Mandatory Electronic Filing for Information Returns

1. What is an information return?
2. Who must file an information return?
3. What are the new mandatory electronic filing requirements?
4. How should information returns be filed electronically?
5. Will the CRA still accept "electronic media" such as a DVD, CD, or diskette?
6. Why is the CRA making electronic filing mandatory?
7. What are the benefits of electronic filing?
8. Will my information return be secure?
9. Which information returns must be filed electronically?
10. Are there different Internet filing options depending on the type of information return?
11. Do I have to file additional or amended returns electronically?
12. Is there an additional cost to file a return over the Internet?
13. What will happen if I am required to file my return over the Internet, but I send the CRA a paper return or a return on electronic media such as a DVD, CD, or diskette instead?
14. What is the penalty amount for failing to comply with the mandatory electronic filing requirement, and how is it applied?
15. How has the penalty amount for late filing changed, and how is it applied?
16. Will mandatory electronic filing have any impact on the filing deadlines?
17. If I am required to file returns for prior years, as well as the last year, do I have to file them electronically as well?
18. Where can I get more information about Internet filing?

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1. What is an information return?

An information return is a prescribed form used to report certain types of transactions to the CRA. Examples of prescribed forms include the T4 slip Statement of Remuneration Paid and the T5 slip Statement of Investment Income. Each information slip is considered an information return.

2. Who must file an information return?

Any person, including a corporation, partnership, individual estate, and trust, who makes reportable transactions during the calendar year, must file an information return to report those transactions to the CRA.

3. What are the new mandatory electronic filing requirements?

Currently, filers who submit more than 500 information returns of various types must file using either the Internet or electronic media such as a DVD, CD, or diskette.

Starting in January 2010, filers who submit more than 50 information returns (see Question 9 for the types of returns) will be required to file electronically using the Internet.

4. How should information returns be filed electronically?

Filing electronically means sending your information returns to the CRA using the Internet. The CRA is increasing the size of file that we can accept from 20 megabytes to 150 megabytes. As a result, all filers will be able to send their information returns electronically.  Effective January 1, 2010, filers who previously filed more than 50 returns on paper, CD, DVD, or diskette must file over the Internet.

Effective January 1, 2011, filers who submit more than 50 returns on paper, DVD, CD, or diskette will be subject to penalties. 

5. Will the CRA still accept "electronic media" such as a DVD, CD, or diskette?

Yes.  However, effective January 1, 2011, filers who submit more than 50 returns on paper, CD, DVD or diskette will be subject to penalties. 

6. Why is the CRA making electronic filing mandatory?

This change will increase the efficiency of government while also delivering service and value to taxpayers. By making electronic filing mandatory, the costs and time required to process information returns are significantly reduced.

7. What are the benefits of electronic filing?

Filing electronically over the Internet is an environmentally friendly alternative to filing on paper or on electronic media. You will receive immediate electronic confirmation that we have received your return, and we will process it faster, with less chance of errors.

8. Will my information return be secure?

Yes, the CRA uses specially configured computer Web servers for transmitting information. We use 128-bit secure sockets layer (SSL) encryption, which is the most secure form of encryption commonly available in North America today. We also have a number of other measures in place to ensure data security and confidentiality. We use corporate firewalls to protect our Web servers from unauthorized access. Filer information is not stored on these servers. We securely store all personal information on separate computer systems that are not directly accessible from the Internet.

9. Which information returns must be filed electronically? 

The majority of common information returns (original and additional)—such as the T4 Statement of Remuneration Paid, the T5 Statement of Investment Income, and the T3 Statement of Trust Income Allocations and Designations—must be filed electronically if there are more than 50 information returns for each return type. The following information returns must be filed electronically using the Internet:

• T3 Statement of Trust Income Allocations and Designations
• T4 Statement of Remuneration Paid
• T4A Statement of Pension, Retirement, Annuity, and Other Income
• T4A-NR Statement of Fees, Commissions, or Other Amounts Paid to Non-Residents for Services Rendered in Canada
• T4E Statement of Employment Insurance Benefits
• T4RIF Statement of Income From a Registered Retirement Income Fund
• T4RSP Statement of Registered Retirement Savings Plan Income
• T5 Statement of Investment Income
• T5007 Statement of Benefits
• T5008 Statement of Securities Transactions
• T5018 Statement of Contract Payments
• NR4 Statement of Amounts Paid or Credited to Non-Residents of Canada

The following information returns must be filed electronically as this is the only way they can be accepted by the CRA:

Originals only:

• AGR-1 Statement of Farm-Support Payments
• SAFER Manitoba Shelter Benefits
• T4A(OAS) Statement of Old Age Security
• T4A(P) Statement of Canada Pension Plan Benefits

Originals and amended:

• T4E Statement of Employment Insurance Benefits
• T1204 Government Service Contract Payments
• RRSP Contribution Receipt Filing
• TFSA, Tax Free Savings Account

10. Are there different Internet filing options depending on the type of information return?

Yes. Information returns can be filed electronically using Internet File Transfer (XML). The CRA can accept files of up to 150 megabytes. If your file is more than 150 megabytes, you can still file using the Internet File Transfer application by either compressing or dividing each submission so that it is no more than 150 megabytes.

For T4 returns, this means that filers can send approximately 160,000 returns in an uncompressed file and 1.6 million returns in a compressed file.

For T5 returns, this means that filers can send approximately 260,000 returns in an uncompressed file and 2.6 million returns in a compressed file.

For T4 returns, filers can use T4 Web forms (up to 3 returns) and T4 Desktop Application (up to 70 returns), in addition to Internet file transfer (XML). For more information on Internet filing, go to Filing T4/T5 information returns electronically.

11. Do I have to file additional or amended returns electronically?

If mandatory electronic filing applies to you, you must file any additional returns using the Internet. You do not have to file amended returns electronically, with the exception of the four returns that can only be filed electronically as mentioned in Question 9. However, we encourage you to do so.

12. Is there an additional cost to file a return over the Internet?

No, the CRA does not impose a filing fee. The only costs may be related to fees for commercial software, or for your service provider.

13. What will happen if I am required to file my return over the Internet, but I send the CRA a paper return or a return on electronic media such as a DVD, CD, or diskette instead?

Filers who must file electronically and fail to do so may be subject to a penalty for non-compliance.

14. What is the penalty amount for failing to comply with the mandatory electronic filing requirement, and how is it applied?

If the information return should have been filed electronically, a penalty will be assessed as follows:

The CRA is providing a one-year transitional period to allow filers time to adapt to these changes. Penalties will be assessed starting on January 1, 2011.

15. How has the penalty amount for late filing changed, and how is it applied?

If you do not file an information return when required, you will be liable to a penalty equal to the greater of $100 and the amount determined as follows:

The penalty for late filing will be implemented beginning on January 1, 2010.

16. Will mandatory electronic filing have any impact on the filing deadlines?

No, the filing deadlines will remain the same.

17. If I am required to file returns for prior years, as well as the last year, do I have to file them electronically as well? 

Yes. Mandatory electronic filing relates to the date of filing, not the tax year of the returns being filed.

18. Where can I get more information about Internet filing?

Go to E-services for businesses, or call our Business Enquiries line at 1-800-959-5525.

You can also subscribe to our electronic mailing list at Electronic mailing list - Electronic Filing for Businesses.