Saturday, March 30, 2013

Studio Tax - Free Income Tax Program with Netfile Support

This year, Revenue Canada stopped mailing out paper tax forms and also ceased supporting telephone filing (Telefile).  While you can still pick up copies from the post office, print off PDF versions of the forms and hand-fill, or even fill them out online and then print them off, the real push is for people to use online tax software and submit their tax forms over the internet using Netfile.

Income tax software programs have been around for years.  TurboTax seems to be the most popular, with multiple versions ranging from $20-$100, supporting various types of income and deductions.  There have also been free online programs made available for people with really low income.

My returns were relatively simple in the past, so I usually did my taxes manually by hand, then either mailed in the paper forms or used Telefile.  This year, since it was more difficult to obtain the paper form and my tax return now included more sources of retirement income, I started looking into software options for filing over the internet.  In an article by the Globe and Mail, I learned about a Windows-based software called StudioTax that is free for everyone, regardless of income level.

The interface for StudioTax begins by gathering the information required to fill in page 1 of the T1 General form, including your name, address, date of birth, social insurance number, and info about your spouse if applicable.  Then it allows you to select which forms you received for your various sources of income, as well as choose from typical deductions including RRSP contributions, charitable donations, political contributions, tuition fees, expenses for dependents, and medical expenses.

Income Forms
Purpose, Sample Fields
Universal Child Care Benefits
Allocations from Income Trusts
Remuneration Paid (employment income), CPP contrib., EI contrib., Income Tax deducted
Pension, retirement, annuity, RESP, death benefits, research grants, fees for services,  and Other Income (not self employed)
Employment Insurance and Other Benefits
Fishing Income
RRSP income
RRIF Income
Employee Profit Sharing
Old Age Security (OAS) Income
Canada Pension Plan (CPP) Income
Investment Income (Canadian eligible and ineligible dividends, Foreign Income, Interest Income)
Worker’s Compensation, Social Assistance, Status Indian Tax Exemptions
Security Transactions – Capital Gains or Losses
Partnership Income – fishing, agriculture, business, etc.
Pension Adjustment Reversal

StudioTax provides good help and several tutorials to guide you through the various processes, but in general it was quite straightforward.  It is merely a matter of matching the box numbers on the paper tax slips with the fields on the StudioTax forms, and entering the corresponding values in these fields.  Amounts for your chosen deductions are similarly prompted for.  These processes shield you from needing to understand the actual CRA tax forms, in terms of knowing which fields should be entered or how to perform calculations on the raw data.  However, if you have more specific needs that require further tax forms, you can select to add any of the actual Federal or Provincial tax forms and then fill them out directly.

Once you are done all the data input, the program plugs the numbers into the correct locations in the actual tax forms, performs the necessary calculations, and the resultant CRA tax return is presented to you for review.  There is an option to validate your entries and you will be warned of inconsistencies, or missing data.  Another option allows you to try to "optimize" your return, including looking for ways of better dividing up income and deductions between spouses in order to minimize the tax burden.

Finally when you are satisfied with your generated tax return, you can create a .TAX file that is saved on your hard drive.  You can then go to the  Canada Revenue Agency at to Netfile.  You will be prompted to attached the .TAX form as part of this process.  In the past, you required a CRA Web Access code to perform the Netfile, and this code was sent as part of the paper forms mailed to you.  Since the mailing is no longer happening, the need for the web access code has been eliminated.

For this first usage of StudioTax, I wanted to verify my understanding of its calculations and compare them with my own.  So I still manually calculated the values of my tax return on the CRA forms, which are available at  Rather than entering everything by hand, I selected the "PDF fillable/saveable" forms so that I could enter the values using the computer.  When I compared the two results, they matched exactly.  This made me feel more comfortable with using the software.  Next year, I will probably forgo the manual calculations and just let the tax program carry the load.


  1. I used Studio Tax this year for 2013 returns for the first time as I wanted to Net File. I was very impressed by the quality of the software and its depth. I used it for returns I had to file by paper (a death in the family) and also Net File. My own return was somewhat complicated and although the software did not auto-link every item, it gave ample information in the validate function to ensure that I properly posted the information that did not update from schedule to return (this was pretty esoteric as it involved the carry-forward taxation of a flow-through share ITC claimed in 2012. Anyway, I am a former tax partner with one of the 'big 4' international accounting firms in Canada so I have a lot of experience with serviceable tax software and I am quite pleased with Studio Tax. I am particularly a fan of the shareware model used and I will definitely be making a reasonable 'donation' for the value received (I will base it on the number of returns I prepared (i.e. for my family). I will definitely recommend this software (I already have) and I encourage all users to make reasonable donations to keep this valuable and quality model going. In fact, it seems to me that this effort should actually be sponsored by the federal government itself as it doesn't necessarily make sense to me that individuals should have to pay to acquire software in order to enable them to file their tax returns but, based on the current state of the art, I think Studio Tax is the best alternative.

  2. Studio Tax is easy, I've been using it for 4 years. My tax returns have all been 100% accurate. From the time they are completed and e filed, my return is deposited is within one week. Why pay to have this done, this program is FREE.

  3. I'm new to e-filing but find this software very easy to work with. I have on question though. If I create a joint return in StudioTax, do I have to generate separate Netfile files for each person?

    1. I believe you have to create one Netfile per person. At least that's what my husband and I do. Each Netfile is connected to a specific Social Insurance Number so I don't think you can share. It seems like the "spouse" option just provides an easy way to split income on your T3 and T5s.

    2. doh... somebodies return is going to be late (at least it's not the one who owed). Many thanks for the quick response A. R. And my apologies for the spelling mistakes in the previous post. Enjoy the rest of your day.