user business -- CCH bought them out, kept the CanTax Pro versions and sold the rest to Intuit Canada Ltd., the maker of QuickTax.
That makes QuickTax the reigning champion of Canadian tax software, particularly as it is available in both Windows and Macintosh versions. Baldwin says the latest QuickTax deluxe "seems very comprehensive. It features good rollovers of data from CanTax and HomeTax."
Macintosh users can also use the more utilitarian GriffTax (www.grifftax.com), which claims to be "Canada's first online tax return preparation service."
For Windows 95/98/NT users, there is a relatively new kid on the block: TaxWiz, which was available as an Internet package only in 1997 and 1998 but is available in a retail-level "shrink wrap" version for 1999 (a trial version can be downloaded at www.taxwiz.ca). It is targeted to individual, professionals and small businesses everywhere except Quebec. The package can has "Netfile" capability, which allows users to file their taxes through cyberspace.
But QuickTax's main competitor this year is going to be free software, both from Intuit and a free package called CoolTax. CoolTax (www.cooltax.com), available for Windows-based machines, can be downloaded from its Web site. FLS Research Inc., the company behind CoolTax, explains the product is provided "to increase market awareness of [its] professional tax software products."
Internet discussion forum cyberparticipant "waxman" says CoolTax is indeed "cool."
He adds: "If you have 15 or fewer returns to do, you couldn't do better. The only feature that's lacking in CoolTax is they don't include the CanTax return import utility that comes with the professional edition."
Despite all these accolades, these programs can make mistakes. That's why Baldwin recommends that anyone doing a tax return, even on one of these programs, check the calculations by hand.
But doesn't that defeat the whole purpose of the software exercise? Not according to another prominent cyberparticipant, Bylo Selhi: "The software relieves you from the tedious and error-prone task of doing arithmetic on large numbers of numbers. Good software will often remind you of tax-saving opportunities that you may have overlooked."
On most occasions, Selhi manually checks any important computer output, including tax returns, spreadsheets, reports and so on. "It's amazing the number of errors I can find just by cross checking a few critical items."
He adds: "Cross check some key important numbers to ensure that the results look reasonable. For example, if last year your net tax was 33% of gross income, and this year my gross salary and deductions haven't changed much, you should be concerned if this year's net tax is more than a couple of percentage points different. You may want to check 'obvious' things like whether you entered your RRSP contribution, included all charitable deductions or capital gains and losses," Selhi says.
Another way some people can acquire free tax software is through a special offer targeted at low-income individuals. Late in February, Intuit Canada Ltd. announced its QuickTax Freedom program, an online tax preparation service for as many as five million lower-income Canadians .
Singles qualify for this free service if they file a personal tax return with a gross income of $20,000 or less. Married couples will qualify if their combined income is $20,000 or less.